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In the global race to green the supply chains of the future, Europe is still lagging behind. Decades of planning and investment by China, and recent strong support from the United States, threaten to leave our continent behind.
Chris Heron is Director of Communications and Public Affairs at Eurometaux; Julia Poliscanova is Senior Director of Transport and Environment; Kinga Timaru-Kast is the public affairs and communications director at Recharge
The European Commission’s new Battery Fund is a critical first step to fill the funding gap and scale up EU production of batteries, battery components and the entire supply chain. The Fund must be designed well from the outset to truly drive European investment companies to compete.
Today’s €3 billion will need to be used wisely to have a significant impact on investment in the EU battery value chain.
Let’s also be clear that this mechanism must be the first of many steps. It needs to be significantly expanded during the next legislative session to ensure final investment decisions across the battery value chain and truly compete with the U.S. Inflation Reduction Act and China’s accumulated excess capacity.
We call on the European Commission to design a smart and future-proof mechanism that delivers on the four keys to success: simplicity, speed, supply chain vision and sustainability.
As the committee worked out the details of the new fund, speed of operation and simplicity of design were two keys to success.
Europe cannot win the battery race by handing its companies complex templates and questions that require the input of entire teams of experts – as some grants under the Innovation Fund today require.
Instead, the first call should be made no later than the end of 2024. Support could be based on actual production in Europe, i.e. the number of batteries or battery materials.
The fund should also partially cover operating costs, such as energy and labor costs, which in Europe are among the highest in the world.
Our third key to success is to focus on the supply chain. We call on the EU’s new battery fund to also address materials manufacturing, as this is the main bottleneck to Europe’s resilience.
Today, Europe’s supply chain investments simply cannot keep pace with its battery needs, particularly for cathode and anode active materials and the refining and recycling of battery materials.
Although the potential is there, it is not easy to turn it into a commercial project. The EU Battery Fund could be one of the driving factors. T&E PredictionsBy the end of the century, the region In fact, it is possible to meet all its processed lithium needs and ensure that between 8% and 27% of battery minerals are recycled from Europe.
The EU has the potential to produce 56% of cathode demand by 2030, but only two plants have started commercial operation so far. Commercial operation of anodes has not yet begun in Europe.
But these beautiful visions need to be translated into final investment decisions.
In this regard, the European Commission’s initial support for battery manufacturers should already reward local supply chains. Priority should be given to companies that demonstrate a commitment to sourcing from EU midstream and upstream suppliers.
The new fund should therefore also plan to directly support strategic EU cathode and anode manufacturing, refining and recycling projects; while continuing to focus on battery manufacturing, especially in initial financing rounds.
The ultimate key to our success is sustainability.
Project selection in Europe should follow simple selection criteria that reward best-in-class projects with the lowest carbon footprint in the supply chain. This is Europe’s unique selling point, where our companies across the entire battery supply chain are based on significantly lower manufacturing costs than global competitors.
Member States should ensure the right investments are made locally and promote the use of renewable energy to consolidate this competitive advantage. As batteries and their components are already regulated under the EU Battery Regulation, no additional sustainability criteria are required.
The new EU Battery Fund is not a one-size-fits-all solution, but its financial support is essential to creating the green building blocks of the EU’s energy transition. If designed simply, taking into account the entire local supply chain and focusing on sustainability, it could put Europe on the global battery map.
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