Connect with us

Hi, what are you looking for?

CleanTechnica
Image courtesy of Volkswagen, (VW Group battery factory launch)

Batteries

Forecast: Europe Could End Reliance On Chinese Li-ion Battery Cells By 2027

But pledged investments can still be lost to America unless the EU ramps up incentives for the EV supply chain.

The EU can end its reliance on China for lithium-ion battery cells by 2027, Transport & Environment (T&E) has 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 the new analysis of battery-makers’ announcements. However, the green group said the EU needs a policy to counter US subsidies or risk losing investments in the EV supply chain.

 

China’s dominance of battery components can also be cut. Two-thirds of Europe’s demand for cathodes — which contain critical raw materials — can be produced domestically by 2027, the report also finds. Existing and planned cathode production projects include Umicore in Poland, Northvolt in Sweden, and BASF in Germany. But companies could still move projects planned for Europe to the US, tempted by the tax benefits and other subsidies provided by the Inflation Reduction Act for localizing battery supply chains in America.

Reliance on China for the refining and processing of battery metals could also fall dramatically: more than 50% of Europe’s refined lithium demand can come from European projects by 2030, T&E forecasts. These include RockTech Lithium and Vulcan Energy Resources in Germany, and Imerys in France. The materials will be sourced from mines abroad or directly from European projects under a planned EU Critical Raw Materials Act provided they meet high environmental standards.

Julia Poliscanova, senior director for vehicles and e-mobility at T&E, said: “The EU’s phase-out of combustion engines in 2035 has already spurred much investment. Today half of the lithium-ion battery cells used in the EU are already made there. But the Inflation 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 to support green technologies should be established with cash raised through joint debt issuance, T&E said. This would provide a level European playing field and avoid cash-rich countries leaving others behind by offering generous state aid to companies. Only green production targeted by the US IRA, such as electric vehicles, batteries, and renewables, should receive cash.

But, unlike Next Generation EU, the funds should be disbursed directly by the EU to companies to avoid the slow absorption rates seen under the Recovery and Resilience Facility (RRF). Spending under the RRF also lacks strategic focus, funds are often slow to reach companies, and the money is not bankable in the same way as the US IRA production credits. EU state aid rules also need to be streamlined so that green projects can be scaled up using production aid – as is already permitted in the US.

Julia Poliscanova said: “Europe needs the financial firepower to support its green industries in the global race with America and China. A European Sovereignty Fund would support a truly European industrial strategy and not just countries with deep pockets. But spending rules need to be streamlined so that building a battery plant does not take the same amount of time as a coal plant.”

Read more:

Analysis: A European Response to US Inflation Reduction Act 

Originally published by Transport & Environment.

Related Stories:

A European Response To The US Inflation Reduction Act

Europe, China, & US Could Decarbonise 84% Of Global Shipping Emissions Without IMO

EU Passes Law To Make Electric Car Batteries Cleaner

 

 
Don't want to miss a cleantech story? Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!
 

Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.
Advertisement
 
 

Transport & Environment’s (T&E) vision is a zero-emission mobility system that is affordable and has minimal impacts on our health, climate and environment. Created over 30 years ago, we have shaped some of Europe’s most important environmental laws.

Comments

You May Also Like

Clean Power

Rail in the US is a case where a huge transportation segment is deeply out of step with the rest of the world, and...

Buildings

Federal rebate programs offer significant financial incentives to people who replace fossil fuel powered appliances.

Clean Power

The natural experiment of renewables vs nuclear continues in China, and it continues to unfold in renewables' favor. 

Cars

The UK auto market saw plugin electric vehicles (EVs) take 20.0% share of new sales in January, flat from 20.4% year on year. Full...

Copyright © 2023 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.