Automotive manufacturer Mercedes-Benz announced today an agreement with U.S.-based steel producer and metals recycler Steel Dynamics for the supply of more than 50,000 tonnes of CO2-reduced steel annually for its plant in Tuscaloosa, Alabama.

The CO2-reduced steel is anticipated to be introduced into series production at the plant as early as this month.

Steel Dynamics (SDI) produces steel using electric arc furnace (EAF) technology, which uses recycled ferrous scrap as the primary raw material, and does not require the smelting of virgin iron ore or the burning of coal, generating substantially lower levels of carbon emissions with less energy intensity relative to traditional blast furnace steelmaking technology.

According to the companies, the steel supplied by SDI will use electricity from 100% renewable sources, which enables EAF-produced steel production to reduce emissions by more than half compared to primary steel production which uses blast furnaces and basic oxygen furnaces. SDI recently signed a 308 MW Renewable Product Purchase Agreement (RPPA) with NextEra energy, the largest of its kind to date for the North American steel industry.

Mercedes-Benz’s Tuscaloosa plant produces SUV models including the GLE, GLE coupé and GLS model series, as well as the all-electric EQS SUV and EQE. All models built in the plant currently use SDI flat rolled steel made of 70% or greater recycled scrap content, and the companies said that they have agreed to potentially increase the share of scrap in the near future, which would further reduce carbon footprint.

Mercedes-Benz stated earlier this year that it is pursuing a goal to achieve a green steel supply chain from 2039 at the latest, as part of a series of ESG-related goals and initiatives announced by the company at its ESG Conference to investors and analysts, which also included a target to achieve an 80% reduction in CO2 emissions from production by 2030.

Dr. Gunnar Güthenke, Head of Procurement & Supplier Quality Mercedes-Benz Cars, said:

“Our ambition is clear: Together with our partners we want to make our entire fleet of new vehicles net carbon-neutral along the entire value chain by 2039. Following this strategy our agreement with SDI to procure more than 50,000 tonnes CO2-reduced steel annually is another important milestone to establish a sustainable steel supply chain in North America.”