August 4, 2022
• ‘Green steel’ to be gradually introduced in Shenyang-made BMW cars from 2026
• BMW Group among the first automotive manufacturers to announce the gradual incorporation of ‘green steel’ into its standard production in China
• Goller: Auto industry needs a holistic sustainability approach; the cooperation with steel industry is ground-breaking
(Shenyang) On 4th August 2022, BMW Group and HBIS Group signed a Memorandum of Understanding to Create a Green and Low-Carbon Steel Supply Chain. With the agreement, starting from mid-2023 BMW’s Shenyang production base will begin using HBIS’s low-carbon steel that has a 10-30% smaller carbon footprint compared with traditional steel. As new technologies transform steel manufacturing processes, from 2026 BMW’s Shenyang production base will gradually shift to using green automotive steel (“green steel”). HBIS will produce the “green steel” with the hydrogen-based DRI-EAF (Direct Reduced Iron in Electric Arc Furnace) process, which will gradually move towards a 95% reduction of emissions.
BMW will be the first customer of HBIS’s green and low-carbon automotive steel, and is among the first OEMs to announce a clear plan of the gradual incorporation of “green steel” into its standard production in China, which it expects will reduce CO2 emissions in its supply chain by up to 230,000 tons per year from 2026.
The MoU states that the two parties will work together to develop green and low-carbon automotive steel and complete relevant certifications based on BMW's requirements. The two companies will transparently collect and monitor the carbon emissions data throughout the lifecycle of automotive steel, from the iron-ore mining and steel manufacturing to the vehicle production process and end-of-life recycling. In addition, they will jointly carry out R&D on clean energy and other carbon-negative technologies and establish a platform to train and develop talents in the related fields.
“To BMW Group, Sustainability in the automotive industry means much more than just putting BEV cars on the road. Instead, we are pursuing a holistic sustainability approach covering the whole lifecycle of our vehicles, with supply chain playing obviously a major part. In Europe, we are already partnering with two steelmakers for low-carbon steel. And in China, we have just decided to work with HBIS for the supply of ‘green steel’ from 2026 onwards,” said Jochen Goller, President and CEO of BMW Group Region China.
“This partnership is a significant progress since the inauguration the Low Carbon Value Chain Initiative last year, and a major breakthrough for the collaboration between the automotive and steel industries. In line with our 'At Home in China' strategy, BMW Group will spare no efforts to jointly with Chinese partners drive forward sustainability through innovation, so as to actively contribute to China's ‘Dual Carbon’ goals,” he added.
At the BMW Group China Sustainability Summit in June 2021, together with China Development Research Foundation, BMW Group launched the Low Carbon Value Chain Initiative with partners. Since then, in-depth research into key topics have been carried out such as the low-carbon transformation of steel production, the accessibility of green electricity, circular economy, and relevant sustainability standards. The China Development Research Foundation has produced several independent reports on green steel and green electricity and has proposed measures and suggestions to policymakers.
“Enterprises are the main entities in implementing green, low-carbon, circular development, and are important promoters of industrial green transformation and innovation. Sustainability involves all aspects of the value chain, and cross-sector collaboration is the key. The cooperation between BMW Group and HBIS is of great significance and opens a door for the utilisation of 'green steel' in the automotive sector. We hope more enterprises will follow suit and support China's decarbonization with real actions,” said Cheng Huiqiang, Researcher and Deputy Secretary General of the China Development Research Foundation.
Innovation drives the development of the sustainable value chain
Currently, steel production accounts for around 20% of CO2 emissions in the supply-chain of a mid-sized BEV, behind only high-voltage battery production (26%) and light metal production (23%). Reducing the carbon footprint of steel production is therefore vital for the lifecycle decarbonization of BEVs.
“BMW Brilliance is committed to working with innovative local suppliers to drive the development of a sustainable automotive supply chain in China. The signing with HBIS today paves the way for us to significantly reduce CO2 emissions at source in our supplier network. Simply put, green and low-carbon steel will help us produce greener cars and achieve our joint sustainability ambitions with HBIS.” said Dr. Franz Decker, President and CEO of BMW Brilliance Automotive Ltd.
HBIS was China’s first steelmaker to issue a low-carbon green development plan and draw up a clear technology roadmap. It was also the first player in the industry to start a 1.2-million-tonne hydrogen metallurgy demonstration project, and has established a clear advantage in low-carbon metallurgy through its pioneering industrialised utilisation of hydrogen energy.
According to the MoU, HBIS will complete the process path development and related certification within a defined schedule. Its decarbonisation roadmap mainly involves: In the short term, achieving more than 10% CO2 reduction in current production processes through hydrogen-based DRI; and in the mid- to long-term, achieving greater than 50% CO2 reduction with newly established EAF processes. After 2025, EAF processes will gradually move towards a 95 percent reduction of emissions through the use of green electricity.
The BMW Way: 360-Degree Sustainability
BMW Group firmly believes that carbon reduction goals can only be achieved by realising whole lifecycle sustainability from resource to recycling.
BMW will reduce its CO2 emissions by 40% per vehicle by 2030 across the entire value chain compared to 2019 levels, with a 20% reduction in the supply chain, an 80% reduction in production and a 50% reduction in the use phase; in addition, the proportion of secondary materials used in the production of BMW Group vehicles will be gradually increased from 30% to 50%.
BMW Group aims to build the most sustainable supply chain in the automotive industry by focusing on reducing CO2 emissions, protecting natural resources and complying with environmental and social standards. An example of this is the design principle for the fifth-generation BMW eDrive electric motors that eliminates the need to use rare earth materials in the rotor. BMW Group has been advocating responsible resource extraction globally and has been directly purchasing lithium and cobalt since 2020. BMW recently established closed-loop recycling of high-voltage battery raw materials in partnership with Huayou Recycling, an example of how BMW is implementing circularity in China.
In order to ‘build the greenest electric vehicle’ and shape the sustainable future of mobility, the BMW Group will continue to deepen cross-sector cooperation with its Chinese partners and fully implement its 360-degree sustainability approach throughout the value chain.