Mercedes-Benz goes for green steel
In 2025, Mercedes-Benz will try to use ‘green steel’ to produce all its vehicles, thus reducing its carbon footprint further.
The Stuttgarters are the first car manufacturer to take an equity stake in the Swedish start-up H2 Green Steel (H2GS) to introduce CO2-free steel into series production.
The partnership with HSGS is another step towards CO2 neutrality, which Mercedes-Benz is pursuing as part of Ambition 2039. Its goal is to achieve a fully connected and CO2 neutral vehicle fleet in 2039 – eleven years earlier than the EU legislation requires.
Together with its steel suppliers, the company is retooling its supply chain to focus on the prevention and reduction of CO2 emissions rather than compensation.
“With an equity stake in H2 Green Steel, Mercedes-Benz is sending an important signal to accelerate change in the steel industry and increase the availability of carbon-free steel. As a first step, we are investing a single-digit million amount. As a preferred partner of the start-up, we will be launching green steel in various vehicle models as early as 2025,” says Markus Schäfer, responsible for Daimler Group Research and the Mercedes-Benz Cars COO.
A Mercedes‑Benz sedan is made from about 50% steel, accounting for about 30% of CO2 emissions in production. With the partnership, Mercedes-Benz is actively and consistently tackling one of the biggest challenges in the automotive industry on the road to CO2 neutrality.
Using a new, innovative manufacturing process, the production of steel at the supplier level is CO2-free. By contrast, steel produced using a classic blast furnace emits an average of more than two tons of CO2 per ton.
The supplier uses hydrogen and electricity from 100 % renewable energy sources instead of coking coal in steel production in the new process. The hydrogen serves as a reduction gas, which releases and binds the oxygen from the iron ore.
Unlike the use of coking coal, this does not produce CO2 but water. The supplier uses electricity from 100% renewable sources for the energy requirements generated in the manufacturing process.
CO2-neutral supply chain
Mercedes-Benz is a member of the Responsible Steel Initiative and is actively involved in developing a certifiable sustainability standard for the steel industry. The aim is to ensure environmentally friendly and socially acceptable steel production along the entire value chain.
Suppliers representing more than 85% of Mercedes-Benz’s annual purchasing volume have already signed an Ambition Letter, agreeing to supply the company only with CO2-neutral products in the future.
This includes important steel suppliers. At the same time, Mercedes-Benz is working with its partners to gradually increase the proportion of secondary materials in components and materials.
Who is H2GS?
H2 Green Steel (H2GS) was founded in 2020, aiming to build a large-scale fossil-free steel production facility in northern Sweden. H2GS will produce 5 million tons of fossil-free steel by 2030.
By doing this, the company will contribute to the decarbonizing of the European steel industry, one of the largest carbon dioxide emitters. H2GS will establish operations in Boden and Luleå.
The founder and largest shareholder is Vargas, co-founder and one of the largest shareholders in battery producer Northvolt.