Mercedes to source ‘green’ steel from Sweden
Mercedes-Benz has signed a supply contract with the Swedish start-up H2 Green Steel (H2GS) for around 50,000 tonnes of virtually CO2-free steel per year for its European press plants. The steel is to be used in various series models of the carmaker.
Mercedes-Benz has already held a stake in H2 Green Steel since 2021. The start-up plans to begin production in 2025 – and should thereupon enable the Stuttgart-based company to bring virtually CO2-free steel into series production. The above-mentioned delivery volume applies to the carmaker’s European press plants. At the same time, both sides have now additionally made public a signed letter of intent according to which they also aim to establish a supply chain for green steel produced in North America for the local Mercedes-Benz manufacturing plants.
H2 Green Steel uses hydrogen and electricity from 100 percent renewable energy sources instead of coking coal for its steel production. As a result, the manufacturing process is considered virtually CO₂-free. “By contrast, steel produced using a classic blast furnace, emits an average of more than two tons of CO₂ per ton” Mercedes-Benz points out in a statement. In the Swedish company’s new approach, hydrogen serves as a reducing gas that releases and binds the oxygen from the iron ore. Unlike the use of coking coal, no CO₂ is produced in the process, but water vapour. According to Mercedes, H2GS is aiming for a footprint of 0.4 tonnes of CO₂ per tonne of steel at the start of delivery.
“With the supply deal of around 50,000 tonnes almost CO₂-free steel from H2 Green Steel for our manufacturing plants in Europe, Mercedes-Benz and H2 Green Steel are accelerating the creation of a decarbonised, regional and resilient steel supply chain,” expresses Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG and Member of the Board of Management for Engineering, Development and Procurement. “At the same time, we are taking our partnership to the next level with the aim of establishing a sustainable steel supply chain in North America, another important step towards making the auto industry more resilient and sustainable.”
Mercedes-Benz has made a voluntary commitment to establish a carbon-neutral supply chain by 2039 at the latest. The focus here is on avoiding and reducing CO₂ emissions and not on offsetting them, the German manufacturer emphasises. “Already today, the brand with the three-pointed star has introduced low-CO₂ steel, made from scrap, into four series models. This allows CO₂ emissions for the respective steel grades to be cut by more than 60%..” In addition, Mercedes-Benz recently announced that aluminium with a CO2 footprint reduced by almost 70 per cent from its partner Hydro would go into series production – for the EQE and EQS electric models, among others.
Henrik Henriksson, CEO of H2 Green Steel, said the following about the agreement with the Stuttgart-based company: “H2 Green Steel exists because pioneering companies in the automotive industry, like Mercedes-Benz, signaled the transition in the steel industry was too slow for them to meet their climate targets. Working side-by-side with Mercedes Benz, we have a partner with whom we can raise the bar when it comes to supply chain emissions, circularity and social sustainability. They are a very strong player to liaise with for our European operations, but naturally also as we endeavor into the steel value chain in North America.”
H2 Green Steel was launched in 2020. The startup’s founder and largest shareholder is Vargas Holding, which is also a co-founder and one of the largest shareholders of Swedish battery manufacturer Northvolt. H2 Green Steel is headquartered in Stockholm and the first green steel plant is currently being built in northern Swedish.
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