Swedish truck and bus maker Volvo Group [VOLVB:SS] has entered into a 10-year power purchase agreement (PPA) with Vattenfall AB, a Swedish state-owned renewables producer, as reported by Bloomberg on May 23. As per the agreement, Volvo will purchase 50% of the electricity generated by Sweden’s new Bruzaholm wind farm starting in 2025. This amounts to approximately 225 gigawatt-hours (GWh) per year. Vattenfall is scheduled to commence construction of the wind park this summer, with a capacity of 140 megawatts (MW). Volvo CEO, Martin Lundstedt, emphasized that the deal demonstrates the company’s commitment to prioritizing low-carbon investments, sourcing renewable energy, and taking climate action across its operations.
The PPA serves as a complement to Volvo’s efforts to achieve net-zero greenhouse gas (GHG) emissions throughout its value chain by 2040. The European Union (EU) has introduced strict rules to phase out new combustion engine cars by 2035 and reduce emissions from trucks and buses by 90% by 2040. These rules have prompted automakers to transition toward electric vehicles or those with lower emissions. However, they do not address emissions associated with automobile production. In 2022, Volvo reduced its GHG emissions from its own operations (Scope 1 and 2) by 13% compared to 2019 levels, thanks to increased use of renewable energies and improved energy efficiency. The company aims to achieve a 50% reduction by 2030. Additionally, Volvo’s GHG emissions from the use of sold products (Scope 3) declined from 323 million tons in 2019 to 287 million tons in 2022, attributable to energy efficiency measures, changes in sales volumes and product mix.