German automaker Mercedes-Benz has recently secured a supply contract with Swedish start-up H2 Green Steel (H2GS) for approximately 50,000 tonnes of virtually CO2-free steel annually. The steel will be utilized in various series models produced by the car manufacturer at its European press plants.
Mercedes-Benz has held a stake in H2 Green Steel since 2021, and the start-up aims to commence production in 2025. This partnership will enable Mercedes-Benz to introduce nearly carbon-neutral steel into mass production. The agreed delivery volume pertains to the European press plants, but both companies have expressed their intentions to establish a supply chain for green steel produced in North America to cater to Mercedes-Benz manufacturing plants in the region.
H2 Green Steel sets itself apart by employing hydrogen and electricity sourced entirely from renewable energy to replace coking coal in the steel production process. Consequently, the manufacturing procedure is considered virtually CO2-free. Mercedes-Benz highlights that traditional blast furnace steel production emits over two tons of CO2 per ton of steel, contrasting with H2 Green Steel’s approach that releases water vapor instead of CO2 when utilizing hydrogen as a reducing gas to separate oxygen from iron ore. At the start of delivery, H2 Green Steel aims for a CO2 footprint of 0.4 tonnes per tonne of steel.
Markus SchĂ€fer, Member of the Board of Management for Engineering, Development, and Procurement at Mercedes-Benz Group AG, expressed enthusiasm about the collaboration, stating, “With the supply deal of around 50,000 tonnes of 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 decarbonized, regional, and resilient steel supply chain.” SchĂ€fer further noted their aim to establish a sustainable steel supply chain in North America, marking a significant step toward a more sustainable and resilient automotive industry.
Mercedes-Benz has voluntarily committed to establishing a carbon-neutral supply chain no later than 2039. The company’s primary focus is on reducing and avoiding CO2 emissions rather than relying solely on offsetting them. Presently, Mercedes-Benz has already incorporated low-CO2 steel, derived from scrap, into four of its series models, leading to a reduction of over 60% in CO2 emissions associated with these steel grades. Furthermore, the automaker recently announced its partnership with Hydro to introduce aluminum with a nearly 70% reduced CO2 footprint, which will be utilized in the production of electric models like the EQE and EQS.
Henrik Henriksson, CEO of H2 Green Steel, expressed appreciation for the collaboration with Mercedes-Benz, stating, “H2 Green Steel exists because pioneering companies in the automotive industry, like Mercedes-Benz, signaled that the steel industry’s transition was progressing too slowly to meet their climate targets.” Henriksson emphasized the partnership’s potential in addressing supply chain emissions, circularity, and social sustainability, considering Mercedes-Benz as a strong player in both European and North American operations.
H2 Green Steel was established in 2020 and is primarily owned by Vargas Holding, which is also a co-founder and major shareholder of Swedish battery manufacturer Northvolt. The company’s headquarters is located in Stockholm, and its initial green steel plant is currently under construction in northern Sweden.
