Swedish startup H2 Green Steel announced today that it has signed a 7-year binding agreement with global auto supplier ZF for delivery of near-zero emissions steel, valued at €1.5 billion.

Founded in 2020, H2 Green Steel is building the world’s first large-scale fossil-free 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. H2 Green Steel aims to begin production in 2025, with plans to produce 5 million tons of nearly fossil-free steel by 2030.

The agreement follows recent deal announcements from H2 Green Steel with companies including Mercedes-Benz, Scania, and steel producer BILSTEIN.

Henrik Henriksson, CEO of H2 Green Steel, said:

“This is a true milestone contract for H2 Green Steel, not the least because of its size. ZF’s role in the automotive ecosystem is undeniable and they are a true partner to us where we also see potential to move into other regions, like North America.”

While the companies did not disclose the volume of steel to be delivered under the new agreement, H2 Green Steel said that the deal covers “a significant share” of ZF’s roughly 2.5 million tonnes of direct and indirect steel processed per year, and will result in CO2 emissions savings of 2.3 million tonnes compared to traditional steelmaking processes. Deliveries of the steel are expected to begin in 2026.

ZF has set goals to reduce its Scope 1 and 2 corporate carbon footprint by 80% and Scope 3 emissions intensity by 40% by 2030, and to achieve net zero across all scopes by 2040.

ZF Board of Management member Stephan von Schuckmann said:

“No one can fight climate change alone, but teaming up with partners, we can achieve a lot. H2 Green Steel is a good example of startups working together with established players to drive change faster than the incumbent industry has managed. For ZF, this is a strategic agreement in our significant efforts to reduce CO2 emissions from our supply chain.”