(Bloomberg) -- Swedish steelmaker SSAB AB is teaming up with Volvo Cars to develop fossil-free steel for use in the automotive industry.
Volvo Cars will be the first carmaker to secure the greener steel, SSAB said in a statement on Wednesday. Volvo Cars will use the material for testing and possibly in a concept car, it said.
For the automaker, the project is about cutting carbon emissions to supply an increasing number of consumers looking for a car that's as sustainable as possible, said Kerstin Enochsson, global head of procurement.
The steel is made from hydrogen-reduced iron from a pilot plant in Lulea, Sweden. The Hybrit project, run by SSAB with iron ore producer LKAB and utility Vattenfall, seeks to remove fossil fuels from the highly polluting steel-making value chain by replacing coking coal with hydrogen and clean energy. Commercial-scale production is set to start in 2026.
SSAB has already announced a similar collaboration with Volvo AB, a maker of trucks. It will now focus on existing strategic partnerships, Chief Executive Officer Martin Lindqvist said by phone. “It's possible that there's room for one or two more, but not much more.”
Read More: SSAB in ‘Pole Position' in Green Steel Race
“Right now the supply is limited, but we see that an increased demand will come, and with this comes an increased supply” of green steel, Enochsson at Volvo Cars said in an interview.
Steel is “an important piece of the puzzle” to help meet sustainability goals, she said. “We have to show that it's possible.”
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