The EU could end dependence on China for lithium-ion battery cells by 2027, Transport & amp; Environment (T&E) has a forecast. Europe is on track to produce enough Li-ion cells by then to fully meet domestic demand for electric vehicles and energy storage, according to a new analysis of battery manufacturers’ announcements. However, the green group said the EU needs a strategy to counter US subsidies or risk losing investment in the EV supply chain.
China’s regulation of battery components could also be cut. Two-thirds of Europe’s demand for cathodes – which contain important green materials – could be produced domestically by 2027, the report also finds. Existing and planned cathode manufacturing projects include Umicore in Poland, Northvolt in Sweden, and BASF in Germany. But companies could still move projects planned for Europe to America, tempted by tax benefits and other subsidies provided by the Tax Cuts Act for entering battery supply chains in America.
Dependence on China for the refining and processing of battery metals could also drop significantly: more than 50% of Europe’s refined lithium demand could come from European projects by 2030, T&E forecasts. These include RockTech Lithium and Vulcan Energy Resources in Germany, and Imerys in France. Materials will be sourced from mines abroad or directly from European projects under the proposed EU Critical Raw Materials Act as long as they meet high environmental standards.
Julia Poliscanova, senior director of vehicles and e-mobility at T&E, said: “The EU’s phase out of combustion engines by 2035 has already encouraged a lot of investment. Today half of lithium-ion battery cells those used in the EU are already made there. But the Tariff Reduction Act has changed the rules of the game, and Europe needs to put more money on the table or risk losing planned battery factories and jobs to America.”
A European Sovereignty Fund supporting green technologies should be created with the money raised by issuing a joint loan, T&E said. This will level the playing field for Europe and avoid money-rich countries leaving others behind by giving more government subsidies to companies. Only green production targeted by the US IRA, such as electric vehicles, batteries, and renewables, should receive funding.
But, unlike the Next Generation EU, funds should be sent directly by the EU to companies to avoid the slow absorption rates seen under the Recovery and Resilience Facility (RRF). Using money under the RRF also lacks a focus, funds are often delayed in reaching companies, and the money cannot be banked in the same way as US IRA production loans. EU state aid rules also need to be reformed so that green projects can be promoted using production aid – as is already allowed in the US.
Julia Poliscanova said: “Europe needs financial strength to support its green industries in the global race with America and China. The European Sovereignty Fund would support a real European industrial policy and not the countries that have deep pockets. But the spending rules need to be adjusted so that building a battery plant doesn’t take as long as a coal plant.”
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Originally published by Transportation & Environment.
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Transportation & Environmental Vision (T&E) is a zero-emission mode of transportation that is inexpensive and has minimal impacts on our health, the climate and the environment. Founded more than 30 years ago, we have created some of Europe’s most important environmental laws.
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