Mercedes-Benz has announced it will become the first car manufacturer to take an equity stake in Swedish start-up H2 Green Steel (H2GS), allowing it to introduce CO2-free steel into series production. Mercedes-Benz describes it as an important step towards completing its Ambition 2039 programme, where the company intends to achieve a carbon neutral and fully connected vehicle fleet by 2039.
Founded in 2020, H2GS aims to build a large-scale fossil-free steel production facility in northern Sweden. H2GS intends to produce five million tons of steel without using fossil fuels by 2030, contributing to the decarbonising of the European steel industry – one of the largest carbon dioxide emitters.
“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,“ said Markus Schaefer, COO of Mercedes-Benz Cars and member of the Board of Management of Daimler and Mercedes-Benz who is responsible for Daimler Group Research.
“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.“
Mercedes‑Benz says its sedans are made from about 50 per cent steel, which accounts for around 30 per cent of CO2 emissions in production. Through the partnership, the company expects to tackle one of the biggest challenges in the automotive industry on the road to carbon neutrality.
One ton of steel produced using a classic blast furnace emits an average of more than two tons of CO2. In the new process to be adopted, however, the supplier uses hydrogen and electricity from 100 per cent renewable energy sources instead of coking coal in steel production. The hydrogen serves as a reduction gas, which releases and binds the oxygen from the iron ore. Unlike the use of coking coal, this produces water rather than carbon dioxide.
In addition, the company says it is committed to a responsible steel supply, relying on the application of recognised standards and robust certificates. Mercedes-Benz is a member of the Responsible Steel initiative and says it is actively involved in the development of a certifiable sustainability standard for the steel industry, aiming to ensure environmentally friendly and socially acceptable steel production along the entire value chain.
Together with its steel suppliers, the company says it is “retooling“ its supply chain to focus on the prevention and reduction of CO2 emissions rather than compensation. Suppliers representing more than 85 per cent of Mercedes-Benz’s annual purchasing volume, including steel suppliers, have signed an Ambition Letter, agreeing to supply the company with only carbon neutral products in future.