Volvo Cars Steers Towards Sustainable Manufacturing Through SteelZero Initiative

Mobility Outlook Bureau
05 Jun 2022
10:00 AM
3 Min Read

The new initiative aims to increase demand for fossil-free steel and accelerate a transition to carbon neutrality in the global steel industry.

Volvo Cars

“Environmentally friendly cars will soon cease to be an option, they will become a necessity,” said Fujio Cho, President, Toyota Motors, during the North American International Auto Show in 2004.

It is said that the goal of sustainability can not just merely be achieved by switching to an eco-friendly powertrain; rather, the work has to start with the way vehicles are manufactured.

Aligning with this, the Swedish carmaker Volvo recently announced to sign up for the SteelZero initiative, aiming to underline its position as a leader in climate action.

Earlier in 2021, while announcing its sustainability goals, Håkan Samuelsson, Chief Executive, Volvo Cars, said, “Sustainability is now as important as safety to us.”

It must be noted that the company plans to become a climate-neutral company by 2040, and to attain that, it aims to have climate-neutral manufacturing as one of the critical steps towards the goal.

The company said that the new initiative aims to increase demand for fossil-free steel and accelerate a transition to carbon neutrality in the global steel industry.

By signing up to SteelZero, it commits itself to stringent CO2-based steel sourcing requirements by 2030, and by 2050, all the steel it sources should be net-zero steel.  

Kerstin Enochsson, Chief Procurement Officer, Volvo Cars, said, “We are pleased to join the SteelZero initiative and support its ambitions to transform the steel industry. By signaling our demand for responsibly sourced low- and zero-carbon steel, we aim to help drive an increased supply to our sector.”

Interestingly, 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, while globally, steel production is responsible for around 7% of all greenhouse gas emissions.  

Enochsson said, “A sustainable approach to steelmaking is not just good news for the environment, it is also good business because it limits our exposure to future climate risks and regulations.”

The Climate Group launched SteelZero in partnership with ResponsibleSteel, a steel industry-wide standard and certification body which Volvo Cars will also join.

Jen Carson, Head of Industry, Climate Group, said, “Volvo Cars joining SteelZero marks an important step change in the global demand signal for low-emission and net-zero steel, and a pivotal moment for the automotive industry.”

Through ResponsibleSteel, the carmaker also 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 labour and human rights, engagement with local communities, water use and biodiversity impact.

Other Initiatives 

Prior to signing the SteelZero initiative, the company announced a collaboration with Swedish steel maker SSAB last year to jointly explore the development of fossil-free, high-quality steel for use in the automotive industry through SSAB’s HYBRIT initiative, making it the first carmaker to work with SSAB and HYBRIT.

HYBRIT aims to replace coking coal, traditionally needed for iron ore-based steelmaking, with fossil-free electricity and hydrogen. The result is expected to be the world’s first fossil-free steelmaking technology, with virtually no carbon footprint, Volvo Cars said.

The company’s ambition to be climate neutral by 2040 is part of its comprehensive climate action plan. In addition, it aims to become a fully electric car maker by 2030 and plans to roll out a whole new family of pure electric cars in the coming years.

The electrification plans are part of its ambition to reduce the lifecycle carbon footprint per car by 40% between 2018 and 2025, including reducing carbon emissions in its supply chain by 25% by 2025.

In terms of its operations, the company aims for climate-neutral manufacturing by 2025. Currently, all of its cars in European plants run on 100% clean electricity, while its Torslanda plant in Sweden is fully climate neutral. Besides, its Chengdu and Daqing sites in China are also powered by climate-neutral electricity.

Last year, Volvo Cars introduced an internal carbon price of SEK 1,000 (about $105) for every tonne of carbon emissions from across its entire business, intending to future-proof its organisation and be ahead of the regulatory curve.

The company noted that it anticipates and favours more governments implementing a carbon price in the 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 lifecycle. 

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. 

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