Steel is vital for car manufacturing but emissions-intensive. Achieving transport CO₂ targets requires a shift to green steel, and the automotive sector can drive demand and scale the European green steel market
19% of EU steel is used in car manufacturing
16 - 27 % of the CO₂ emissions of producing a car come from steel
Steelmaking is very energy-intensive, with coal-based technology currently dominating the industry. The sector is a big emitter and responsible for 7% of global CO₂ emissions. Its share of total EU emissions is 5%. With global steel demand projected to grow by more than a third by 2050, there is a pressing need to develop green steelmaking processes for all sectors that use it. Green steel is the manufacturing of steel without the use of fossil fuels. It is produced by using green hydrogen and/ or recycled steel.
In the EU, steel companies currently have plans to increase green steel capacity by 34 million tons by 2030, but many companies have put their plans on hold or delayed them. This means we are at risk of missing our climate targets in the industry sector. Consequently this will not only jeopardise thousands of industrial jobs in Europe, but also the future competitiveness of an entire industry, while China will already start its green steel production in 2026.
Unlocking the potential of green steel in cars, explained in under two minutes
The automotive sector accounts for around 19% of EU steel consumption, making it one of the most important consumers of steel in Europe.
Steel is an important part of manufacturing emissions, with estimates ranging from 16% to 27%. For electric vehicles, which have no tailpipe emissions, CO₂ from the production phase - also known as the vehicle’s embedded emissions - will account for around 60% of their total lifecycle emissions by 2030.
As cars — particularly premium models — have relatively high margins, manufacturers are well placed to absorb the short-term costs of cleaner materials.
This is why by committing to using green steel at scale, carmakers can help unlock investment, accelerate deployment of clean steelmaking technologies, and drive down costs across the wider steel market.
By committing to green steel at scale, carmakers can help unlock investment, accelerate deployment of clean steelmaking technologies, and drive down costs across the wider steel market.
T&E research found that a shift to 40% green steel in new cars by 2030 would:
Increase the price of an electric vehicle by just €57
Reduce car manufacturing emissions by 6.9 million tonnes of CO₂
By 2040, cost impacts are expected to fall close to price parity, at around €8 per vehicle. This shows that green steel is both a climate solution and a cost-effective pathway for the automotive sector to reach net-zero manufacturing.
Together with the Lead the Charge network, we assessed car manufacturers’ commitments to green steel across three key areas:
Disclosure: Does the company publish greenhouse gas emissions along the steel supply chain?
Target Setting and Progress: Has the company set specific targets for the use of green steel? Is progress toward these targets publicly available?
Supply Chain Levers: Are concrete measures being implemented to decarbonise steel supply chains, such as contractual purchases?
Volvo leads the ranking and performs well across all indicators. While many manufacturers still lag behind, progress is accelerating. In 2023, two-thirds of car manufacturers scored zero points in the comparative ranking. In 2025 less than one-third of manufacturers scored zero points. To sustain this trend, the automotive industry needs a clear legal path for the use of green steel in new vehicles.
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