EU auditors launch audit of Europe’s quest to become a top global battery producer

EU auditors launch audit of Europe’s quest to become a top global battery producer
Gigafactory for battery production in Skellefteå, Sweden, credit: Northvolt

The European Court of Auditors (ECA) published on Tuesday a preview of a new audit to find out whether the European Commission has been effective in developing a globally competitive and sustainable value chain for batteries in the EU.

The audit comes against the backdrop of a rapid increase in European battery production expected by 2025 and the EU becoming the world’s second largest battery producer after China. Already one year after its launch in 2017, the European Battery Alliance was on its way to become a lead player in battery innovation and manufacturing and was building the first pilot production facilities.

In 2018, only about 3% of global production capacity of lithium-ion battery cells – currently the state of the art in electric vehicles – was located in the EU. For comparison, about 66% was located in China and 20 % in South Korea, Japan and other Asian countries.

The first Gigafactory (billion watt) in Europe for large-scale battery cell production construction has already been built by Northvolt in Skellefteå in northern Sweden – a region which according to the Commission is home to a prominent raw material and mining cluster. Building the factory in northern Sweden will enable Northvolt to utilise 100% renewable energy within its production processes.

“Batteries are highly relevant for Europe's role as a major industrial player and a leader in the clean energy transition, as well as for its strategic autonomy,” said Annemie Turtelboom, the Belgian ECA member who will lead the audit. “We will assess whether EU action is promoting a battery boom in Europe and contributing to a competitive and sustainable value chain.”

The preview describes the scope of the audit and different issues but it was too early to identify possible shortcomings that will be examined in detail in the audit. One issue is the Commission's optimistic forecast for 2025 when European battery production is expected to rise almost tenfold compared to 2020, involving 800,000 jobs and generating around €250 billion per year.

“The audit will examine the evolution of the EU’s battery value chain in recent years, including the actions taken by the Commission together with the Member States to support this evolution,” ECA member Turtelboom told The Brussels Times.

Another issue is that crucial raw materials for the building-up of a complete supply chain for the production of batteries, such as lithium and cobalt, still are largely in the ground in Europe and will have to be imported in the meantime.

The preview admits that critical materials are not produced in the EU in sufficient quantities to cover the expected hike in future demand and the risk of shortages, further aggravated by the war in Ukraine, will also adversely affect the EU’s battery production and its strategic autonomy.

“We will also examine any potential factors that may hamper its future growth,” Turtelboom added. “These include adequate and sufficient supply of raw materials. However, we cannot draw any conclusions yet as the audit work has just started.”

Initial estimates show that the EU budget provided at least €1.25 billion of grants to battery-related projects between 2014 and 2020 and a further €500 million as loan guarantees. EU’s research and innovation programme, Horizon Europe, has earmarked €925 million in this field for the 2021-2027. Battery-related milestones and targets are also part of some national resilience and recovery plans.

During the corona virus crisis, audits could not be carried out on the spot in the member states but this has changed as restriction measures have been lifted. The audit team will visit Germany, Spain, France, Poland, Sweden (countries where battery-related projects receiving the largest amounts of EU funding are being implemented) and Portugal (the country with the largest known lithium reserves in Europe).

The supply of batteries are closely linked to the charging infrastructure for e-vehicles, either in the form of stationary charging stations or electric road systems for charging when driving. In April 2021, ECA published an audit dedicated to the specific issue of recharging infrastructure.

Another issue is competition with alternative fuels, such a low carbon liquid fuels and hydrogen in the transport sector. The ECA’s work programme for 2022+ includes an audit dedicated to the use of hydrogen in transport.

M. Apelblat

The Brussels Times


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