The BMW Group is systematically pursuing its goal of significantly reducing CO₂ emissions at their source in the supply chain. From 2025 on, the company plans to source steel produced with up to 95% less CO₂ emissions and without requiring fossil resources such as coal. The BMW Group has now reached an agreement to this effect with the Swedish startup H2 Green Steel (H2GS), which uses hydrogen and only green power from renewable energies for steel production. (Mercedes-Benz took a stake in H2GS in May 2021. Earlier post.)

In addition to the delivery of steel produced using green power, the BMW Group and H2 Green Steel have also agreed to create a closed-loop material cycle. H2 Green Steel will take back sheet metal remnants, such as those produced at press plants when doors are punched out, and will process them in such a way that they can be shipped back to the plants as new steel rolls, also known as steel coils.

In this way, raw materials can be used multiple times in a circular economy and natural resources protected. Since it requires less energy to produce, secondary steel lowers CO₂ emissions by an average of 50-80%, compared to primary material.

The BMW Group is already using between 20% and 100% secondary steel in its vehicles and will continue to increase this percentage in the future. BMW Group press plants in Europe process more than half a million tonnes of steel per year.

H2 Green Steel is building its steel production site in the province of Norrbotten in northern Sweden, close to the Arctic Circle. The region is best known for its reindeer and spectacular northern lights, but also provides access to high-quality iron ore, plentiful energy from renewable sources such as hydroelectric and wind power, a major seaport and generations of steel production know-how.

Unlike conventional processes that rely on coke for making steel, the company employs hydrogen produced using green power to remove the oxygen from the iron oxide. This direct reduction of iron ore produces almost no CO₂ at all, only water, thereby avoiding 95% of the CO₂ emissions normally produced. The specially built hydrogen power plant, which uses water and green power from across the region, will be directly integrated into the steel production plant. The company also uses local green power for the remainder of the manufacturing process.

Swedish company Northvolt, which develops and produces battery cells for electric cars, is also exploiting the potential for green power in the north of Sweden.

Last year, the BMW Group signed a long-term battery-cell supply contract with Northvolt. The battery cells will be produced in Europe at the Northvolt gigafactory currently under construction in Skellefteå in northern Sweden from 2024. The company will use only green electricity from local wind and hydroelectric power to produce the battery cells.

As part of its involvement with the not-for-profit organisation ResponsibleSteel, the BMW Group actively participated in establishing environmental and social standards throughout the entire steel value chain, starting at the mine. This sustainability standard for production sites in the steel industry was published in 2019 as part of a multi-stakeholder process and now forms the basis for certification. ResponsibleSteel is the steel industry’s first global multi-stakeholder standard and certification initiative.