Building Sustainable Battery Value Chains in Europe

Europe could be come a significant player in the global battery industry, with the potential to achieve self-sufficiency in battery cell production by 2026, according to a new report by Transport & Environment. 

By 2030, the continent could meet most of its own demand for critical components and materials, presenting a considerable opportunity to reduce reliance on imports and bolster energy security.

However, the path forward is far from certain. More than half of planned giga-factory projects in Europe face the risk of delay or cancellation. 

Building a strong battery production capacity in Europe would not only enhance its energy independence but also position the region as a leader in the burgeoning electric vehicle and renewable energy sectors.

Yet, significant challenges must be addressed to realise this potential. Securing adequate investment, ensuring a steady supply of raw materials and developing the necessary technical expertise are all crucial.

Without robust government support and a clear, long-term policy framework, many of these ambitious projects may not materialise, putting Europe’s aspirations in jeopardy.

Environmental benefits of a localised battery supply chain

One of the most compelling reasons for onshoring the battery supply chain to Europe is the environmental benefits it could deliver.

By producing batteries within the region and using the EU’s electricity grid, Europe could reduce carbon emissions by 37% compared to battery production in China.

The environmental gains could be even more substantial if Europe prioritises renewable energy sources, potentially slashing emissions by 62%.

These efforts could result in a reduction of up to 133 million tonnes of CO2 by 2030 compared to continuing to import batteries from China.

Beyond carbon emissions, Europe has the potential to become a major producer of key battery components.

By 2030, it could supply more than half (56%) of its cathode needs – the most valuable part of a battery. The continent could also fully meet its demand for processed lithium by that time. 

McKinsey also published its Battery 2030 report this year, outlining several key recommendations for policymakers. 

"Our Battery 2030 report, produced by McKinsey together with the Global Battery Alliance, reveals the true extent of global battery demand – and the need for far greater transparency and sustainability across the entire value chain," comments Benedikt Sobotka, CEO of Eurasian Resources Group. 

"The lithium-ion battery value chain is set to grow by more than 30% annually from 2022-2030, in line with the rapid uptake of electric vehicles and other clean energy technologies.

"The scaling of the value chain calls for a dramatic increase in the production, refining and recycling of key minerals, but, more importantly, it must take place with ESG considerations at front and centre.

"It's time we transition to a more circular, sustainable and just value chain that protects our planet's biodiversity and resources and ensures human rights are respected globally. We can achieve the sustainable future we all desire, but only if we work together for it."

Production capacity and the roadblocks ahead

Despite the promising outlook for Europe’s battery industry, significant risks and challenges persist.

Many planned projects remain uncertain, largely due to the high costs and logistical hurdles involved in scaling up production. Securing a reliable supply of raw materials, such as lithium, nickel and cobalt, is one of the primary challenges.

Developing the necessary skills and expertise within the workforce is also critical to ensuring Europe can maintain and expand its battery production capabilities.

The capital-intensive nature of battery production adds another layer of complexity. Both the initial investment required to build new facilities and the ongoing operational costs are substantial.

To navigate these challenges, policymakers must provide strong support through clear and consistent long-term policies. This includes setting ambitious targets for reducing vehicle emissions and implementing measures to secure local manufacturing.

"Umicore is a proud founding member of the Global Battery Alliance and a strong supporter of its Battery Passport project, as they align with our ambition to roll out a decarbonised and responsible battery supply chain," says Mathias Miedreich, CEO of Umicore. 

"Acceleration in EV sales will go hand in hand with unprecedented growth in the production of rechargeable batteries that are sustainably sourced, manufactured, used and recycled. 

"By sharing our longstanding industry expertise in battery materials and battery recycling through partnerships like the GBA, we aim to raise the bar to reach true clean mobility." 

A strategic path forward 

To build a sustainable and self-sufficient battery industry, Europe must adopt a strategic and coordinated approach.

Harmonising EU regulations to accelerate the decarbonisation of transport, implementing policies that support local manufacturing and securing a stable supply of raw materials will be essential, while ensuring sustainable practices throughout the supply chain is also crucial to minimising environmental impact and promoting a circular economy.

The lasting takeaway from these reports should be the notion that "Batteries, and the metals that go into them, are the new oil."

The challenges of this revelation are significant, but with the right policies and a clear vision, Europe has the potential to establish a resilient and sustainable battery industry that can compete on the global stage.

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