T&E Study: European Battery Production Could Offer Up to 60 Percent Climate Advantage Over China
Relocating the electric vehicle supply chain from China to European sites could reduce the emissions generated during the production of a battery by 37%. This is shown by an analysis recently presented by the European environmental umbrella organization Transport & Environment (T&E). If renewable energies are used in production, the savings potential even rises to over 60%. If the European demand for battery cells and components were to be met locally, an estimated 133 million tons of CO2 could be avoided between 2024 and 2030. This corresponds to the annual emissions of the Czech Republic.
A look at the status quo makes it clear: Currently, Europe could produce less than half (47%) of the lithium-ion batteries expected to be needed by 2030. A year ago, the share was still one-third. Here, the measures taken in response to the US Inflation Reduction Act have shown their impact. For the remaining 53% of the announced production capacities, there is still a medium or high risk that they will be delayed, reduced, or canceled if European governments do not take decisive action.
“Batteries and the raw materials needed to produce them are the new oil. To fully exploit the benefits for the climate and the industry, European leaders must act together with a clear focus. Stringent sustainability standards, such as the carbon footprint for batteries, can drive clean, European production. It is crucial that we better position the European Investment Bank and the EU Battery Fund to support investments in European gigafactories," explains Sebastian Bock, Managing Director of T&E Germany.
France, Germany, and Hungary Increase Capacity
Since the last T&E risk assessment last year, France, Germany, and Hungary have shown the largest increases in capacity. In 2023, ACC began production in Pas-de-Calais, France, while the completion of facilities by Verkor in Dunkirk and Northvolt in Schleswig-Holstein is also approaching, partly due to state subsidies. Finland, the United Kingdom, Norway, and Spain, on the other hand, are locations where a substantial portion of capacity expansion continues to face medium to high risk. Projects by the Finnish Minerals Group, the West Midlands Gigafactory, as well as the initiatives by Freyr and Envision AESC are progressing slowly. T&E is therefore calling for a more investment-friendly climate. At the EU level, more ambitious regulations for electric vehicles must be introduced, strict sustainability standards for batteries must be enforced to strengthen intra-European production, and the EU needs to be equipped with better financing instruments for future technologies.
Securing Local Value Chains
Securing other parts of the battery value chain will pose an even greater challenge given China's dominance and Europe's gradually emerging expertise. According to T&E analysis, Europe has the potential to produce 56% of its cathode needs – the most valuable battery components – by 2030. So far, however, only two facilities have commenced production. By the end of this decade, the region could also meet its entire demand for processed lithium and recover between 8% and 27% of the required battery minerals from intra-European recycling loops. However, for rapid growth, processing and recycling facilities are dependent on support from the EU and the respective countries, according to T&E.
Translated automatically from German.“The race between China, Europe, and the USA is intensifying. While we have been able to save some of the battery investments that threatened to migrate due to US subsidies since last year, almost half of the planned EU production is still at risk. Germany and the EU must unequivocally commit to phasing out combustion engines and introduce binding targets for commercial electric vehicle fleets to give the industry certainty that a secure market for their products will emerge,” appeals Bock.
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