Automotive manufacturer BMW Group announced today an agreement with steel producer Salzgitter to supply low carbon steel for all of BMW’s European plants, starting 2026.

The deal marks the BMW’s second agreement to source low carbon steel. In October, BMW announced an agreement with Swedish startup H2 Green Steel (H2GS), to source steel produced with the use of fossil fuels, beginning in 2025.

Steelmaking is one of the biggest emitters of CO2 globally, with total greenhouse gas emissions (GHG) from the sector accounting for 7% – 9% of direct emissions from the global use of fossil fuels. As manufacturers globally aim to decarbonize their supply chains, demand for steel produced using fossil-free energy is expected to increase significantly.

The new agreements follow BMW’s announcement last year of the expansion of its efforts to combat climate change with new goals to reduce vehicle emissions throughout the lifecycle, focus on the circular economy, and ramp up the use of recycled and reusable materials by 50% by 2030.

BMW Board of Management member Joachim Post, responsible for Purchasing and Supplier Network, said:

“This is an important step in substantially reducing CO2 emissions at source in the supplier network. Our aim is to reduce vehicles’ lifecycle carbon footprint with a holistic approach. With steel, in particular, we are leading the way by sourcing low-carbon steel for our plants in Europe in the future.”

Salzgitter stated that it intends to gradually switch the production of steel to a hydrogen-based route, using hydrogen and green electricity to replace the carbon energy fueled blast furnace process. The company aims to reduce CO2 emissions in steel production by 95%.

Gunnar Groebler, CEO of Salzgitter AG, said:

“Salzgitter AG is putting ‘circularity’ at the centre of its new strategy. We firmly believe that closed loops of recoverable materials can only realise their full effect with strong partners. We are delighted about the circular economy cooperation with the BMW Group and the agreement to supply green steel to our long-standing customer. Partnering for Transformation – this is how we will translate our new corporate vision into practice.”