Mercedes-Benz AG is the first automaker to take a stake in Swedish start-up H2 Green Steel (H2GS) to introduce CO₂ free steel in series production. In collaboration with its steel suppliers, the company is reorganizing its supply chain to focus on the prevention and reduction of CO₂ emissions rather than offsets.

With a stake in H2 Green Steel, Mercedes-Benz is sending an important signal to accelerate change in the steel industry and increase the availability of carbonless steel. As a first step, we invest an amount of one-digit million. As a privileged partner of the start-up, we will launch green steel in various vehicle models from 2025.

—Markus Schäfer, member of the board of directors of Daimler AG and Mercedes-Benz AG; Head of Research for the Daimler Group and COO of Mercedes-Benz Cars

A Mercedes-Benz sedan, for example, is made of around 50% steel, which represents around 30% CO₂ emissions in production. With this partnership, Mercedes-Benz is tackling one of the automotive industry’s biggest challenges on the CO route₂ neutrality.

Using an innovative new manufacturing process, steel production at the supplier level is CO2 free. On the other hand, the steel produced from a conventional blast furnace emits on average more than two tonnes of CO.₂ 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 in the iron ore. Unlike using coking coal, this does not produce CO₂, but water. The supplier uses electricity from 100% renewable sources for the energy needs generated in the manufacturing process.

Mercedes-Benz and all of its steel suppliers are constantly working to reduce CO₂ emissions in the steel supply chain on the way to green steel production. In addition, the company is committed to responsible steel sourcing, based on the application of recognized standards and robust certificates. Mercedes-Benz is a member of the Responsible Steel Initiative and actively participates in the development of a certifiable sustainability standard for the steel industry.

H2 Green Steel (H2GS) was founded in 2020 and aims to build a large scale fossil fuel free steel production facility in northern Sweden. H2GS will produce 5 million tonnes of non-fossil steel by 2030. H2GS will establish operations in Boden and Luleå. The founder and principal shareholder is Vargas, who is also a co-founder and one of the principal shareholders of Northvolt.

Partnering with HSGS is another step towards CO₂ neutrality, pursued by Mercedes-Benz as part of Ambition 2039, its objective of achieving₂– neutral vehicle fleet in 2039 – eleven years earlier than required by European legislation.