Volvo aims to build cars with fossil-free steel by 2026

Swedish steelmaker SSAB said on Wednesday it had agreed with Volvo Cars to start a joint-venture to explore the development of fossil-free steel to use in the automotive industry.

The carmaker is aiming to be the first to source green steel from its HYBRIT venture, which is owned by SSAB, Vattenfall and LKAB.

"This steel will be used for testing purposes and may be used in a concept car," SSAB said in a statement.

The project began in 2020 and attempted to replace coking coal in the process of making steel with fossil-free electricity and hydrogen. It aims for a demonstration plant to be ready in 2026.

At the moment, steel-making is one of the biggest contributors to carbon emissions but it is one of the harder sectors to decarbonise.

Volvo estimates the steel in its petrol and diesel cars accounts for 35% of carbon emitted during production.

"Together with Volvo Cars, we aim to develop fossil-free steel products for cars of the future," SSAB said.

Substituting coking coal for hydrogen is expected to reduce emissions from steelmaking by at least 90%.

Kerstin Enochsson, Volvo’s head of procurement, said it was too early to say what effect the new technology would have on car prices, but added that the carmaker saw environmental sustainability as a key part of its attraction to buyers.