From gray to green
© Schaeffler
November 2021

From gray to green

By Björn Carstens
On the road toward making its supply chains climate-neutral by 2040, automotive and industrial supplier Schaeffler has entered into an important agreement. Starting in 2025, the company will be buying 100,000 metric tons (110,000 short tons) of “green” steel per year from a Swedish startup. The steel will be produced with hydrogen.

For a long time, climate-wrecking coal was deemed to be irreplaceable in steel production. Now, innovative companies are showing that alternatives exist. With renewable hydrogen, the carbon footprint of steel can be reduced significantly. To achieve its sustainability goals, Schaeffler is planning to buy 100,000 metric tons (110,000 short tons) of strip steel per year from Sweden starting in 2025. The H2 Green Steel (H2GS) startup requires no fossil fuels in the production process, which is why the steel is said to be nearly carbon-neutral.

200,000 metric tons (220,000 short tons) of CO2 emissions less per year

Schaeffler is the first so-called tier-1 supplier worldwide to become a customer of H2GS. Automotive suppliers supplying to automotive manufacturers directly are referred to as tier-1. Schaeffler intends to reduce its annual CO2 emissions by 200,000 metric tons (220,000 short tons) through the offtake agreement with H2GS.

“We process a significant amount of steel and view this as a crucial driver in supporting decarbonization. Schaeffler is already relying increasingly on low-carbon steel production processes among its suppliers today.”

From gray to green
Andreas Schick, Chief Operating Officer at Schaeffler AG© Schaeffler
Green steel from renewable sources

H2 Green Steel (H2GS) was founded in 2020 and aims to produce five million metric tons (5.5 million short tons) of virtually CO2-neutral steel annually in Sweden by 2030. “We are delighted to have found a global and experienced partner in Schaeffler, to support us in our goal of decarbonizing the steel industry, and with whom we can work toward making the world more sustainable for the future,” says Henrik Henriksson, CEO of H2GS. As a greenfield project, the company is planning a new steel site with networked and digital production that will produce “green steel” in the towns of Boden and Luleå. The first European steelworks in around 40 years is being constructed there, together with a dedicated production facility for hydrogen generation.

From gray to green
Starting in 2025, Schaeffler will be purchasing 100,000 metric tons (110,000 short tons) of strip steel per year from Sweden© Schaeffler

The production of green steel is energy-intensive and must be done from sustainable sources. Northern Sweden offers excellent conditions for this. The production of steel without carbon dioxide is realized by H2GS through the use of the direct reduction method, in which hydrogen produced from renewable energies is used instead of coking coal, thus enabling a 95-percent reduction in the CO2 emissions produced with previous methods. The founder and majority shareholder of H2GS is Vargas Holding, a co-founder and major shareholder of the Swedish battery cell manufacturer Northvolt.

Klaus Rosenfeld, Chief Executive Officer of Schaeffler AG, says: “The use of green hydrogen for the direct reduction of iron ore is a crucial component in making steel clean and sustainable in the future. Hydrogen is an important technology and growth area for Schaeffler. Against this background, the partnership with H2 Green Steel is a very important step for us in advancing the topic of sustainability.”

Additional background information on green steel
From gray to green© Getty

Steel production is responsible for eight to ten percent of worldwide carbon dioxide emissions. It’s time to change things: with green hydrogen and new technology approaches. Continue reading.

Climate neutrality: These are Schaeffler’s plans
From gray to green© Schaeffler

By 2040, Schaeffler, the automotive and industrial supplier with worldwide operations, is planning to achieve climate neutrality – not only at its own production sites but along the entire supply chain. Continue reading.