BMW inks deal for fossil-free steel manufactured using hydrogen and renewables

BMW Group has announced plans to begin sourcing steel produced using fossil-fuel-free methods from 2025, claiming that the material produces up to 95% less emissions on a lifecycle basis.

Image: BMW Group

Image: BMW Group

The luxury carmaker has today (20 October) announced an agreement with Swedish startup H2 Green Steel, which is buildings its first commercial-scale steel production site in Norrbotten, northern Sweden, at present.

H2 Green Steel is sourcing local iron ore for the facility, as well as locally generated renewable electricity and green hydrogen; the region is a hub for wind energy and hydropower, with electrolysis set to expand in the coming years. The hydrogen will be produced on-site and used to replace coke in traditional steelmaking processes.

With support from BMW Group, H2 Green Steel is also set to incorporate processes that close the loop on waste at the facility. The firm will take back sheet metal and remnants from BMW Group and process them into new steel coils.

When the emissions savings from local sourcing, decarbonised energy and closed-loop processes are combined, the result is steel with a lifecycle carbon footprint up to 95% lower than steel produced using traditional methods.

“Our goal is to reduce CO2 emissions in our steel supply chain by about two million tonnes by 2030, and sourcing steel produced using hydrogen and green power can make a vital contribution to this,” said BMW Group’s board member responsible for the purchasing and supplier network, Dr Andreas Wendt.

“Steel is essential for producing cars and will be no less important for future vehicle generations. Innovative technologies that enable virtually carbon-free production of steel have a significant impact on our ability to reduce CO2 emissions in our steel supply chain.”

BMW Group has not yet disclosed how much steel it intends to purchase from H2 Green Steel, which also has a deal with rival Mercedes-Benz. edie has reached out to ask for this information.

The move on steel builds on a deal between BMW Group and Emirates Global Aluminium,  which will see the carmaker procuring aluminium produced using solar-powered manufacturing processes.

BMW Group recently updated its climate goals, with new targets including a commitment to reduce life-cycle emissions per vehicle by 40% by 2030. The firm has continually emphasised the fact that switching its portfolio to electric vehicles (EVs) will not be enough, given that EVs are more emissions-intensive and materials-intensive to produce than traditional ICE vehicles. In other words, tailpipe emissions are only one portion of lifecycle emissions for vehicles.

To that end, BMW Group has also set a target to increase the proportion of recycled and reused materials across the company’s vehicle portfolio to 50% this decade, up from 30% at present.

Spotlight on steel

Steel accounts for around 7% of global annual emissions and is regarded as hard-to-decarbonise, as much of the sector’s emissions footprint lies in industrial heating processes.

The Mission Possible Partnership (MPP) – an organisation set up to accelerate decarbonisation pathways for high-emitting sectors – this month published its roadmap to net-zero by 2050 for steel. This strategy is being supported by businesses including  Rio Tinto, Boston Metal, ArcelorMittal, Severstal, Tata Steel, SSAB and Liberty Steel.

Electrification plays a key role in the roadmap, alongside green hydrogen, energy efficiency and material efficiency and carbon capture and storage.

At other parts of the steel value chain, The Climate Group is convening businesses that purchase steel and getting them to commit to improving low-carbon procurement and specification standards, while the Climate Action 100+ corporate engagement investor initiative is putting pressure on producers to align with net-zero plans.

Sarah George



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