Volvo plans to build cars using steel made without fossil fuels by 2026, as part of a deal that could significantly reduce the carbon emissions from manufacturing its vehicles. The Swedish carmaker and compatriot steelmaker SSAB signed a letter of intent to commercialise technology that replaces coal with hydrogen in a crucial part of the process. Steel is a big contributor to global carbon emissions but it is widely seen as one of the most difficult sectors to decarbonise. Blastfurnaces use huge amounts of energy, while carbon dioxide is also released when coking coal is used to remove oxygen from iron ore. Volvo estimates the steel in its petrol and diesel cars accounts for 35% of carbon emitted during production. The figure is 20% for Volvo’s electric vehicles, which use significantly more energy in making batteries, although over the lifetime of an electric car, average resource and energy use is expected to be significantly lower. Replacing coking coal with hydrogen is expected to reduce emissions from steelmaking by at least 90%. The deal with SSAB is expected to make Volvo Cars, owned by the Chinese carmaker Geely, the first major marque to use the lower-emission steel. However, it will take some time to increase production to commercial scale and to test its safety. Volvo hopes to use it in a concept car by 2025, with commercial applications arriving by 2026 at the earliest. That would help the company reduce its cars’ average emissions before a self-imposed 2030 deadline to make battery electric cars only. By 2040, Volvo is aiming to be climate-neutral. Kerstin Enochsson, Volvo’s head of procurement, said the carmaker was in talks with other steelmakers in Europe and the US about lower-emissions technology. However, she added that progress in China – the world’s largest car market – was slower because it was harder to secure renewable energy. Volvo is a good candidate to develop the cleaner steel technology in part because of abundant renewable energy, particularly in northern Sweden. Renewable energy will be crucial to make zero-emissions hydrogen from water with electricity, rather than relying on a fossil fuel process that still releases carbon dioxide. Enochsson said it was too early to say what effect the new technology would have on car prices, but added that the carmaker saw environmental sustainability as a key part of its attraction to buyers. She said Volvo internally referred to sustainability as “planetary safety”, echoing a marketing focus on safety features such as three-point seatbelts that it has long used as a selling point. Carmakers have among the most complex supply chains of any consumer product, making it difficult to estimate cars’ carbon footprints. Large suppliers “realise they are not attractive over time only having good products with good prices”, Enochsson said. “They need to have a sustainability agenda.”