In the news: Mercedes-Benz has signed a significant deal with H2 Green Steel, a Swedish company, for the long-term supply of low-emissions steel. This reflects the industry’s shift towards reducing greenhouse gas emissions in supply chains. The agreement ensures a steady steel supply for Mercedes’s European factories and explores the possibility of steel production in North America.
As an early investor in H2 Green Steel, Mercedes has committed to purchasing 50,000 metric tons of low-emissions steel for its European manufacturing plants. The type of steel provided by H2, known as flat steel, is used in vehicles’ body structure, panels, and doors.
H2 Green Steel, founded in 2020, aims to produce steel with minimal CO2 emissions. To achieve this, they will use hydroelectric power to create green hydrogen, which will be used as a heat source in their steel production process. This method is expected to reduce CO2 emissions by 95% compared to conventional steel plants.
The financing for H2’s plant in northern Sweden, amounting to over 5 billion euros ($5.35 billion), involved a combination of debt financing and equity investors. Debt and credit guarantees were obtained from various European banks, while equity investors covered the remaining funding. This financing model and long-term supply contracts like the one with Mercedes are seen as a scalable blueprint for the company’s expansion.
The partnership between Mercedes-Benz and H2 Green Steel demonstrates the automotive industry’s commitment to sustainability and reducing carbon footprints in the production of vehicles.