Befitting its leadership in tackling climate change, Volvo Cars has become the first automaker to join the SteelZero (Zero Steel) initiative. The SteelZero initiative aims to increase the use of fossil-free steel and accelerate the transition to a carbon-neutral structure in the global steel industry.
By registering with SteelZero, Volvo Cars commits to take necessary actions regarding the supply of solid CO2-based steel by 2030 (see Notes to Editors). Accordingly, by 2050, all the steel the company supplies will be net zero steel. This target is in line with the company’s target of becoming a climate neutral company by 2040 at the latest.
The use of steel equates to 33 percent of the carbon produced by cars!
Steel production is an important source of CO2 emissions for the automotive industry; According to data for 2021, steel accounts for 33 percent of all emissions gases produced during the production process of a new Volvo car. If we look at the global scale, it is stated that about 7 percent of all greenhouse gas emissions originate from steel production.
Kerstin Enochsson, Vice President Purchasing at Volvo Cars, said: “Taking a sustainable approach to steel production is important not only for the environment, but also because it limits our exposure to future climate risks and regulations. We are pleased to join the SteelZero initiative and support their goal of transforming the steel industry. “By announcing our demand for responsibly sourced low and zero carbon steel, we aim to help increase supply in the industry.”
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Jen Carson, President of Climate Group Industry, said: “The joining of Volvo Cars to SteelZero is a very important step for the automotive industry. This development marks a major shift in global demand for low-emissions, net-zero steel. The industry plays a central role in driving the net zero transition of steel. Thanks to this development, a decarbonized steel market can be created internationally, the industry can achieve its net zero targets and a product that is truly compatible with the climate agenda can be delivered.”
The SteelZero initiative, in which Volvo Cars will be involved, was launched by The Climate Group in partnership with ResponsibleSteel, a steel industry-wide standardization and certification body. Through ResponsibleSteel, Volvo Cars will have access to reliable, third-party verified and audited information on the steel supply chain and related sustainability references. The company will thus ensure that the steel is sourced responsibly.
In addition to reducing CO2 emissions, ResponsibleSteel also focuses on other key issues such as labor and human rights defense in the steel supply chain, interaction with local communities, water use and biodiversity impact.
The SteelZero signature is Volvo Cars’ latest attempt to address one of the most intense sources of CO2 emissions in automobile manufacturing. The company announced a collaboration with Swedish steelmaker SSAB last year. As part of this collaboration, joint efforts are being made to develop fossil-free, high-quality steel for use in the automotive industry, through SSAB’s HYBRIT initiative.
Volvo Cars is the first automaker to work with SSAB, as well as with HYBRIT, an ambitious project to develop fossil-free steel. HYBRIT aims to replace the coking coal traditionally needed for iron ore-based steel production with fossil-free electricity and hydrogen. As a result, it is planned to achieve the world’s first fossil-free steel production technology with almost no carbon footprint.
Volvo Cars’ climate action plan is one of the most ambitious and comprehensive in the auto industry. As part of this plan, the company aims to be a climate neutral company by 2040. Aiming to produce only electric cars by 2030, the company plans to launch a completely new family of electric cars in the coming years.
As part of its electrification plans, the company aims to reduce carbon emissions in its supply chain by 25 percent by 2025, as well as reduce its life cycle carbon footprint per car by 40 percent between 2018 and 2025.
The company aims to achieve climate neutral production by 2025 as part of its own operations. Currently, all of Volvo Cars’ plants in Europe run on 100 percent clean electricity, while the Torslanda plant in Sweden is completely climate neutral. In addition, the Chengdu and Daqing plants in China are also powered by climate-friendly electricity.
Volvo Cars set an internal carbon price of SEK 1,000 for every tonne of carbon emissions from all of its businesses last year, making it the first automaker to apply this process to all of its operations. The company aims to prepare its organization for the future and stay ahead of regulations, as it predicts that governments will apply more carbon prices in the coming years and also supports this.
Under the programme, every car project undergoes a “sustainability detection check” and a CO2 cost is applied for every tonne of carbon emissions expected over the car’s life cycle. The goal is to ensure that every model is profitable, even under a strict carbon pricing scheme, guiding the entire project and decision towards the most sustainable option on the table.