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Getting the CO2 out of car making is nearly as important as getting out of car driving.

Dan Carney

April 14, 2023

4 Min Read
Volvo Cars' partner in green steel is SSAB.Volvo Cars

While the car industry is engaged in a shift in propulsion technology intended to reduce carbon emissions from transportation, it is also involved in a lower-profile effort to squeeze carbon out of the manufacturing process. Steel is the largest component of most new cars and it is one that produces a lot of CO2 in its manufacture, so carmakers are working with steel suppliers to investigate ways to produce so-called “green steel” for use by the industry.

According to the International Energy Agency, steel production accounts for 8 percent of global energy demand and 7 percent of energy sector CO2 emissions. To reduce these carbon emissions, steelmakers are examining ways to make steel using hydrogen instead of coal, with Siemens Energy preparing to open a 2.1-million square foot, $33 million facility in Berlin to produce green hydrogen in volume.

“With the new production facility for hydrogen electrolyzers, we are reinforcing our claim to play an active role in shaping the energy transition,” explained Christian Bruch, president and CEO of Siemens Energy. “To this end, we are pooling our knowledge in the field of various energy technologies in Berlin. For us, hydrogen is an important component of the future energy world. For this to be economically viable, the manufacturing costs for electrolyzers must be significantly reduced. With our new production facility, we are helping to make hydrogen competitive sooner.” 

The hydrogen is made using electricity from renewable energy sources for the electrolysis that splits the free hydrogen from water molecules. This green hydrogen can replace the coal used in conventional blast furnaces in so-called direct reduction plants, which use hydrogen to directly reduce iron ore to iron in the solid state. The solid iron produced in this way is then melted down with steel scrap in an electric arc furnace powered by renewable electricity.

 Sweden’s SSAB and Germany’s Salzgitter AG are developing the ability to deliver steel to customers that is made using hydrogen. SSAB says  that it plans to begin green steel deliveries in 2026 and to “largely eliminate” CO2 emissions by 2030. “This means reducing Sweden’s CO2 emissions [by] 10 percent and Finland’s [by] 7 percent,” said SSAB’s CEO Martin Lindqvist. “We have proven the HYBRIT technology at pilot scale and delivered fossil-free steel to customers. The next step is to phase up to demonstration scale, while we transform our steelmaking sites.”

HYBRIT is SSAB’s effort  to create a completely fossil-free value chain from mine to finished steel, with fossil-free pellets, fossil-free electricity and hydrogen. One step in the program’s development was completion of a pilot underground storage facility for 100 cubic meters of high-pressure hydrogen gas. The storage facility is in a lined rock cavern, which is being tested through repeatedly filling and emptying the reservoir of hydrogen gas. The company says its aim is a commercial facility a thousand times larger that could contain fuel for a sponge iron plant.

Volvo Cars is partnered with SSAB, with the intent to build cars using the company’s green steel. “As we continuously reduce our total carbon footprint, we know that steel is a major area for further progress,” said Håkan Samuelsson, chief executive at Volvo Cars. “The collaboration with SSAB on fossil-free steel development could give significant emission reductions in our supply chain.” CO2 emissions related to steel and iron production for Volvo Cars amount to around 35 per cent of the total carbon emissions of the car manufacturing process for a traditionally powered car and 20 percent of that for an EV.


Volvo aims to build cars using green steel as soon as 2026.

BMW’s deal with Saltzgitter is similar, with the plan to start using green steel in production vehicles starting in 2026. The company’s goal is for such low-carbon steel to account for 40 percent of its total steel use by 2030.

General Motors, meanwhile, is working with Nucor Corp. to incorporate that company’s Econiq line of net-zero carbon steel products into car manufacturing. "We commend Nucor for their commitment to net-zero carbon steel solutions and look forward to working with them to utilize their innovative Econiq steel in our vehicles. It brings GM one step closer to its vision of a zero emissions future," said Shilpan Amin, former GM vice president for global purchasing and supply chain and now senior vice president for GM International. "General Motors is excited to be Nucor's first customer for Econiq as we work to integrate sustainability into all aspects of our supply chain."

Analysts at Precedent Research predict the green steel will grow from $196.8 billion in 2022 to $624.4 in 2032. It will be interesting to see whether industry movement toward green steel will revitalize the steel industries in the U.S. and Europe, which have suffered from low-cost competition from China and India.

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