The push for decarbonization is part of the car maker’s global ESG strategy.

Mercedes-Benz has signed a supply agreement with Swedish start-up H2 Green Steel (H2GS) to purchase 50,000 metric tonnes (55115 tons) of “green steel” per year for its European press shops. The car maker and steel company have also signed a memorandum of understanding to establish North American production and supply chains for the sustainably produced raw material.
Mercedes-Benz took an equity stake in H2GS in 2021 in an effort to eventually use the green steel in series production. The supply deal is set to start production in 2025—the steel will be produced in H2 Green Steel’s green hydrogen powered iron and steel plant in Boden in northern Sweden.
H2GS says it produces its green steel using a new manufacturing process developed. Steel produced using a classic blast furnace emits an average of more than two tons of carbon dioxide per ton of steel produced. The new process uses hydrogen and electricity from renewable energy sources instead of coking coal in steel production. The hydrogen is the reduction gas, which releases and binds the oxygen from the iron ore, producing water vapor instead of carbon dioxide. H2GS says it’s targeting 0.4 tons of carbon dioxide per ton of steel by the start of the supply deal.
“H2 Green Steel exists because pioneering companies in the automotive industry, like Mercedes-Benz, signaled the transition in the steel industry was too slow for them to meet their climate targets,” said Henrik Henriksson, CEO, H2 Green Steel. “Working side-by-side with Mercedes Benz, we have a partner with whom we can raise the bar when it comes to supply chain emissions, circularity and social sustainability.”
As part of a broader effort to decarbonise the supply chain, Mercedes-Benz and H2GS agreed to try to establish a supply chain for green steel produced in North America for local Mercedes-Benz manufacturing plants.
“We have talked to different stakeholders in both Canada and the U.S. for some time and the possibility to leverage a large supply of renewable electricity for the production of green hydrogen and green sponge iron that can feed a sustainable steel production is a very interesting prospect for H2 Green Steel as it continues to push the steel value chain to decarbonize globally”, says Henriksson.
Extending the strategic partnership with H2GS to North America is part of Mercedes-Benz strategy of procuring materials close to its production sites.
“With the supply deal of around 50,000 tonnes almost CO₂-free steel from H2 Green Steel for our manufacturing plants in Europe, Mercedes-Benz and H2 Green Steel are accelerating the creation of a decarbonised, regional and resilient steel supply chain,” said Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG. Chief Technology Officer, Development & Procurement. “At the same time, we are taking our partnership to the next level with the aim of establishing a sustainable steel supply chain in North America, another important step towards making the auto industry more resilient and sustainable.”
Decarbonizing the supply chain
Mercedes-Benz is working with all its suppliers towards a net-carbon neutral supply chain by 2039. The luxury carmaker is retooling its supply chain to focus on the prevention and reduction of carbon dioxide emissions rather than off-setting emissions through the purchase of credits.
The carmaker has introduced low-CO₂ steel made from scrap into four series models, cutting emissions for the respective steel grades by more than 60 percent. It has also recently announced plans to use aluminium with almost 70 percent CO₂-reduction compared with the European average into series production. It also has plans to increase the ratio of recycled raw materials in its passenger car fleet to an average of 40 percent.
Mercedes-Benz is a member of the Responsible Steel Initiative and is actively involved in the development of a certifiable sustainability standard for the steel industry to ensure environmentally compatible and socially acceptable steel production alo