BMW Group Significantly Increases Use of Low-carbon Steel

Bennett Oghifo

The BMW Group continues to reduce CO2 emissions in its supplier network as part of its ambitious ongoing sustainability activities. Steel produced using natural gas or hydrogen and green power, instead of fossil resources like coal, makes a vital contribution to this. The BMW Group has now signed a corresponding agreement with Salzgitter AG for delivery of low-carbon steel. The steel will be used in standard production of cars at the BMW Group’s European plants from 2026 onwards. With this move, the BMW Group is expanding its sourcing of low-carbon steel to two suppliers. The aim is to use low-carbon steel to meet over 40% of demand at its European plants by 2030, thereby reducing CO2 emissions by up to 400,000 tonnes per year.

“This is an important step in substantially reducing CO2 emissions at source in the supplier network,” said Joachim Post, member of the Board of Management of BMW AG responsible for Purchasing and Supplier Network. “Our aim is to reduce vehicles’ lifecycle carbon footprint with a holistic approach. With steel, in particular, we are leading the way by sourcing low-carbon steel for our plants in Europe in the future.”

“Salzgitter AG is putting ‘circularity’ at the centre of its new strategy,” said Gunnar Groebler, CEO of Salzgitter AG. “We firmly believe that closed loops of recoverable materials can only realise their full effect with strong partners. We are delighted about the circular economy cooperation with the BMW Group and the agreement to supply green steel to our long-standing customer. Partnering for Transformation – this is how we will translate our new corporate vision into practice.”

Agreements with two suppliers on low-carbon steel will meet over 40% of steel demand at European plants

The BMW Group already signed an agreement with Swedish startup H2 Green Steel in October of last year. H2 Green Steel will supply the BMW Group’s European plants with steel produced exclusively using hydrogen and green power from renewable energies from 2025 onwards. This process will reduce CO2 emissions by around 95%.

Together, the two agreements will supply over 40% of the steel required by the company’s European plants and save around 400,000 tonnes of CO2 emissions per year. BMW Group press plants in Europe process more than half a million tonnes of steel per year.

Gradual transition to low-carbon steel production

Due to its energy-intensive manufacturing process, steel production generates high CO2 emissions. However, because of its versatility, steel is one of the most important materials for car production and will continue to account for a large proportion of the body and many components.

To lower CO2 emissions from steel production on a massive scale, Salzgitter AG is gradually switching to virtually carbon-free production. Electricity from renewable sources and its use in production of hydrogen from electrolysis are key elements of the transformation. This green hydrogen will replace the coal currently used in the conventional blast-furnace process. This is made possible by so-called direct reduction plants, which use hydrogen to directly reduce iron ore to iron in the solid state. The solid iron produced in this way is then melted down with steel scrap in an electric arc furnace powered by renewable electricity.

Salzgitter AG plans to use this method to gradually reduce CO2 emissions from steel production to around 5% of what they originally were.