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EU battery industry must try avoid critical dependency on external sources: EC

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EU battery industry must try avoid critical dependency on external sources: EC

Highlights

Need varied, sustainable and homegrown value chain

Efficient batteries requirement growing at unprecedented pace

Increased focus on digitalization of energy system needed

  • Author
  • Jacqueline Holman
  • Editor
  • Daniel Lalor
  • Commodity
  • Electric Power Energy Transition Natural Gas Metals
  • Tags
  • Cobalt Solar energy
  • Topic
  • Battery Metals Energy Transition Environment and Sustainability

The EU must be careful of its developing battery industry becoming critically dependent on external sources, according to the European Commission Policy Officer, Innovation, Research, Digitalisation, Competitiveness.

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"We have to be careful that we get all our value chains to speed as fast as this transition is happening, because batteries will be increasingly important," Jens Bartholmes told a Nov. 15 Eurobat webinar.

"But we have learned the hard way that actually we have to minimize any critical dependencies of our energy system," Bartholmes said, referring to the dependency on Russia for gas supplies.

"This was really a wake-up call on how important it is to have a varied but also sustainable and homegrown value chain for everything that we have in the energy sector, or at least come close to it."

To achieve this, the EU required a strong competitive manufacturing sector and had to ensure its envisaged deployment of renewables was supported by the technology battery sector.

"We have to be careful that are we are not running from one dependency into the next one, so when developing batteries of the future and the whole battery value chain, we should very much keep it in consideration that we have to avoid critical raw materials that may strangle the whole process and we have to actually get production, but also the skill and the best talents," Bartholmes said.

"Quoting [Vice-President Maros] Sefcovic, we need to take a leap from 'Made in Europe' to 'Invented in Europe' and really grow our homegrown battery industry strong and fast," he said, adding that included using the right battery chemistries, such as those with lower cobalt content.

Unprecedented pace

Europe's need for efficient batteries was growing at an unprecedented pace, Bartholmes said.

"The future we are facing will be increasingly electric, especially now it has been pushed to speeds we did not expect some time ago through the political situation, which pushes the migration from fossil to electric even faster."

One of the main drivers was the automotive sector, with the EC expecting around 50 million electric vehicles to be on European roads in 2030.

"That means, and this seems to be conservative, that we are going to the terawatt scale of batteries -- I have 1.5 TWh," Bartholmes said.

"I see from [Eurobat] estimates that this can reach up to four times more and we also will have a much larger, but still small compared to cars, 80 GWh of stationary batteries that we need for 2030. But this might see an extreme increase in the coming years because the smart grid and smart energy system we are looking at will, in our opinion, need much more stationary [batteries] than is currently projected."

In addition, by 2050, the entire European car fleet of an estimated 250 million vehicles should be electric, with battery manufacturing capacity having to increase with it.

"There are concrete proposals on the table for completely stopping the combustion engine by 2035, so this will further push this," Bartholmes said.

In addition, the REPowerEU renewable energy plan was due to possibly increase the need for stationary batteries in the range 100s of GWh in 2030, he said, which would add more pressure on the battery sector, but also "a huge opportunity to stand up to his challenge."

Digitalization

Bartholmes called for increased focus on the digitalization of the energy system, with an EU action plan on digitalizing the energy system launched recently through research funding program Horizon Europe.

That would feed into the green deal and REPowerEU, with him saying that if the EU was to reach its goal of 45% of renewables by 2030, more focus was required on the smart management of batteries and the whole system.

"We think that decarbonization in general, electrification in specific will need digitalization to make it work and to steer this and the entire energy and digital transition, we adopted this action pan that gives several pushes in directions where we need to be more aware of cyber security of these new smart systems," he said.

EC initiatives

The EU Solar Photovoltaic Industry Alliance, the European Clean Hydrogen Alliance, the European Raw Materials Alliance and the European Battery Alliance had been established to strengthen value chains and promote homegrown production, Bartholmes said.

"That is important for Europe, and we think we are currently on track because for 2025 it is foreseen that we can cover 69% of battery demand and then by 2030, up to 89%. Hopefully we can live up to this."

The EC's annual report on the competitiveness of energy technologies adopted Nov. 15 showed "huge progress" in battery technology in the EU, but there was still a lot to do, Bartholmes said.

There were also upcoming battery regulations at the final stage of the legislative process which, he said, would hopefully further push the sector, while Eurobat helped guide the EC's battery agenda to meet green deal objectives.

Eur1 billion ($1.04 billion) had been earmarked via Horizon Europe for battery research by BATT4EU focused on ensuring the entire battery value chain's independence from outside shocks.

The EC had already spent close to Eur150 million on energy storage projects, while there were also the two battery-focused Important Projects of Common European Interest, which included Eur6.1 billion in state aid and Eur15 billion from private sector investments, Bartholmes said.

Platts, part of S&P Global Commodity Insights, assessed seaborne lithium carbonate and lithium hydroxide at $77,000/mt CIF North Asia and $84,300/mt CIF North Asia Nov. 16, up 128% and 166%, respectively, since the start of 2022.