Mercedes-Benz AG is the first car manufacturer to take an equity stake in Swedish start-up H2 Green Steel (H2GS) as a way to introduce CO2 free steel into series production.
H2GS successfully closed its Series A equity financing of $105 million from a select group of investors, including: Mercedes-Benz AG, Altor Fund V, Ane & Robert Maersk Uggla, BILSTEIN GROUP, EIT InnoEnergy, Exor, FAM, IMAS Foundation, Kingspan, Marcegaglia, Scania, SMS Group, Stena Metall Finans, Cristina Stenbeck, Daniel Ek, and Vargas.
This investment is part of the car manufacturer commitment to reduce by 2025 its CO2 footprint in the production side of its business by just using green steel in its vehicles.
Together with its steel suppliers, the company is retooling its supply chain to focus on the prevention and reduction of CO2 emissions rather than compensation. The partnership with HSGS is another step towards CO2 neutrality, which Mercedes-Benz is pursuing as part of Ambition 2039, its goal to achieve a fully connected and CO2 neutral vehicle fleet in 2039, eleven years earlier than the EU legislation requires.
The global steel industry is one of the world’s largest emitters of carbon dioxide, representing approximately seven percent of global CO2 emissions. Demand for fossil-free steel is growing rapidly with strong interest from global market leaders in sectors such as automotive, commercial vehicles, white goods, furniture, and construction.
The investment in H2GS comes on the heels of other agreements closed this same month by Daimler AG, aimed to push tne manufacturing of electric trucks and the development of green mobility in the trucks segment.
Last 20th May Mercedes-Benz Trucks signed three agreements: The first one, aimed to establish a strategic charging infrastructure partnership with Siemens Smart Infrastructure, ENGIE and EVBox Group; the second one, signed with Shell intends to accelerate the rollout of hydrogen-based trucking in Europe: simultaneously building truck refuelling infrastructure and rollout of fuel-cell vehicles; and the third one expands the global partnership with CATL for the joint development of sophisticated truck-focused batteries and supply agreed beyond 2030.
About H2 Green Steel
H2 Green Steel (H2GS) was founded in 2020, aiming to build a large-scale fossil-free steel production facility in northern Sweden. H2GS will produce 5 million tons of fossil-free steel by 2030. By doing this, the company will contribute to the decarbonizing of the European steel industry, one of the largest carbondioxide emitters. H2GS will establish operations in Boden and Luleå. The founder and largest shareholder is Vargas, which is also co-founder and one of the largest shareholders in Northvolt.
Henrik Henriksson, CEO, H2 Green Steel, said:“We’ve seen a tremendous interest, both from the industry, future customers and long-term investors, in our mission to bring down co2-emissions to zero in the steel industry. Investors all over Europe understand that the climate crisis is the biggest challenge of our time and that a transformation of the industry is necessary. Our closing of the Series A is an important milestone that gives us continued momentum for the journey ahead”.
The global steel industry is one of the world’s largest emitters of carbon dioxide, representing approximately seven percent of global CO2 emissions. Demand for fossil-free steel is growing rapidly with strong interest from global market leaders in sectors such as automotive, commercial vehicles, white goods, furniture, and construction.
On February 23rd, 2021, the Swedish venture H2GS announced its plan to become a large-scale steel producer and build a greenfield steel plant in northern Sweden. The plant will be located in Boden, offering unique conditions for cost competitive fossil-free steel production. The project includes a giga-scale green hydrogen plant as an integrated part of the steel production facility. Production will begin in 2024 and, by 2030, H2GS plans having annual production capacity of five million tons of high-quality steel.
H2 Green’s steel CO2 free manufacturing technology
By using a new, innovate manufacturing process, the production of steel at the supplier level is 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. The supplier uses electricity from 100% renewable sources for the energy requirements generated in the manufacturing process.
Towards a CO2 neutral Mercedes-Benz supply chain
Mercedes-Benz AG pursues the goal of a CO2 neutral new car fleet along the entire value and supply chain. Suppliers representing more than 85% of Mercedes-Benz’s annual purchasing volume have already signed an Ambition Letter, agreeing to supply the company only with CO2 neutral products in the future. This includes important steel suppliers. At the same time, Mercedes-Benz is working with its partners to gradually increase the proportion of secondary materials in components and materials.
Active engagement for a sustainable steel supply chain
Mercedes-Benz and all its steel suppliers are working consistently to reduce CO2 emissions in the steel supply chain on the way to producing green steel. In addition, the company is committed to a responsible steel supply, relying on the application of recognized standards and robust certificates.
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 friendly and socially acceptable steel production along the entire value chain.
