The Volkswagen Group and Salzgitter AG—which have been partners for more than 60 years—signed a Memorandum of Understanding under which Volkswagen will become one of the first customers for the low-CO₂ steel that Salzgitter AG plans to produce on a new production route at its headquarters in Lower Saxony from the end of 2025.

According to Salzgitter AG, this will enable more than 95% of CO₂ emissions in steel production to be saved in future on the basis of hydrogen and renewable energies. The Volkswagen Group plans to use the low-CO₂ steel from the end of 2025 in future projects such as the Trinity e-model, which will be produced in Wolfsburg from 2026.

For Volkswagen, the reduction of CO₂ emissions in the supply chain is a key element in the Group’s strategy to gradually become a carbon-neutral mobility provider by 2050. In doing so, the manufacturer is pursuing the approach of a “hot-spot analysis”: it is concentrating on reducing CO₂ emissions where they are mainly generated during the production of a car.

In addition to the battery-electric powertrain and aluminium components, this is particularly the case with steel. In future projects such as Trinity—the fully connected electric car of the next generation—the use of CO₂-reduced steel can therefore make a significant contribution to improving the overall CO₂ balance sheet. By the end of 2022, both partners intend to concretise and contractually agree on purchase quantities for the low-CO₂ steel in the period 2025 to 2030.

For its part, Salzgitter AG has set out to reduce CO₂ emissions in steel production with the transformation program “SALCOS - Salzgitter Low CO₂-Steelmaking”. In contrast to pig iron production using carbon-based blast furnaces, the steel and technology group wants to produce steel in future using green hydrogen and renewable energies on a new production route. Hydrogen electrolyzers, direct reduction plants and electric furnaces are being built in Salzgitter for this purpose. Step by step, the steel producer wants to reduce CO₂ emissions by more than 95% by 2033. This would avoid one percent of Germany’s total CO₂ emissions.

Cooperation between the two companies on green steel has already begun. Last year, Volkswagen AG processed sample quantities of CO₂-reduced steel from the Salzgitter AG for the first time. This is produced on the scrap-based electric steel route in Peine and has a 66% reduced CO₂ footprint. This year, Volkswagen plans to purchase a further 3,000 tonnes.

Another aspect of the joint agreement is the goal of establishing a closed-loop recycling system for steel between Volkswagen’s main plant in Wolfsburg and the integrated steelworks in Salzgitter. Accordingly, the Volkswagen Group makes the steel residues from production available again to Salzgitter AG, which melts them down, processes them into new steel products and delivers them to Wolfsburg for car production again. The aim is to extend this “closed loop” for steel to other Volkswagen Group production sites in the future.

Purchasing is a decisive factor for the Volkswagen Group on the road to CO₂ neutrality. And we want to achieve this goal by 2050 at the latest. Even today, parts of our production are CO₂-neutral in balance sheet terms—for example, in ID.3 production in Zwickau. The transformation to e-mobility is significantly increasing the importance of corporate purchasing in terms of decarbonization: while the supply chain has so far been responsible for 17 percent of CO₂ emissions over the entire life cycle of the Golf, this figure has already risen to 42% for the ID. 3. For the further improvement of our CO₂ balance, the use of materials—above all the raw material steel—plays a central role. The use of CO₂-reduced steel is an important step here, as is the recycling of steel residues.

With green steel and a recycling loop, we will make Volkswagen’s supply chains even more environmentally friendly in the future.

—Murat Aksel, Group Board Member for Purchasing at Volkswagen AG