Volkswagen-owned truck maker Scania has promised that by 2030 it will be buying mostly green-hydrogen-derived steel for the manufacture of its heavy-duty vehicles, as part of a deal with its main supplier of steel, Sweden’s SSAB.
In a letter of intent signed on Monday, Scania and SSAB agreed that the truck maker would begin taking deliveries of the green steel (see panel below) in 2026, with the supply gradually ramping up to become completely decarbonised by the end of the decade.
The pair gave no indication as to how much steel this entails, but Scania noted that SSAB is its “main” supplier of steel — suggesting that much of the company’s steel supply will effectively be decarbonised by 2030.
The steel will be produced using hydrogen-based direct-reduced iron (DRI) technology developed by the Hybrit consortium, of which SSAB is a part alongside miner LKAB and power producer Vattenfall.
Hybrit is currently working on building 500MW of electrolysis to supply green hydrogen to its demonstration plant in Gällivare, Sweden, which will produce fossil-free DRI for use in SSAB’s operations.
The demonstration plant, as well as two new electric arc furnaces at SSAB’s steel plant in Oxelösund, near Stockholm, have been granted €143m ($155m) from the EU’s Innovation Fund.
And Scania, which has pledged to decarbonise the entirety of its European supply chain, comprising batteries, aluminium and cast iron by 2030, has also committed to buy green steel from Sweden’s H2 Green Steel, expected to be the world’s first commercial steel plant if and when it comes on line in 2025.
“We are truly looking forward to ramping up the deliveries of our fossil-free steel, thereby contributing to more sustainable value chains,” said Martin Lindqvist, SSAB’s chief executive. “Fossil-free steel will be a game-changer in heavy transport. It has the same high quality and technical properties as traditional steel. And, while being produced in a sustainable way, it can also be recycled just like steel has always been.”
Hydrogen is widely touted as one of the most promising routes to decarbonising the steel sector, which accounts for around 7% of global emissions at present.
Today, most steel is made using a carbon-intensive blast furnace-basic oxygen furnace (BF-BOF) method, which uses coal to both extract iron from iron-oxide ore and then heat that iron while other substances are introduced to make steel.
Hydrogen can be used instead of coal to both heat and remove oxygen from the ore in a process known as direct-reduced iron (DRI). DRI plants have been in commercial use for some time, using natural gas as the reducing agent, but hydrogen DRI plants are now being commercialised.
Hydrogen-DRI is currently the only available method of fully decarbonising iron production. When paired with an electric arc furnace (EAF) to help turn that iron into steel, emissions could theoretically be reduced to zero.
However, as most plants today still use BF-BOF, it will require a massive amount of capital investment to realise a switchover to hydrogen-DRI and EAF, resulting in slightly more expensive green steel.