Harnessing wind and hydroelectric power from the Arctic Circle: BMW Group plans to source steel produced with green power and hydrogen from northern Sweden

Munich. The BMW Group continues to push forward with
climate protection and is systematically pursuing its goal of
significantly reducing CO2 emissions at their source in the
supply chain. From 2025 on, the company plans to source steel produced
with up to 95% less CO2 emissions and without requiring
fossil resources such as coal. The BMW Group has now reached an
agreement to this effect with the Swedish startup H2 Green Steel,
which uses hydrogen and only green power from renewable energies for
steel production. Owing to its particularly energy-intensive
manufacturing process, steel production is considered one of the main
sources of global CO2 emissions.

“Our goal is to reduce CO2 emissions in our steel supply
chain by about two million tonnes by 2030. Sourcing steel produced
using hydrogen and green power can make a vital contribution to this,”
says Dr Andreas Wendt, member of the Board of Management of BMW AG
responsible for Purchasing and Supplier Network. “Steel is essential
for producing cars and will be no less important for future vehicle
generations. Innovative technologies that enable virtually carbon-free
production of steel have a significant impact on our ability to reduce
CO2 emissions in our steel supply chain.”


Closed-loop material cycle
In addition to the
delivery of steel produced using green power, the BMW Group and H2
Green Steel have also agreed to create a closed-loop material cycle.
H2 Green Steel will take back sheet metal remnants, such as those
produced at press plants when doors are punched out, and will process
them in such a way that they can be shipped back to the plants as new
steel rolls, also known as steel coils. In this way, raw materials can
be used multiple times in a circular economy and natural resources
protected. Since it requires less energy to produce, secondary steel
lowers CO2 emissions by an average of 50-80%, compared to
primary material.

The BMW Group is already using between 20% and 100% secondary steel
in its vehicles and will continue to increase this percentage in the
future. BMW Group press plants in Europe process more than half a
million tonnes of steel per year.


Ideal location in northern Sweden

H2 Green Steel is building its steel production site in the province
of Norrbotten in northern Sweden, close to the Arctic Circle. The
region is best known for its reindeer and spectacular northern lights,
but also provides access to high-quality iron ore, plentiful energy
from renewable sources such as hydroelectric and wind power, a major
seaport and generations of steel production know-how.

Unlike conventional processes that rely on coke for making steel, the
company employs hydrogen produced using green power to remove the
oxygen from the iron oxide. This so-called direct reduction of iron
ore produces almost no CO2 at all, only water – thereby
avoiding 95% of the CO2 emissions normally produced. The
specially built hydrogen power plant, which uses water and green power
from across the region, will be directly integrated into the steel
production plant. The company also uses local green power for the
remainder of the manufacturing process.


BMW Group to source Northvolt battery cells from the same
region from 2024 on

Swedish company Northvolt, which develops and produces battery cells
for electric cars, is also exploiting the potential for green power in
the north of Sweden.

Last year, the BMW Group signed a long-term battery-cell supply
contract with Northvolt. The battery cells will be produced in Europe
at the Northvolt gigafactory currently under construction in
Skellefteå in northern Sweden from 2024. The company will use only
green electricity from local wind and hydroelectric power to produce
the battery cells.


Neue Klasse poised to set new standards

From 2025 onwards, the BMW Group will be realigning its product range
– which has grown successfully over decades –on the basis of the Neue
Klasse. The Neue Klasse will be characterised by three key aspects: a
completely redefined IT and software architecture, a new generation of
high-performance electric drive trains and batteries and a radically
new level of sustainability across the entire vehicle lifecycle. These
strands are interwoven within an overall vehicle architecture that has
been uncompromisingly optimised for electric drive trains, setting a
new benchmark in terms of digitisation and electrification, while at
the same time ensuring that the characteristic flair of a typical
BMW is transferred to future vehicle generations.


Active commitment to environmental and social standards in the
steel supply chain

As part of its involvement with the not-for-profit organisation
ResponsibleSteel, the BMW Group actively participated in establishing
environmental and social standards throughout the entire steel value
chain, starting at the mine. This sustainability standard for
production sites in the steel industry was published in 2019 as part
of a multi-stakeholder process and now forms the basis for
certification. ResponsibleSteel is the steel industry’s first global
multi-stakeholder standard and certification initiative.