Climate protection in production

Strategy and concepts

Implementation of the Paris Agreement — CO₂ neutral production from 2022

In its sustainable business strategy the Mercedes-Benz Group has set itself the holistic goal of making the mobility of the future more sustainable. One important target is the reduction of greenhouse gas emissions. This applies not only to our mobility solutions but also to our own production plants. By pursuing our goal of making our production processes CO₂ neutral we are fulfilling our voluntary commitment to the Paris Agreement and complying with other national and international climate-protection guidelines.

The expansion of electric mobility is the key for making mobility more sustainable in the future, which is why Mercedes-Benz has flexibly planned its global manufacturing network for the production of all-electric vehicles. The plans call for eight Mercedes-EQ electric vehicles to roll off the assembly lines at seven locations. Moreover, all of the car and battery assembly locations operated by the Mercedes-Benz Group will have climate-neutral production processes from 2022.

Responsibilities and organisation

The Mercedes-Benz Group operates more than 30 production facilities all over the world that are subject to a variety of regional and national laws. The environmental and climate-protection measures at our production locations are controlled and coordinated across business units by three regional committees: Germany/Europe, North and South America and Africa/Asia. The committees let our experts form networks between companies and plants and share information about legislation, processes and innovations. In addition, these committees draw up globally valid internal standards and procedures.

CO₂ neutral sales

Climate protection is a matter for the entire value chain. Due to its many locations, the sales organisation of Mercedes-Benz also has considerable potential to drastically reduce CO₂ emissions. The company-owned sales and service outlets of Mercedes-Benz AG in Germany are striving to become CO₂ neutral by the end of 2022.

However, the associated investments in energy efficiency and renewable energies are not only contributing to climate protection. They also produce financial benefits due to rising energy prices and various political decisions. For example, climate-protection measures also have a high marketing potential for our car dealerships, because they are the main point of contact for customers and are very visible at the local level.

European Union Emissions Trading System

Industrial facilities that generate CO₂ emissions as a result of the combustion of fossil fuels and whose approved thermal output exceeds 20 MW are required by law to participate in the EU Emissions Trading System (EU ETS). The operators of such facilities are required to calculate on an annual basis the CO₂ emissions they generate, report the figures to the responsible authorities, and then submit to the same authorities CO₂ emission permits in the amount of the reported CO₂ emissions. The company is permitted to generate one ton of CO₂ per CO₂ emission permit (European Union Allowance — EUA). The permitted total number of EUA certificates within the EU’s emissions trading program is limited. A small number of EUA certificates are assigned to industrial plants free of charge. Fewer and fewer free CO₂ emission permits are issued each year, which means that by the end of the fourth trading period (2021 to 2030) the number of such permits available to the automotive industry and many other sectors will have been reduced to zero. A large portion of the CO₂ emission certificates needed must therefore be acquired at a cost via EUA auctions, the emission permit market or direct trading. At the Mercedes-Benz Group, an in-house committee consisting of experts from various departments defines the procurement strategy and the risk management for the EUA certificates needed by the Group.

More than half of the CO₂ emissions generated at the Mercedes-Benz Group’s European production locations are currently covered by the EU Emissions Trading System. We are using various measures to try to further reduce our CO₂ emissions. These include projects to increase energy efficiency and expand the capacity of systems that generate heat and electricity from renewable sources.

German National Emissions Trading System

Since the beginning of 2021, Germany has also had a legally prescribed fuel emissions trading process that complements the European emissions trading scheme. The new Fuel Emissions Trading Act (BEHG) has introduced CO₂ pricing by means of a national emissions trading process for amounts that are not subject to the EU Emissions Trading System (EU ETS). The law applies to the heating and transport sectors in particular. Accordingly, the Mercedes-Benz Group must ensure the acquisition of certificates for the fossil fuels it uses that are not subject to the EU ETS.

Measures

Procuring green electricity

Mercedes-Benz has committed itself to consistently reducing CO₂ emissions caused by vehicle production and energy supply at its plants, or to eliminate them completely wherever possible. The procurement of green electricity plays a key role in these efforts. Beginning in 2022, worldwide all of the Mercedes-Benz Group’s own production plants will obtain externally generated electricity exclusively from renewable sources.

In Germany, Mercedes-Benz is cooperating with the energy supplier Enovos and the Norwegian energy producer Statkraft to expand its portfolio of green electricity. This electricity mix consists of solar, wind and hydro power. The electricity is generated by a variety of facilities, including a solar park near Ingolstadt as well as hydroelectric power stations and more than 200 wind turbines throughout Germany. This green electricity is generated at the same rate as it is consumed. This ensures that the company’s exact electricity requirements are met by green power from the grid with an accuracy of 15 minutes.

Since early 2022, all of the company-owned sales and service outlets in Germany have been procuring electricity from renewable sources. This enables the annual CO₂ emissions from building operation to be cut by around half.

Generation of green electricity

Another major pillar of CO₂ neutral production at Mercedes-Benz involves increasing the generation of energy from renewable sources at the various locations.

The production of the EQS at Factory 56 in Sindelfingen since May 2021 is a great example of the sustainable and CO₂ neutral vehicle production of the future at Mercedes-Benz: the plant is a zero carbon factory. A photovoltaic (PV) system not only covers around 30 per cent of the hall’s needs annually with self-generated green electricity but also charges a stationary energy storage unit from Mercedes-Benz Energy. The latter has a capacity of 1,400 kWh and serves as a buffer on days when there is little sun, for example.

PV systems for the self-generation of green electricity are also to be installed on existing buildings at five Mercedes-Benz locations in Germany in 2022. PV systems are to be set up on further buildings in the future, if possible.

In addition, Mercedes-Benz U.S. International, Inc. (MBUSI) and the utility company Alabama Power received approval in December 2021 for a solar energy project in Lowndes County, south of Montgomery. The resulting Letohatchee solar park will supply our production plant in Tuscaloosa, Alabama (United States) with power from the sun in the future. Commercial operations are scheduled to begin in March 2024.

More sustainable heat supply

The Mercedes-Benz Group is also reducing CO₂ emissions arising from the plants’ heat supply. Among other things, the company plans to use biogas, biomass, geothermal energy and solar heating systems and to commission heat pumps powered by green electricity.

Beginning in 2022, Mercedes-Benz Cars wants to gradually increase the procurement of biogas for the production processes at German locations. The Mercedes-Benz Vans plant in Ludwigsfelde (Germany) procures district heating. More than 45 per cent of this heat comes from renewable sources of energy and reduces the CO₂ emissions from our Sprinter production at the location.

Offsetting CO₂ emissions

The Mercedes-Benz Group has, since early 2022, been offsetting all the CO₂ emissions at its production facilities that have been as yet unavoidable by means of carbon offsets from qualified climate protection projects.

Such residual emissions are released above all by our cogeneration facilities that use natural gas to produce electricity and heat. All of the offsetting projects comply with the high quality standards of the Clean Development Mechanism (CDM). Moreover, they are validated according to the Gold Standard. The climate-protection projects not only avoid CO₂ emissions but also promote sustainable, socially beneficial and environmentally friendly development in many ways in the countries where the projects take place. Our portfolio also includes offsetting projects that promote a renewables-based energy supply, for example energy from geothermal sources in Indonesia and energy for the reduced-CO₂ purification of drinking water in Uganda.

Global battery production network

The vehicle portfolio of Mercedes-Benz Cars & Vans is set to become all-electric by 2030. In this process, the local production of batteries is a crucial element for flexibly and efficiently meeting the global demand for electric vehicles. As a result, Mercedes-Benz is continuing to expand its global battery production network, which is an important component of its global production network.

In the future, this battery production network is to consist of factories on three continents. We are already producing battery systems in Kamenz, Saxony, in Stuttgart-Hedelfingen and in Bangkok (Thailand), Beijing (China) and Jawor (Poland). The battery factories in Esslingen-Brühl near Stuttgart and in Tuscaloosa, Alabama (United States) are currently preparing themselves for the production launch in 2022.

In order to further increase capacities in our global battery production network, we will cooperate even more strongly with the company GROB from Mindelheim, which specialises in battery facility technology. Our goal is to jointly develop and set up assembly systems for upcoming battery modules and systems. These facilities will produce the batteries for our EQ models that will roll off the assembly line beginning in 2025.

Moreover, Mercedes-Benz plans to work together with partners worldwide to build eight factories for the production of battery cells.

This will enable Europe to remain a centre of the automobile industry even in the electric age. Here, Mercedes-Benz intends to work together with new partners to develop future cells and modules and efficiently produce them at four locations. To this end, Mercedes-Benz has a holding in the European battery cell manufacturer Automotive Cells Company (ACC).

More sustainable transport logistics

Whether going by ship, plane, train or truck, our global transport logistics system now serves 30 production plants on four continents and customers all over the world. The Mercedes-Benz Group transported around 2.3 million vehicles worldwide in 2021 and about 3.7 million tons of production materials in Europe during the first half of 2021 alone. Our global transport volume amounted to around 260,000 standard containers of sea freight and about 120,000 tons of air freight.

Our aim is to further reduce the associated CO₂ emissions. One of the levers here is our logistics network, which we are continuously optimising. Our main goal here is to connect the transport hubs with one another as effectively as possible so that the driving distances can be reduced and the capacity of the transport systems is better utilised. Innovative transport concepts and new modes of transport also play a major role in reducing emissions.

We now select logistics concepts not only on the basis of their costs, duration and transport quality but also according to their CO₂ emissions. When choosing providers of logistics services, we also take sustainability criteria into account. Among other things, we determine whether service providers have environmental certificates and use environmentally compatible equipment or low-emission trucks that meet the latest Euro emissions standards.

In particular, Mercedes-Benz is steadily increasing the volumes it transports via the railroad network. For example, the production materials for the Mercedes-Benz car plants in Germany and the plant in Kecskemét (Hungary) have been transported in trains powered by green electricity since as early as 2020.

In addition, we are reducing the CO₂ emissions not only on railways but also from ship-borne freight. At the beginning of 2021, we launched a joint project together with a transport service provider. In this project, a ship fuelled with biofuel transported more than 1,000 Mercedes-Benz vehicles from Bremerhaven via South Africa to Australia. The CO₂ emissions were reduced by about one third compared to conventional ship propulsion fuels.

From June to September 2021, Mercedes-Benz became one of the first automakers to take part in a CO₂ neutral cargo flight route, with the aim of decarbonising air shipments. The planes on the transport route from Frankfurt to Beijing use sustainable aviation fuel (SAF), which is made of waste biomass such as used cooking oil (UCO). SAF causes around 80 per cent less CO₂ emissions per flight than conventional aviation fuel.

More sustainable sales operations

Mercedes-Benz wants to make its sales operations more sustainable and climate-friendly. However, this is only possible with the support of our sales partners. We have published two information brochures to help them operate and build Mercedes-Benz sales outlets in a more sustainable and climate-friendly manner.

The first brochure was released in November 2020. It provides instructions on how to reduce CO₂ emissions in dealerships. A total of 28 measures are presented. They range from minor adjustments in building operation to detailed renovation measures and the local generation of renewable energies. The second information brochure has been available since March 2021. It addresses sustainable construction and covers a building’s entire life cycle, from the planning stage and the production of the construction materials to demolition and the recycling or disposal of the rubble.

In July 2021, the Mercedes-Benz Group also launched the online training course “Sustainability at Mercedes-Benz Retail” for its car dealerships. The course is targeted at managers and employees working in Sales and After Sales. The first part of the course teaches theoretical content, such as the fact that sustainability is a key element of our strategy. The second part addresses practical concerns and, among other things, shows what sustainability means for dealerships in concrete terms and how they can contribute to sustainability.

Effectiveness and results

The effectiveness of our management approach

The Mercedes-Benz Group uses internal and external tools to determine how much progress its plants are making in achieving the climate-protection targets. The Mercedes-Benz Group has defined the parameters for in-house reviews, and it regularly monitors these parameters. An external auditing firm annually evaluates a selected number of our corporate goals and their implementation. We use the results of these evaluations to adapt and improve our climate-protection measures.

Results