Volvo Cars is the first car maker to sign up to the SteelZero initiative, which aims to increase demand for fossil-free steel and accelerate a transition to carbon neutrality in the global steel industry.
As well as a long-term commitment to procure 100% fossil-free steel by 2050, SteelZero signatories also commit to 50% of their steel procurement by 2030 meeting at least one of the following criteria:
Steel produced by a steelmaking site where the site’s corporate owner has defined and made public both a long-term emissions reduction pathway and a medium-term, quantitative science-based greenhouse gas emissions target for the corporation (a target approved by the Science Based Targets initiative or equivalent would meet this interim requirement in full).
ResponsibleSteel-certified steel, or equivalent.
Low embodied carbon steel, with a defined specific emissions intensity which takes into account the proportion of end of life scrap.
Steel production is a major source of CO2 emissions for the automotive industry, averaging 33% of all production-related emissions for a new Volvo car in 2021. Globally, steel production is responsible for around 7% of all greenhouse gas emissions.
SteelZero was launched by the Climate Group in partnership with ResponsibleSteel, a steel industry-wide standard and certification body which 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.
As well as CO2 reductions, ResponsibleSteel also focuses on other important issues in the steel supply chain such as labor and human rights, engagement with local communities, water use and biodiversity impact.
The SteelZero signing is 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 steel maker SSAB to explore the development of fossil-free, high quality steel for use in the automotive industry through SSAB’s HYBRIT initiative. (Earlier post.)
Volvo Cars is the first car maker to work with SSAB and HYBRIT, an 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.
Last year, Volvo Cars introduced an internal carbon price of 1,000 SEK (US$102) for every tonne of carbon emissions from across its entire business, the first car maker to implement such a mechanism across all its operations. The aim is to future-proof its organization and be ahead of the regulatory curve, as it anticipates and favors more governments implementing carbon price 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 on the table.