Mercedes-Benz has signed a supply agreement with Swedish start-up H2 Green Steel (H2GS) (earlier post) over approximately 50,000 tonnes almost CO₂-free steel per year for its European press shops and deepened its partnership through a Memorandum of Understanding (MoU) with the aim to establish a sustainable steel supply chain in North America.

Mercedes-Benz took an equity stake in H2GS in 2021; (earlier post); the new supply agreement enables Mercedes-Benz to bring almost CO₂-free steel into series production. The partner plans to start its production during 2025.

As part of a broader effort to decarbonize the supply chain, Mercedes-Benz and H2GS agreed to aim to establish a supply chain for green steel produced in North America for local Mercedes-Benz manufacturing plants. Extending the strategic partnership with H2GS to North America marks another important milestone in increasingly pursuing the strategy of procuring close to Mercedes-Benz production sites.

By using a new, innovate manufacturing process, the production of steel at the H2GS production site is almost CO₂-free. By contrast, steel produced using a classic blast furnace emits an average of more than two tons of CO₂ per ton. In the new process, the supplier uses hydrogen and electricity from 100% renewable energy sources instead of coking coal in steel production. The hydrogen serves as a reduction gas, which releases and binds the oxygen from the iron ore.

Unlike the use of coking coal, this does not produce CO₂, but water vapor. H2GS aims to achieve a footprint of 0.4t CO₂ per ton of steel at start of supply.

Mercedes-Benz is working with all its suppliers towards a net-carbon neutral supply chain from 2039 at the latest. To achieve its climate goals, the luxury carmaker is retooling its supply chain to focus on the prevention and reduction of CO₂ emissions rather than off-setting. Already, the brand has introduced low-CO₂ steel made from scrap into four series models. This allows CO₂ emissions for the respective steel grades to be cut by more than 60%.

Moreover, Mercedes-Benz recently announced to bring aluminum with almost 70% CO₂-reduction compared with the European average into series production as the lightweight material is becoming increasingly important for electric vehicles.

At the same time, Mercedes-Benz aims to increase the share of secondary raw materials in its passenger car fleet to an average of 40%. Mercedes-Benz and H2GS agreed to collaborate on levers to increase the scrap content accordingly.

In addition to consequently reducing CO₂ emissions, the company is committed to a responsible steel supply, relying on the application of recognized standards and robust certificates. Mercedes-Benz and H2GS share the same understanding of sustainability and intend to establish highest standards in terms of human rights due diligence along the steel supply chain. Mercedes-Benz is a member of the Responsible Steel Initiative and is actively involved in the development of a certifiable sustainability standard for the steel industry. The aim is to ensure environmentally compatible and socially acceptable steel production along the entire value chain.