Volvo Cars Is First Car Maker to Join SteelZero Initiative in Support of Fossil-Free Steel Ambitions

Underlining its position as a leader in climate action, Volvo Cars has become the first car maker to sign up for the SteelZero initiative, which aims to increase demand for fossil-free steel and accelerate a transition to carbon neutrality in the global steel industry.

By signing up to SteelZero, Volvo Cars commits itself to stringent CO₂-based steel sourcing requirements by 2030 (see Notes to Editors). By 2050, all the steel it sources should be net-zero steel, which aligns with the company’s ambition to be climate neutral by 2040.

Steel production is a significant source of CO₂ emissions for the automotive industry, averaging 33 per cent of all production-related emissions for a new Volvo car in 2021. Globally, steel production is responsible for around 7 per cent of all greenhouse gas emissions.

“A sustainable approach to steelmaking is not just good news for the environment; it is also good business. It limits our exposure to future climate risks and regulations,” said Kerstin Enochsson, chief procurement officer at Volvo Cars. “We are pleased to join the SteelZero initiative and support its ambitions to transform the steel industry. By signalling our demand for responsibly-sourced low- and zero-carbon steel, we aim to help drive an increased supply to our sector.”

The Climate Group launched SteelZero in partnership with ResponsibleSteel, a steel industry-wide standard and certification body Volvo Cars has also joined. Through ResponsibleSteel, Volvo Cars gains access to reliable, third-party verified and audited information about its steel supply chain and relevant sustainability credentials, helping to ensure it is responsibly sourced.

Jen Carson, head of industry at Climate Group, said: “Volvo Cars joining SteelZero marks an important step-change in the global demand signal for low emission and net-zero steel, and a pivotal moment for the automotive industry. This sector plays a central role in driving the net-zero transition of steel. It’s supporting creating a decarbonised steel market internationally that can enable the sector to meet its net-zero targets and deliver a product that is truly aligned with the climate agenda.”

As well as CO₂ reductions, ResponsibleSteel also focuses on other essential issues in the steel supply chain like labour and human rights, engagement with local communities, water use and biodiversity impact.

The SteelZero signing is only the latest initiative by Volvo Cars to address one of car making’s most intensive sources of CO₂ emissions. Last year, it announced a collaboration with Swedish steelmaker SSAB to jointly explore the development of fossil-free, high-quality steel for use in the automotive industry through SSAB’s HYBRIT initiative.

Volvo Cars is the first car maker to work with SSAB and HYBRIT, an ambitious and advanced project in fossil-free steel development. 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 climate neutral by 2040 is part of its comprehensive climate action plan, one of the most ambitious auto industries. It aims to become a fully electric car maker by 2030 and plans to roll out a whole new family of pure electric cars in the coming years.

The company’s electrification plans are part of its ambition to reduce the lifecycle carbon footprint per car by 40 per cent between 2018 and 2025, including by reducing carbon emissions in its supply chain by 25 per cent by 2025.

In terms of its operations, the company aims for climate-neutral manufacturing by 2025. All of Volvo Cars’ European plants run on 100 per cent clean electricity, while its Torslanda plant in Sweden is fully climate-neutral. Elsewhere in the world, its Chengdu and Daqing sites in China are also powered by climate-neutral electricity.

Last year, Volvo Cars introduced an internal carbon price of 1,000 SEK for every tonne of carbon emissions across its entire business. It was the first car maker to implement such a mechanism across all its operations. The aim is to future-proof its organisation and be ahead of the regulatory curve, as it anticipates and favours more governments implementing carbon prices in coming years.

Under the scheme, every car project undergoes a ‘sustainability sense-check, and a CO₂ cost is imposed for every anticipated tonne of carbon emissions throughout the car’s life cycle. The aim is to ensure that each car model would be profitable even under a strict carbon pricing scheme, steering all project and sourcing decisions towards the most sustainable option.

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