It's the first facility in Volvo Cars' global manufacturing network to achieve the feat, making a step towards the company's goal of having carbon-neutral global manufacturing operations by the year 2025.
All heating supplied to the facility is now generated from waste incineration, biomass and recycled bio-fuels. Volvo's Sködve plant has had electricity from renewable sources since 2008.
The factory is also one of only several climate-neutral automotive facilities in Europe.
"Improving energy efficiency is our first priority and then, for the energy we need to use, we aim for supplies generated from renewable sources," said Javier Varela, senior vice president of manufacturing and logistics for Volvo Cars.
"The Skövde plant achievement is an important addition to our broader efforts in minimising our environmental footprint."
"We are pleased to be a leader within the automotive industry in the move towards climate-neutral manufacturing," he added.
The announcement comes after the company committed to electrifying all of its new models launched from 2019, as part of an ongoing effort to reduce its overall carbon footprint.