BMW Group extends its low-CO2 steel target, now with agreements in the US and China
One of the biggest sustainability initiatives by automobile manufacturers focuses on the materials used in their vehicles. One of these is steel, which accounts for 20% of total CO2 emissions in the supply chain, third only to battery cells and aluminium.
To reduce these emissions, the BMW Group opted last year to enter into a low-carbon steel supply agreement with the Swedish company H2 Green Steel. Also in Europe, the Group signed an agreement with Salzgitter AG to supply steel with lower CO2 emissions, with the aim of using the steel in the series production of cars at the BMW Group’s European plants from 2026. Other manufacturers have also made similar agreements, such as Volkswagen, Ford, and even Volvo, which secured the supply of CO2-neutral steel with SSAB, with whom Mercedes-Benz has also reached an agreement.
In addition, the Group has also established closed material cycles for steel plate scrap with several steel suppliers, returning the scrap to BMW Group plants for reuse.
While the BMW Group already has a Europe-wide agreement for the supply of CO2-reduced steel, it has now announced the extension of its target to the United States and China, for which it has made new agreements. BMW AG Board of Management member responsible for Purchasing and Supplier Network, Joachim Post, said:
“Steel is one of the main sources of CO2 emissions in our supply chain. That is why we are comprehensively reorganising our steel portfolio in order to be able to supply our global production network with more than one-third CO2-reduced steel from 2026. This will reduce the carbon footprint of our supply chain by 900,000 tonnes per year, while driving the transformation of the steel industry.”
For the US, the Group has announced agreements with domestic steel producers Steel Dynamics (SDI) and Big River Steel, as well as a U.S. Steel facility to use renewable energy sources in its local steel production. In the US and Mexico, the Group’s flat steel is supplied through the electric arc furnace (EAF) steelmaking process, which relies on electric power to melt iron and steel scrap.
This manufacturing process has a significant CO2 saving potential compared to coal-fired steel production in a large furnace. CO2-reduced steel is used at the BMW Group’s plants in Spartanburg and San Luis Potosi to create BMW vehicle bodies.
In addition to sourcing CO2-reduced steel, the BMW Group has also invested in a new method for CO2-free steel production developed by US startup Boston Metal, through its venture capital fund, BMW i Ventures. The company uses an electrolysis cell to produce molten iron, which is then transformed into steel.
In China, the BMW Group has announced the signing of an agreement with steelmaker HBIS Group, which will supply the BMW Group’s Shenyang plants with CO2-reduced steel from 2023. HBIS Group is gradually transitioning to a hydrogen-based method in combination with electric arc furnace steelmaking to achieve further CO2 reduction from 2026. The BMW Group will be the first automobile manufacturer in China to use HBIS Group’s CO2-reduced steel in series production.
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