- Significant Emission Savings: Switching to 40% green steel in car production by 2030 can save 6.9 Mt CO2 annually, equivalent to the emissions of 3.5 million fossil fuel cars.
- Minimal Cost Increase: Using 40% green steel adds only €57 to an electric vehicle’s cost in 2030; 100% green steel by 2040 will cost just €8 more.
- Legislative Support Needed: Lawmakers are urged to set targets for green steel usage in cars to create a reliable market and encourage investment.
Switching to green steel could drastically cut the climate impact of car production with minimal cost implications, according to Transport & Environment (T&E). Their analysis highlights that using 40% green steel by 2030 can save 6.9 million tons of CO2 emissions annually, the equivalent of removing 3.5 million fossil fuel cars from the roads.
Cost Efficiency
T&E’s study, based on research by consultancy Ricardo, shows that incorporating 40% green steel would only add €57 to the price of an electric vehicle in 2030. By 2040, the cost difference for switching to 100% green steel drops to just €8, driven by the decline in green steel production costs and CO2 pricing.
Investment and Demand
The automotive industry, consuming 17% of the EU’s steel, is pivotal in driving demand for green steel. T&E emphasizes that achieving this transition requires legislative action to set incremental targets for carmakers, starting with 40% green steel by 2030 and reaching 100% by 2040. This regulation could be integrated into the revised EU End-of-life Vehicles (ELV) regulation.
Industry Potential
Alex Keynes, cars policy manager at T&E, stated, “For less than a tire change, Europe can build a green steel industry. The extra cost will be negligible and in time it will be cheaper than conventional steel. But we first need lawmakers to kick start the shift to low-carbon steel in the automotive industry.”
By 2030, Europe is projected to produce up to 172 million tons of low-carbon steel annually, surpassing the automotive sector’s steel demand of 36 million tons in 2022. Additionally, a shift towards lightweight materials will further reduce steel usage in cars over the next decade.
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Keynes added, “The automotive sector is the second biggest consumer of steel and well positioned to be a lead market for green steel in Europe. The relatively high value of cars, especially premium brands, means they can absorb the short-term green premium of low-carbon steel.”
To read the full report, visit Transport & Environment.