Microsoft has signed a deal with green steel company Stegra for the supply of low-carbon steel for use within its data centers.

The agreement will see Stegra deliver green steel, which it claims is up to 95 percent less carbon-intensive than conventional steel, to Microsoft’s data center equipment suppliers. Microsoft suppliers will, in turn, use the green steel in components designated for Microsoft’s data center equipment.

“Integrating near-zero emission steel into our data center construction is a critical advancement in reducing embodied carbon at scale,” says Jennifer Weitzel, corporate vice president of engineering, construction, and procurement at Microsoft. “This collaboration with Stegra enables us to decarbonize our infrastructure, while maintaining the performance and reliability standards required for hyperscale environments.”

The volume of steel that will be delivered to Microsoft’s equipment suppliers has not been disclosed.

Additionally, Microsoft has agreed to purchase the environmental attribute certificates (EACs) tied to production from Stegra’s manufacturing facility in Boden, Sweden.

According to Stegra, the EACs related to the steel are decoupled from the physical product, which is sold as conventional non-prime steel without a green premium. The company stated that this ensures there is no double-counting of emission avoidance.

“Through the environmental attribute certificates, the green value can be sold to Microsoft, a player of a unique size that can really help move the needle in the right direction. It’s impressive that Microsoft has chosen to team up with Stegra and together put something completely new on the steel market that will incentivize bigger volumes and more locations for steel production with close to zero emissions,” said Stegra CEO, Henrik Henriksson.

Stegra is currently constructing the Boden plant, which will utilize green hydrogen – hydrogen created through renewable energy sources – to reduce the emission profile of the steel-making process.

The site will span 270 hectares and be divided into two sections, one for iron and steelmaking, and another for a 700MW hydrogen plant. The company has said it is on course for production at the plant for 2026 and expects to produce five million tons of green steel every year by 2030.

Microsoft is not the first hyperscaler to commit to using green steel within its data centers. Last November, Amazon Web Services signed a deal with SSAB to pilot the use of green steel to construct the roof and wall structures at the AWS Västerås data center.

Microsoft, AWS, Google, and Meta are all part of the Sustainable Steel Buyers Platform (SSBP), a nonprofit organization that aims to bring together ambitious corporations in sectors with high steel usage, such as technology, construction, and manufacturing, and facilitate low-emission steel procurement in North America.

Steel is a crucial material in the construction of data centers. In addition to its traditional role in the foundations and shell of the building, it is also used in the racking, service enclosures, cooling systems, piping, and power generation equipment.