Challenge

Steel demand is expected to reach 2.3 billion metric tons by 2030, with an annual growth rate of 3%. In the automotive industry, only about 55% of the steel purchased by car manufacturers makes it into cars. Dual-mission sourcing (purchasing products that reduce both cost and carbon footprint) is becoming the new major challenge for procurement teams. However, the lack of availability of “green steel” – steel produced with low carbon emissions – can still hinder automotive OEMs in their sustainability strategies.

Solution

Volvo Trucks, in partnership with Swedish steel company SSAB, is developing vehicles built from fossil-free steel. The fossil-free steel is produced using neutral-carbon electricity (including biofuels) and hydrogen instead of by coking coal. Considering that, on average, 70% of a truck’s weight comes from steel and cast iron, the Volvo initiative is an important step in cutting the automotive industry’s emissions. In its car manufacturing, Volvo is also embedding circularity into its practices, using more recycled steel within SSAB’s nearzero- emission steel. Another circularity approach uses green hydrogen surplus produced by Volvo’s partner Ovako, an engineering steel manufacturer, to power the company’s fuel cell vehicles.

Impact

In June 2022, Volvo’s A30G became the first construction equipment built using fossil-free steel, nine months after the first concept vehicle was showcased. By partnering with broader industrial systems, Volvo and SSAB are pushing the decarbonization of the automotive value chain.

Featured in our paper "The “No-Excuse” Opportunities to Tackle Scope 3 Emissions in Manufacturing and Value Chains"