Volvo Cars, owned by Geely, says it is the first automaker to join the SteelZero initiative, which aims to increase demand for fossil-free steel and accelerate the transition to carbon neutrality in the global steel industry.
By joining SteelZero, Volvo Cars commits to adopt strict CO2-based steel procurement requirements by 2030. By 2050, all the steel it supplies must be net zero steel, which Volvo Cars says is in line with the company’s ambition to be carbon neutral by 2040.
Volvo Cars notes that steelmaking is a major source of CO2 emissions for the automotive industry, with an average of 33 percent of all production-related emissions for a new Volvo car in 2021. Globally, steelmaking is responsible for about seven percent of all greenhouse gas emissions. gasses.
“A sustainable approach to steelmaking is not only good news for the environment, it’s also a good thing because it limits our exposure to future climate risks and regulations,” said Kerstin Enochsson, Chief Procurement Officer at Volvo Cars. “We are delighted to join the SteelZero initiative and support its ambitions to transform the steel industry. By signaling our demand for responsibly sourced low-carbon and carbon-free steel, we want to contribute to a wider supply to our sector.”
Jen Carson, Head of Industry at Climate Group, said: “Volvo Cars’ entry into SteelZero marks a significant step change in the global demand signal for low-emission and net-zero steel, and a pivotal moment for the automotive industry. a pivotal role in driving the net-zero transition of steel, supporting the creation of a low-carbon steel market internationally that can enable the sector to meet its own net-zero targets and deliver a product that is truly in line with the climate agenda.”
SteelZero was launched by the Climate Group in collaboration with ResponsibleSteel, a steel industry standards and certification body that Volvo Cars will join. Through ResponsibleSteel, Volvo Cars gains access to reliable, third-party verified and verified information about its steel supply chain and relevant sustainability references, helping to ensure it is sourced responsibly.
In addition to CO2 reduction, ResponsibleSteel also focuses on other important issues in the steel supply chain, such as labor and human rights, involvement with local communities, water use and impact on biodiversity.
The SteelZero signing is just the latest initiative from Volvo Cars to tackle one of the car manufacturers’ most intensive sources of CO2 emissions. Last year, it announced a partnership with Swedish steelmaker SSAB to jointly explore the development of high-quality fossil-free steels for use in the automotive industry through SSAB’s HYBRIT initiative.
Volvo Cars is the first carmaker to partner with SSAB and HYBRIT, an ambitious and advanced project in the development of fossil-free steel. HYBRIT aims to replace coking coal, traditionally needed for iron ore-based steelmaking, with fossil-free electricity and hydrogen. The result is expected to be the world’s first fossil-free steelmaking technology, with virtually no carbon footprint.
Volvo Cars’ ambition to be carbon neutral by 2040 is part of its comprehensive climate action plan, one of the most ambitious in the automotive industry. It aims to become a fully electric carmaker by 2030 and plans to roll out a whole new family of all-electric cars in the coming years.
The company’s electrification plans are part of its ambition to reduce its life cycle carbon footprint per car by 40 percent between 2018 and 2025, including by reducing carbon emissions in the supply chain by 25 percent by 2025.
In terms of its own operations, the company aims to achieve climate neutral production by 2025. Already, all Volvo Cars’ European factories run on 100 percent clean electricity, while the Torslanda factory in Sweden is completely climate neutral. Elsewhere in the world, the Chengdu and Daqing sites in China also run on climate-neutral electricity.
Last year, Volvo Cars introduced an internal CO2 price of 1,000 SEK for every tonne of CO2 emitted by its entire company, the first carmaker to implement such a mechanism in all its operations. The goal is to future-proof its organization and stay ahead of the regulatory curve as it anticipates and favors more governments introducing a carbon price in the coming years.
Under the scheme, each car project undergoes a sustainability sense check and carbon costs are imposed for each expected tonne of CO2 emissions over the car’s life cycle. The goal is to ensure that any car model would be profitable, even under a strict carbon pricing schedule, steering all project and procurement decisions towards the most sustainable option on the table.