BMW Group and H2 Green Steel have signed a final contract on the delivery of CO₂-reduced steel. The agreement addresses BMW Group’s upstream scope 3 emissions and includes recycling and end-of-life management measures. (Earlier post.)

As part of solidifying a binding agreement, BMW Group and H2 Green Steel have also agreed on technical cooperation which will include several measures that address BMW Group’s Science Based Targets and contribute to meeting its CO₂reduction timeline.

H2 Green Steel is committed to the Scope 1, 2 and upstream Scope 3 requirements as defined in the GHG Protocol. The company has a gross embodied carbon emission intensity obligation per tonne of steel, included in its customer contracts. H2 Green Steel’s work to reduce emissions will impact BMW Group’s material supply chain and its upstream Scope 3 emissions.

Additionally, recycling scrap is an important part of the equation which further ensures circularity. In a pioneering move, both companies have therefore agreed to have 40% of the pre-consumer steel scrap of the volumes returned to H2 Green Steel's electric arc furnaces for re-cycling.

According to H2 Green Steel’s definition of green steel, actual CO₂ reductions and improving circularity are both key. Therefore, green steel must be produced from a combination of a significant amount of green virgin iron and scrap in a production process which uses electricity from renewable energy sources. The total CO₂ emissions in such a process must be more than 90% lower than that of traditional steelmaking in a blast furnace process.

H2 Green Steel (H2GS AB) was founded in 2020 with the ambition to accelerate the decarbonization of the steel industry, using green hydrogen. Steel, which is one of the world’s largest carbon dioxide emitters, is the company’s first business vertical. The founder and largest shareholder of H2 Green Steel is Vargas, which is also co-founder and one of the larger shareholders in Swedish battery maker Northvolt. H2 Green Steel is headquartered in Stockholm, Sweden, with its first green steel plant under development in Boden, northern Sweden.

In the H2 Green Steel process, traditional blast furnace-based technology is replaced by direct reduction reactors. The direct reduction reactors have been up and running for more than 50 years in places where natural gas can be procured cheaply. In a natural gas feed reactor, the iron ore reduction takes place with both carbon monoxide to produce sponge iron and carbon dioxide and hydrogen to produce sponge iron and water. H2 Green Steel will replace the natural gas with green hydrogen to only allow for sponge iron and water to be produced.

In addition, the company will electrify every process step of the entire production flow. In this way, virtually the only emissions are steam, reducing carbon dioxide emissions by up to 90% from the outset, with the aim of reducing emissions to zero.

The plant will be fully integrated, with hot charging at each step along the production flow. This limits the amount of energy used, storage and material handling. The plant will also maximize circularity. Recycled scrap from customers will be charged into the Electric Arc Furnace, wasted heat will be sent to the district heating channels of Luleå-Boden, and slag will be processed into products to be used in other industries.