Luxury sports car manufacturer Porsche AG announced today a new agreement with Swedish startup H2 Green Steel to supply up to 35,000 tonner per year of low-carbon steel, aimed at reducing the emissions footprint of Porsche vehicles.

With shipments beginning in 2026, the agreement will account for a significant proportion of Porsche’s steel supply, with the company’s total steel usage in its vehicles reaching 200,000 tonnes last year.

Porsche set a goal in 2021 to make its value chin net carbon neutral by 2030. While the company has been reducing the proportion of steel in its vehicles and increasingly relying on aluminum for lightweight construction, it noted that steel remains a key material for sports car construction, given its mechanical properties.

Barbara Frenkel, Executive Board Member for Procurement at Porsche AG, said:

“Porsche is working towards a carbon-neutral balance sheet across the value chain for its cars by 2030. CO2-reduced steel plays a key role in our sustainability strategy. With the steel from H2 Green Steel, we aim to further reduce the CO2 emissions caused by this important material.”

Steelmaking is one of the biggest emitters of CO2 globally, and one of the more challenging sectors to abate, with total greenhouse gas emissions (GHG) from the sector accounting for 7% – 9% of direct emissions from the global use of fossil fuels.

Founded in 2020, H2 Green Steel is developing its flagship green steel plant in Boden, Sweden, with the project including a giga-scale green hydrogen plant as an integrated part of the steel production facility. The company employs hydrogen produced using green power to remove the oxygen from iron oxide, avoiding most of the CO2 emissions normally produced, and uses electricity from 100% renewable sources for the energy requirements generated in the manufacturing process.

According to H2 Green Steel, its production process results in up to 95% lower CO2 emissions than conventional steel production with coking coal.

H2 Green Steel announced in September that it raised €1.5 billion in equity to finance the new plant’s construction. The company aims to begin production in 2025, with plans to produce 5 million tons of nearly fossil-free steel by 2030.

Porsche is the latest in a series of automotive sector buyers of H2 Green Steel, with recent agreement also including Volvo, Scania, Mercedes-Benz, and BMW.

H2 Green Steel CEO Henrik Henriksson said:

“Few brands are as iconic as Porsche. It stands for quality and a premium product.  It’s also a company that is working actively towards a sustainable future, with clear expectations on how the supply chain contributes to that. Having Porsche place an order for near zero-emission steel is a real boost both for us as a company, but also the transformation of the steel industry, which has very much been driven by the demand from the automotive industry.”