Thursday, February 22, 2024

Mercedes-Benz Is Building a Sustainable ‘Green’ Steel Supply Chain in North America


Mercedes-Benz partners with H2 Green Steel to establish a sustainable steel supply chain.

Mercedes-Benz AG has secured a significant supply agreement with H2 Green Steel (H2GS), a Swedish start-up specializing in the production of nearly CO₂-free steel. The collaboration exemplifies a shared commitment to sustainability and signifies a significant step toward establishing a resilient and responsible supply chain in the automotive industry, the companies say.

Under the agreement, H2GS will provide approximately 50,000 tonnes of sustainable steel per year for use in various Mercedes-Benz vehicle models. This partnership marks a major step towards achieving Mercedes-Benz’s “Ambition 2039” sustainability goals. Furthermore, the companies have signed a Memorandum of Understanding (MoU) to establish a sustainable steel supply chain in North America.

The supply agreement builds upon Mercedes-Benz’s previous investment in H2 Green Steel and will enable the automotive manufacturer to incorporate almost CO₂-free steel into its series production by 2025.

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Courtesy Gilles De Muynck | Unsplash

By utilizing an innovative manufacturing process, H2GS produces steel with a significantly reduced carbon footprint compared to traditional blast furnace production methods. Instead of using coking coal, the process relies on hydrogen and renewable electricity, resulting in water vapor emissions rather than CO₂.

Mercedes-Benz and H2GS have also outlined its joint ambition to establish a local supply chain for green steel production in North America, ensuring a sustainable source of steel for Mercedes-Benz manufacturing plants in the region. This development is part of Mercedes-Benz’s broader commitment to decarbonize its supply chain and source materials in proximity to its production sites.

Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG and Chief Technology Officer, Development & Procurement, emphasized the importance of the partnership. “Mercedes-Benz and H2 Green Steel are accelerating the creation of a decarbonized, regional, and resilient steel supply chain,” Schäfer said in a statement. “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.”

Image courtesy Mercedez-Benz

H2 Green Steel’s manufacturing process aims to achieve a carbon footprint of 0.4t CO₂ per ton of steel at the start of the supply. The company’s CEO, Henrik Henriksson, praised the collaboration. “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,” Henriksson said.

Mercedes-Benz has set an ambitious target of achieving a net-carbon-neutral supply chain by 2039. The company has already made progress in reducing emissions by introducing low-CO₂ steel, made from scrap, into four of its series models. This initiative has resulted in a more than 60% reduction in CO₂ emissions for those specific steel grades. Additionally, Mercedes-Benz aims to increase the use of secondary raw materials in its passenger car fleet to an average of 40 percent. The company is actively involved in developing sustainability standards for the steel industry and is a member of the Responsible Steel Initiative.

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