EU Risks Falling Behind in Global Battery Race, Warns European Court of Auditors
The European Union (EU) is at risk of falling behind in the race to become a global battery superpower, according to a report published today by the European Court of Auditors. While the EU has made efforts to promote its industrial policy on batteries, access to raw materials, rising costs, and fierce global competition remain major obstacles. The auditors warn that these challenges could hinder the EU’s ability to meet the growing demand for batteries and achieve its zero emissions target by 2035.
In 2021, nearly one in five new cars registered in the EU was a rechargeable electric vehicle, and the sale of new diesel and petrol cars will be banned by 2035. As a result, batteries have become a strategic imperative for the EU. However, the European battery industry lags behind global competitors, particularly China, which accounts for over 76% of global production capacity.
To address this issue and make the EU a global battery superpower, the European Commission published a strategic action plan on batteries in 2018. The plan includes essential tools such as strategic leadership, regulation, and funding to support the sector. However, the auditors caution that the EU could start at a disadvantage in terms of access to raw materials, investor interest, and costs.
Between 2014 and 2020, the battery sector received at least €1.7 billion in EU grants and loan guarantees, in addition to nearly €6 billion in authorized state aid between 2019 and 2021, mainly in Germany, France, and Italy. However, the auditors found that the European Commission lacks an overview of all the public support offered to the sector, limiting its ability to ensure proper coordination and targeted support.
While the EU’s battery production capacity is projected to grow from 44 GWh in 2020 to 1,200 GWh by 2030, these projections are not guaranteed and could be jeopardized by geopolitical factors and cost considerations. Battery makers may choose to leave the EU for regions like the US, which offers significant incentives for production. Additionally, the EU heavily relies on raw material imports, particularly from countries with which it lacks trade agreements.
To address these challenges, the European Commission proposed legislation on critical raw materials in March of this year. However, the competitiveness of EU battery production could still be threatened by rising raw material and energy prices. The auditors also criticize the lack of quantified and time-bound targets in the current EU strategy, which could hinder the industry’s ability to meet the growing demand for zero-emission vehicles.
The report warns of two potential worst-case scenarios if the EU’s battery industry does not expand as expected. Firstly, the EU may be forced to postpone the ban on vehicles with internal combustion engines beyond 2035, jeopardizing its carbon emissions neutrality objectives. Secondly, the EU may have to heavily rely on non-EU electric vehicles and batteries, negatively impacting the European car industry and its workforce.
In April 2018, the European Commission published the Action Plan on Batteries, aiming to make Europe a world leader in the production and use of sustainable batteries. The plan outlines six objectives, including secure access to raw materials, support for European industrial-scale production of battery cells, and enhancing workforce skills. The full report, titled ‘EU industrial policy on batteries – A new strategic impetus is needed,’ is available on the Court’s website.
The EU faces significant challenges in its quest to become a global battery superpower. Addressing these obstacles
european court of auditors
To increase to 1,000 GWh by 2025, the auditors warn that this may still fall short of meeting the expected demand. The lack of a comprehensive and coherent strategy, including a clear roadmap and targets, hinders the EU’s ability to attract private investment and coordinate efforts among member states.
Furthermore, the auditors highlight the importance of access to raw materials, such as lithium and cobalt, which are crucial for battery production. The EU is heavily dependent on imports, particularly from countries with potentially unstable supply chains. The report calls for a strategic approach to diversify supply sources and reduce the EU’s reliance on external suppliers.
In terms of costs, the auditors note that Europe’s high electricity prices and stringent environmental regulations can put EU manufacturers at a disadvantage compared to global competitors. They recommend implementing measures to support the competitiveness of European battery manufacturers, such as targeted funding and streamlined regulations.
The auditors also emphasize the need for research and innovation to drive technological advancements in battery production. While the EU has several research and innovation programs in place, the report calls for better coordination and alignment of these initiatives to maximize their impact.
Overall, the European Court of Auditors urges the EU to take immediate action to address the challenges and risks identified in the report. It emphasizes the importance of a coordinated and comprehensive approach to position the EU as a global battery superpower, ensure a secure supply chain, and support the transition to clean energy and zero emissions by 2035.
It is imperative that Europe takes immediate actions to invest and foster its battery industry, or else risk falling behind in the global market. The EU must prioritize research, development, and infrastructure to ensure competitiveness and secure a sustainable future for the continent.
This article sheds light on a critical concern as Europe’s lagging stance on battery production could result in losing the race altogether. Urgent action must be taken by the EU to prioritize and invest in battery technology to secure a sustainable future and not let other countries take the lead.