Volvo Cars wants to be climate-neutral by 2040, and it has set its sights on a major vehicle component that’s notoriously difficult to decarbonize: steel. The automaker has partnered with Swedish company SSAB, which manufactures “fossil-free” steel, for a limited amount of the material to be used in a concept car as early as 2025.

A climate-neutral car is considered by many to be a moonshot goal, not least because of the challenge in decarbonizing components like steel. The steel industry, which sits at the heart of industrialized economies, accounts for around 8% of worldwide carbon emissions. In vehicles, steel and iron production amount to around 35% of emissions in an internal combustion engine vehicle and 20% in a battery electric car.

“It’s steel, it’s aluminum and it’s factories,” Volvo’s head of procurement Kerstin Enochsson explained to TechCrunch. “If we are solving the supply chains and making those supply chains much more sustainable, we are solving the absolute vast majority of the CO2 issues with cars.”

Recent innovations in green hydrogen production mean that fossil-free steel may soon become a reality. SSAB has developed a process to make steel using hydrogen, rather than coal. The hydrogen is produced via electrolysis, a process that uses renewable energy to split water into hydrogen and oxygen.

The steel will be produced at a pilot plant in Luleå, Sweden. The plant was started by SSAB under its HYBRIT initiative, a joint venture with Swedish utility Vattenfall and mining company LKAB. SSAB said it hopes to become a commercial-scale supplier of decarbonized steel by 2026.

Once it receives the material, Volvo will perform tests on its characteristics, such as its durability and heat resistance, Enochsson said. While Volvo declined to specify the exact amount of steel it will be receiving from SSAB, Enochsson specified it was a “project size,” rather than an amount for mass manufacture. But Volvo is also thinking long-term.

“From, say, 2025 and onwards, we can talk about, how do we industrialize? Because obviously, we want not only to have fossil-free steel and a concept car, but we want to use it very broadly. But we can’t take decisions today for industrialization, because we first need to see how this steel behaves,” she explained.

Enochsson said it was too early to say whether moving to decarbonized steel would raise the cost of a vehicle, but she expressed confidence that sustainability was an important factor to consumers. She also alluded to conversations Volvo was having with other sustainable steel manufacturers, but she declined to provide any details as to whether those conversations would yield future partnerships.

Volvo is not the only automaker that has expressed interest in sustainable supply chains. Polestar, the electric vehicle brand spun out of Volvo Car Group, said it wanted to create a climate-neutral car by 2030. EV startup Fisker has set a similar goal, for 2027.

“This is definitely a movement,” Enochsson said. “There are more and more OEMs expecting higher sustainability targets and it’s moving in the right direction. But it is a tremendous job to simply secure it all across.”

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