Volvo Cars said Wednesday it will explore the development of fossil-free steel for its vehicles and components with Swedish steelmaker SSAB as part of its push to become a climate neutral company by 2040.
Of the total CO2 emissions from the material and production of the components going into Volvo's cars, about 35 percent comes from creating the steel and iron needed for a gasoline- or diesel-powered model.
That number drops to 20 percent in a full-electric car.
Volvo estimates by switching to fossil-free steel it will reduce those numbers by at least 90 percent, head of procurement Kerstin Enochsson told Automotive News Europe.
Volvo will start testing steel made from hydrogen-reduced iron as early as this year, with the aim of using it in a concept car within the coming years and eventually becoming the first automaker to build vehicles with fossil-free steel.
SSAB plans to supply the market with fossil-free steel at a commercial scale by 2026.
Volvo is the first automaker to collaborate with SSAB as part of its so-called HYBRIT initiative. HYBRIT was started by SSAB, iron ore producer LKAB and energy firm Vattenfall. The aims is to replace coking coal, traditionally needed for iron ore-based steelmaking, with fossil-free electricity and hydrogen.
"As we continuously reduce our total carbon footprint, we know that steel is a major area for further progress," Volvo CEO Hakan Samuelsson said in a release. "The collaboration with SSAB on fossil-free steel development could give significant emission reductions in our supply chain."
Enochsson said the project with SSAB is focused on its steel needs in Europe.
She said the automaker will seek out separate deals for fossil-free steel with local producers that can supply its factories in the U.S. and China.
She declined to provide a timeline on when those deals could be announced.