Volvo Group receives support for CarbonSmart project

Volvo Group’s engine plant in Skövde, Sweden, has been awarded up to €49 million from the EU Innovation Fund to support the CarbonSmart Factory project: SPACE (Skövde Plant Approaching Carbon Elimination). The 265,000 sq. meter plant is part of Volvo Group Trucks Operations.

Volvo Group’s engine plant in Skövde, Sweden. (Photo: Volvo Group)

The Skövde Plant, which manufactures engines and transmissions for export to Volvo Group production facilities globally, accounts for around 10% of the company’s total operational greenhouse gas emissions. The smelting and casting of iron and steel components represents one of the more energy-intensive parts of the production process.

The SPACE project pioneers a sustainable manufacturing transformation by integrating electrification, advanced industrial AI and hydrogen technologies to achieve a substantial reduction in greenhouse gas emissions at the plant’s foundry, Volvo Group stated.

According to Rickard Lundberg, vice president, Powertrain Production, Skövde Plant, “We transition towards sustainable foundry operations by electrifying key processes and integrating AI technologies, reducing CO₂ emissions by 88% from our manufacturing process. This project is a vital part of Volvo Group’s journey towards net-zero emissions.”

Central to the transformation is the integration of green technologies, including:

• Electric furnaces powered by green electricity
• Hydrogen replacing propane as a fossil-free fuel alternative
• Advanced heat recovery systems to capture and reuse energy
• AI-powered energy management to optimize energy use across operations

The project will also introduce innovative solutions for energy storage, allowing the plant to balance energy use and production:

• Iron Battery: Uses existing furnaces to store energy for high-demand times.
• Hydrogen Battery: Uses green hydrogen, adding possibilities to store energy seasonally.
• Water Battery: Reuses hot water to reduce energy needs for heating and melting processes.

Together, Volvo Group said these systems will allow the plant to balance energy use and production, improving operational flexibility while addressing the grid capacity limitations that many large-scale electrification projects face.

The Skövde plant is conditionally granted up to €49M by Innovation Fund, European Commission. The Innovation Fund is the EU fund for climate policy, with a focus on energy and industry.

The SPACE project was preceded by a pre-study conducted together with Skövde Energi and AI Sweden, funded by Advanced Digitalization through Vinnova.