European Commissioner Maroš Šefčovič explains how the European Battery Alliance will establish an innovative value chain in Europe.
The European Commission’s Industrial Policy Strategy aims at making the EU the world leader in innovation, digitisation and decarbonisation. Batteries are a key enabling technology for e-mobility and energy storage. The EU Battery Alliance initiative, launched by European Commission Vice-President for the Energy Union Maroš Šefčovič on 11 October 2017, aims to help establish a robust, innovative and sustainable full value chain that currently does not exist in the EU.
The role of the EU Battery Alliance
The scale and speed of investment needed to establish a full value chain in Europe requires a European approach, integrated throughout the value chain. The commission is identifying ways of incentivising and leveraging investments (including through the use of existing EU funds) and by creating the right conditions for profitable batteries cells production in Europe.
The alliance should act as a catalyst to facilitate partnerships and generate positive impacts in the short term, especially on cell manufacturing projects, and longer-term impacts in areas such as research and development, skills and the circular economy.
Contextual factors
Analysts are expecting a surge in battery demand, particularly in the context of the shift towards e-mobility, over the next five years, and the majority of European OEMs have announced ambitious electrification strategies for their respective post-2022 vehicle line-ups.
An exponential growth of both the global and the European li-ion battery markets is expected by 2025: the growth should be three to seven times the current volume. The Joint Research Council (JRC) expects that the demand for automotive li-ion battery cells by European OEMs alone will be in the range of 15-28 GWh in 2021, and could potentially reach as high as 117 GWh by 2025. According to KIC Innoenergy, this market could represent up to $250bn (~€211bn) per year.
An exponential increase in supply
In 2015, 88% of the global li-ion battery cell manufacturing capacity (estimated at 60 GWh) was located in Asia (essentially in China, Japan and South Korea). Currently, the only major factory outside of this region is located in the United States.
The EU does not yet have a complete battery value chain, despite being competitive in several of its segments. The EU’s strengths are upstream (fundamental battery research, materials) and downstream (assembly/packing and battery management IT systems), but with no battery cell manufacturing at scale. However, EU cells manufacturers do have great technological knowhow, meaning that the EU could be more than the runner-up in global competition. The EU thus has the potential to become a world leader in battery manufacturing, recycling and second use.
The Battery Alliance initiative enjoys a very opportune momentum in this particular climate: recent climate negotiations, the clean energy package and the new post-2020 CO2 emission standards regulation, accompanied by an action plan to support the roll-out of an alternative fuels infrastructure. The European Commission is thereby working with member states to implement this agenda.
The next steps
The Battery Alliance is intended to have a flexible and evolving structure – the objective is not to set up a single super-entity but rather to establish the framework for the launch of several industry initiatives, both vertical and horizontal, across the whole value chain. At the Clean Energy Industrial Forum (Industry Days 22-23 February 2018), we will announce new initiatives and an action plan.
Maroš Šefčovič
Vice-President for Energy Union
European Commission
This article will appear in Pan European Networks: Government 24, which will be published in January, 2018.
