BLOG: Driving Demand: How Automakers Can Transform the Steel Market
The Power of Collective Action
Did you know that the auto industry is amongst the largest and fastest-growing buyers of steel? Sales to automakers accounted for 31% of U.S. steel-making giant Cleveland-Cliffs’ revenue in 2022. In the same year, U.S. Steel’s shipments to the transportation industry increased almost 10%.
Like with “lightweighting” in 2008, when automakers demand different products, suppliers are compelled to respond. This is where initiatives like SteelZero are vital, coordinating major steel buyers, including automakers, to commit to decarbonization.
Meet SteelZero
SteelZero, a global initiative from the Climate Group, is uniting leading organizations to accelerate the transition to a net-zero steel industry.
Organizations that join SteelZero make a commitment to buy and use 100% of their steel requirement by 2050 as net zero steel, with an interim commitment to buy and use lower-emission steel for 50% of their steel requirement by 2030. Qualifying steel products can be primary or secondary lower-emission steel that meets one or more of three criteria.
Volvo Cars, along with its Polestar brand, has already joined SteelZero.
Case Study: Volvo's Green Steel Journey
Volvo Cars has been a trailblazer in the green steel movement, becoming the first automotive company to join SteelZero in 2022. They demonstrated a clear market for lower-emission automotive steel by publicly signaling their demand for net-zero steel. Volvo Cars has since collaborated with SteelZero members from various sectors to overcome common barriers, identify solutions, and shape corporate best practices for responsible steel sourcing. They have actively raised their voice to drive supply, participating in flagship events like the Asia Action Summit and Climate Week NYC to communicate what the automotive sector needs to achieve net-zero emissions.
Vanessa Butani, Head of Global Sustainability at Volvo Cars, emphasized their progress: “We’re already making good progress in reducing CO2 emissions from steel, as evidenced in our recent LCA report on our EX30 vehicle. This showed a reduction in steel-attributed emissions from 19% to 17% compared to our earlier C40 vehicle. However, to achieve our ambition of net-zero greenhouse gas emissions by 2040 and future-proof our company against regulatory risks and costs, it’s essential to secure a stronger supply of low and near-zero emission steel. SteelZero provides an excellent platform to signal our demand and stimulate the required supply from steelmakers.”
Polestar has also committed to SteelZero. Together, they drive the demand for net-zero steel in the automotive sector. However, more automakers need to join these efforts to break down barriers, expand the market, secure supply, and drive the decarbonization of the steel industry.
The Road Ahead
The automotive industry holds significant power to transform the steel market. By joining initiatives like SteelZero, automakers can lead the way in demanding greener steel products and driving the industry toward a more sustainable future. Your commitment today can make a substantial difference in achieving a net-zero steel industry by 2050.
Are you ready to take the next step? Connect with us at LKaufman@climategroup.org to learn more about how your company can get started in the race to green steel.
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