16% - 30% Car production emissions come from steel
Volvo is leading the way when it comes to greening the production of their chassis through cleaner steel, a new study for T&E shows. The study highlights that with up to 30% of car production emissions coming from steel, it is crucial that more companies focus on green steel made from renewable energy rather than from fossil fuels.
The leaderboard carried out by Lead the Charge assesses three key indicators for steel decarbonisation: transparency, targets for low-carbon steel and recycled steel, and signed agreements for near-zero emissions steel.
Volvo scores well across the board having set itself ambitious targets and having already signed a number of offtake agreements. Mercedes is close second when it comes to establishing purchase agreements with steel suppliers, having disclosed multiple agreements with suppliers in both Europe and North America. Tesla, GM and Ford make up the rest of the top five. Tesla continues to be the only company to disclose detailed scope 3 emissions from its steel supply chain.
Zachary Azdad, vehicles policy officer at T&E, said: “EVs are rapidly eliminating tailpipe emissions, but there is still work to do in reducing the carbon impact of car components. To remain competitive European carmakers need to take the lead in cleaning up their supply chains and components.”
In 2023, two-thirds of automakers achieved a score of zero on their efforts to decarbonise their steel supply chains. Just two years later, less than a third of carmakers scored zero, showing progress is being made, says T&E.
Europe’s automotive sector accounts for 17% of steel demand, while in the US and Germany it accounts for roughly 26%. This gives the automotive industry an outsized impact on the future of the burgeoning green steel industry, says T&E.
T&E calls on the European Commission to introduce rules that ensure that from 2030, carmakers are required to use a minimum of 40% green steel in new cars that are sold in the EU (including recycled steel), increasing to 75% by 2035 when green steel supply is expected to ramp up significantly and 100% in 2040 as part of the upcoming Industrial Decarbonisation Accelerator Act (IDAA). T&E also calls for carbon labels to be mandatory for all the steel that goes in cars.
The study comes as some carmakers, led by Mercedes boss Ola Källenius, are lobbying hard to relax the EU’s car CO2 standards which will effectively phase-out the sales of new petrol and diesel cars by 2035. Yet, to remain competitive in the global automotive market Europe’s carmakers must shift to electric as fast as possible, says T&E. Cleaning up the materials will not be enough on its own, it warns.
