Swedish startup H2 Green Steel has announced its agreement to supply German automaker Mercedes-Benz with 50,000 metric tons of environmentally-friendly steel starting in 2025.
The two companies have also signed a deal to evaluate the possibility of producing eco-friendly steel — manufactured without relying on fossil fuels — in North America.
According to Markus Schäfer, chief technology officer at Mercedes-Benz, the supply agreement will accelerate the development of a decarbonized, regional, and resilient steel supply chain for the carmaker’s manufacturing plants in Europe.
Gunnar Güthenke, head of procurement and supplier quality at Mercedes-Benz Cars, also said that H2GS has helped the company reach an important milestone in its local procurement strategy.
Mercedes-Benz is presently actively collaborating with its suppliers to establish a carbon-neutral supply chain by 2039. The luxury car manufacturer is reorganizing its supply chain to focus on reducing CO2 emissions rather than relying on offsets to reach its climate targets.
The company has made a notable achievement by incorporating low-CO2 steel, produced using recycled materials, into four Mercedes-Benz series models. This implementation has substantially reduced over 60 percent of CO2 emissions for these steel grades.
CO2-free Manufacturing Process
According to H2GS, the manufacturing process implemented at its facility has made steel production nearly carbon-neutral. The startup also utilizes an innovative approach that relies on hydrogen and renewable electricity, eliminating the need for coking coal in steel production. Hydrogen acts as a reduction agent, facilitating the removal of oxygen from iron ore.
Unlike coking coal, this process results in the generation of water vapor rather than CO2 emissions. H2GS has set a target of achieving a carbon footprint of 0.4 tons of CO2 per ton of steel from the start of its supply in 2025.
The CEO of H2GS, Henrik Henriksson, said that the company was established in response to the automotive industry’s need for a faster transition in the steel sector to meet climate targets.
He said that by working closely with Mercedes-Benz, the company had found a partner that shares its commitment to reducing supply chain emissions, promoting circularity, and ensuring social sustainability.
Henriksson also expressed his belief that Mercedes-Benz is “a very strong player” for H2GS to partner with for its European operations and expansion into the steel value chain in North America.