The European Union should lessen its dependence on China for batteries and green hydrogen electrolysers, Bavarian MEP Henrike Hahn told New Europe on May 4.

On May 5, the European Commission updated the EU Industrial Strategy to ensure that its industrial ambition takes full account of the new circumstances following the COVID-19 crisis and helps to drive the transformation to a more sustainable, digital, resilient and globally competitive economy. The Strategy also shows challenges and dependencies in the area of advanced technologies. It presents the results of six in-depth reviews on raw materials, batteries, active pharmaceutical ingredients, hydrogen, semiconductors and cloud and edge technologies, providing further insights on the origin of strategic dependencies and their impact.

Europe imports lithium for electric cars, platinum to produce clean hydrogen, silicon metal for solar panels. 98% of the rare earth elements Europe needs come from a single supplier: China. The import of rare earths from China is probably the most critical issue in this area, because Europe has no mining or processing activity for these important minerals.

“Battery production is key to build a green energy,” Hahn said in a phone interview. “We all know currently China to dominate the battery production but, on the other hand, the European Union is strongly involved in supporting its battery sector. We have the European Battery Alliance. Europe is developing quickly its battery businesses,” she added.

“The European Commission set a target of getting at least 30 million zero-emission cars on the roads by 2030 and the ambition is that the European factories would cover more than 90 percent of the demand for batteries. So, we did not lose the battle,” Hahn said.

Asked how lithium mining for electric car batteries in Europe could be done in a way that does not endanger the environment, the Greens MEP reminded that she is a member of the Industry Committee and a shadow rapporteur on the own Initiative Report on the European strategy for critical raw materials. She said the European Raw Materials Alliance (ERMA) established a project for Rare Earth Magnets & Motors and Materials for Energy Storage and Conversion that could be used as a pathway.

Turning to producing green hydrogen, the German MEP told New Europe the EU leads on innovative technologies. “If the battle of hydrogen and reliance on China for electrolysers can be won, I think that China currently produces the cheapest electrolysers but Europe leads the innovative technology to produce clean hydrogen,” Hahn said, adding, “So, the EU is keen to preserve its industrial leadership in electrolyser manufacturing so we are in a good way there as well”.

European Commission Vice President Maros Sefcovic in charge of the European Battery Alliance said earlier that despite the pandemic, Europe continues to be a battery hotspot, closing the investment gap to its major Asian competitors, and in moving fast towards its open strategic autonomy in this critical sector.

“The production of lithium-ion cell batteries has shown the most progress – and by 2025, we are now set to become the second largest battery cell producer in the world, behind China. Moreover, nearly 30 announced projects should largely satisfy the EU demand for batteries driven by e-mobility,” Sefcovic said at a meeting of the Battery Alliance in March. “In fact, 2020 will go down as the year of the electric car in Europe, as this market saw historic highs – notably, over 1 million e-cars registered, effectively doubling their number on EU roads,” the Commission Vice President added.

In order to keep up the pace, the EU must accelerate the work on the proposed Batteries Regulation – i.e., adopt the General Approach in the Council under the Portuguese Presidency and strive for the adoption of the proposal by 2022 at the latest, while maintaining the overall level of ambition on sustainability and circularity. This is indispensable, given the expected ramp-up in the production of batteries by 2023, Sefcovic said.

Moreover, it is essential to strengthen the local sustainable sourcing and processing of raw materials used in batteries as well as local production of key components that determine the performance of lithium-ion batteries, he said. “This calls for significant investment and greater mobilisation of public funding. As the Member States are finalising their national recovery and resilience plans, I encourage them to include investment in raw and advanced materials. Cohesion funds are another source of funding to consider,” Sefcovic said, adding that the involvement of the European Investment Bank (EIB) is decisive to de-risk raw materials projects, leverage additional private money and effectively, to close the estimated financial gap of €15 billion by 2025.

Also, the European battery success story depends on the EU’s ability to address the fast-emerging skills challenge, as the manufacturing of batteries requires a specific set of skills and currently, the European labour market does not sufficiently meet the demand, the Commission Vice President said, adding that the industry estimates that by 2025, this growing skills shortage could amount to some 800,000 jobs across the entire battery value chain.

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