Wednesday, 17 March 2021
The Battery Alliance aims at promoting the transition to electric vehicles in the EU by developing its capacity to produce batteries but a regulation on sustainable performance standards is still missing.
The alliance, a network of innovation and industrial actors in the EU, was established in 2017 on the initiative of European Commission Vice-President Maros Sefcovic.
At a ministerial meeting last week (12 March), attended by ministers from 14 EU member states and the European Investment Bank (EIB), the alliance discussed the progress achieved until now and the most pressing priorities, such as the supply of raw materials in the EU and the adoption of standards to ensure the batteries will be sustainable and reusable and produced by renewable energy.
Currently Asia provides more than 90% of the world car battery output, half of which comes from China alone. Furthermore, the raw materials such as lithium and cobalt are extracted in other parts of the world.
“2020 was another defining year for the European Battery Alliance,” Sefcovic said at the press conference following the meeting. “Despite the pandemic, Europe continues to be a battery hotspot, closing the investment gap to our major Asian competitors, and in moving fast towards in this critical sector.”
He highlighted that almost 70 industrial projects are being supported by the Alliance, while expected to create 3 to 4 million jobs by 2025.
“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.”
According to Sefcovic, 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. Indirectly, however, he admitted that the Alliance had put the chart before the horse, by not regulating the production of batteries and its consistency with EU’s ambitious climate goals.
Sustainable battery production
The issue was raised already last August, when the Commission announced actions to make Europe’s raw materials supply more secure and sustainable, including the raw materials to batteries. The investment that the Commission has mobilised should lead to supplying 80% of Europe’s lithium batteries demand from European sources by 2025.
The Commission is therefore accelerating the work on a Batteries Regulation during the Portuguese Presidency and will “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, according to Sefcovic. In fact, the Battery Alliance is planning for the construction of 20 – 25 giga factories (billion watt) by 2025 to cover the EU demand. One already under construction is Northvolt in northern Sweden which will use 100 % renewable energy.
Transport has a key role to play in the European Green Deal. Today, transport accounts for a quarter of the EU’s total greenhouse gas emissions and contrary to other sectors, emissions have increased over recent years. According to the Commission, by 2050 emissions from transport need to decrease by 90%, which will mean that almost all cars on EU roads will have to be zero-emission by this date.
Tailpipe emissions from electric vehicles are zero and will improve the air quality in urban traffic but a wider perspective requires considering the “well-to-wheel emissions” during their entire life cycle of the cars, including the production of the batteries. That obviously very much depends on whether the electricity is produced with renewable energy.
Lifecycle calculations show that that electric vehicles pollute up to 70 % less than petrol-and diesel fuelled vehicles but that the difference, though still significant, is reduced if the electricity to produce the batteries and charge the vehicles is generated by non-renewable energy. The issue has not yet been addressed by the Battery Alliance.
Life-cycle comparisons of different fuels
Asked by The Brussels Times if the Commission is basing its transport policy on life-cycle comparisons, an EU official referred to a study in 2020 published by the Directorate-General for Climate Action (“DG CLIMA), titled “Determining the environmental impacts of conventional and alternatively fuelled vehicles through life-cycle assessments”.
Life-cyle studies can be done in different ways, requires lots of data collection and requires much time and expert knowledge to grasp. That said, there seems to be a general consensus that e-vehicles pollute less the fossil-driven vehicles – how much depends on whether “dirty” electricity is used and if the batteries are big and produced in a non-sustainable way.
While the Commission is revising the CO2 emission performance standards legislation for cars and vans to align them with EU’s climate objectives and will decide on more stringent pollutant standards for combustion engine vehicles, it will also to have consider a phase out of such vehicles to ensure a clear pathway towards zero-emission mobility and e-mobility.
EIB’s role in the Battery Alliance
Thomas Östros, a former Swedish minister and newly appointed Vice-President at EIB in charge of among others financing of energy, attended the meeting of the Battery Alliance. He told The Brussels Times that being part of the European Battery Alliance prompted the EIB to significantly step up its financing of all stages of the battery value chain.
“In 2020, the EIB increased its lending to the European battery industry to about €1 billion. For comparison: this is almost four times the amount we put into battery-related projects over the previous decade. But then, batteries just became a priority in late 2017. The European Battery Alliance played a crucial part in this development.”
The common denominator in the projects that EIB supported is risk financing. “Projects in this sector are very challenging but they can also push Europe forward as few other projects can do. Hence, we take a certain risk and we encourage the industry to work together. Like this we help to make projects bankable and give investment incentives to private players as well.”
Will EIB’s future investments in battery production in the EU be dependent on the forthcoming EU regulation on a sustainable supply chain and production of batteries?
“As the bank of the European Union, the EIB follows EU policy developments closely,” Thomas Östros replied. “This is true for sustainable supply chains and the production of batteries as well. Having said this, last year, the EIB approved the Climate Bank Roadmap, which ensures that all new operations, including in the field of batteries, are aligned with the goals of the Paris Climate Agreement.”
He added that it was not for EIB to comment on whether the first giga factories for battery production should be running on renewable energy already by 2025.
Does EIB support economic incentives for the transition to e-mobility based on life-cycle comparisons?
“The EIB supports the transition to e-mobility through the instruments that it has at its disposal,” he replied, and exemplified by EIB’s financing to RDI, manufacturing, deployment of electric fleets and financing their wider infrastructure needs, such as the charging of e-vehicles.”
For fleet efficiency criteria, tank-to-wheel criteria have been used until now in line with current EU legislation. “Life-cycle and well-to-wheel considerations for thresholds depend on the possibility of agreeing a common EU methodology in the future. Such criteria for efficient, low- and zero emission fleets require that operated fleets become more efficient over time.”
“They link eligibility to emissions performance below a certain threshold, which is set to ensure substantially reduced emissions. Thresholds are based on performance and are linked to available testing methods. They require efficiency improvements but don’t prioritise a specific technology, as long as the benefit of the respective technology can be demonstrated.”
The Brussels Times