Transport and environment, EU independence from Chinese batteries in 2027 January 26, 2023 3

Theme independence of the European Union from China As for the production of cells for electric vehicle batteries, this is certainly very important. This topic has been discussed a lot lately, and we know that the European Union is working on several fronts to ensure that car manufacturers have enough products without being dependent on Chinese factories.

According to Transport and Environment (T&E) Reportthis independence can come in 2027. This study indicates that by this date, continental production will be sufficient to meet 100% of domestic demand. Dependence on China, again from 2027, should end for other battery components as well. In fact, the report highlights, two-thirds of European demand for cathodes containing critical raw materials could be covered by domestic production, at least according to data coming from participating companies, including Umicore (in Poland), Northvolt ( in Sweden) and BASF (in Germany).

However, the report highlights a very important fact, namely that in the absence of political initiative able to balance incentives for the sector promoted by the United StatesEurope risks losing some of the investment in the electric vehicle supply chain.

RISKS

In practice, Transport & Environment wanted to warn about Risks of the Inflation Reduction Act (IRA) that the US government is ready to support the national production of electric vehicles and the growth of the battery supply chain. In fact, according to the report, companies may decide to move initiatives currently planned for Europe to the United States amid tax credits and other subsidies provided by the Inflation Reduction Act (IRA).


Therefore, according to Transport & Environment, the European Union must accept the European Sovereign Fund to support green technologies, which will be financed by issuing general debt. Choosing this path will ensure a level playing field for all member states, preventing countries with larger resources from taking advantage of them by offering generous government bailouts to their companies. However, this fund, according to T&E, must only offer support to green manufacturing sectors affected by the US IRA, such as electric vehicles, batteries and renewable energy.

However, unlike funding provided by the next generation of the EU, these new resources must be allocated directly to companies, which speeds up the absorption process, which was especially slow with the implementation of the European Recovery and Resilience Fund (RRF). However, the spending provided by the RRF itself also lacks strategic focus, not to mention that the funds are often slow to reach companies and cannot be used as bank guarantees, unlike what happens with IRA loans in the United States. Finally, EU state aid rules should be simplified, allowing green projects to access funds to increase production, as is already the case, including in this case in the US.

Thus, with the right and timely political action, the European Union can indeed achieve independence from China in the field of battery cell production in 2027. According to T&E, he’s destined also reduce dependence on recycling and in the processing of metals used in batteries. By 2030, more than 50% of domestic demand for refined lithium can be met by projects on the mainland.

The purchase of raw materials will be made from foreign or European mines, subject to high environmental and social standards, as required by the EU Critical Raw Materials Act, which is currently being discussed in Brussels.

Author: Philip Vendrame

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Source: HD Motori

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