Mercedes

Aug 22, 2023

Mercedes-Bens and Swedish start-up H2 Green Steel have signed a supply agreement for more than 50,000 metric tons of low-carbon steel per year to be used in their European press shops. The two companies have also strengthened their partnership with a memorandum of understanding which affirms further efforts towards creating a sustainable supply chain in North America.

Production of the nearly zero-carbon steel will begin in 2025, helping decarbonize the supply chain for Mercedez-Benz manufacturing plants. The company is working with its suppliers toward achieving a carbon-neutral supply chain by 2039, focusing on retooling production rather than carbon offsets.

"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," said Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG. "At the same time, we are taking our partnership to the next level with the aim of establishing a sustainable steel supply chain in North America, another important step towards making the auto industry more resilient and sustainable."

Mercedes-Benz has already introduced low-carbon steel into four of its series models, cutting carbon emissions by 60%. They are also set to use aluminum with nearly 70% carbon reduction in production as the material is frequently used in EV creation. The company also aims to increase the use of secondary raw materials in its passenger car fleet by 40%.

Mercedes-Benz emphasizes certifiable sustainability standards for steel production, and the company is currently a member of the Responsible Steel Initiative. The steel sector accounts for 8% of global emissions, and Mckinsey reports that many steel companies could see their value decline unless they decarbonize. H2 Green Steel reportedly works to meet the goals of companies looking to rapidly decarbonize.

"H2 Green Steel exists because pioneering companies in the automotive industry, like Mercedes-Benz, signaled the transition in the steel industry was too slow for them to meet their climate targets," said Henrik Henriksson, CEO of H2 Green Steel. "Working side-by-side with Mercedes Benz, we have a partner with whom we can raise the bar when it comes to supply chain emissions, circularity and social sustainability. They are a very strong player to liaise with for our European operations, but naturally also as we endeavor into the steel value chain in North America."