A sustainable & competitive EU battery value chain - Hanover Communications


10 Mar 2020

State of affairs

Only eleven days after taking office in December 2019, the new European Commission presented its ambitious European Green Deal to decarbonise the economy while creating jobs and driving innovation.

There is no silver bullet to achieve carbon-neutrality, as the plethora of issues and legislative initiatives in the Green Deal demonstrates. The strategy ranges from clean energy to resource efficiency and circularity across all sectors, from eliminating pollution to biodiversity.

Within this, however, it is clear that electrification will play a key role in the clean energy transition, with batteries as an essential element in stabilising the power grid and the roll-out of clean mobility. Developing a sustainable and competitive European battery value chain is, therefore, a crucial enabler for the green transition.

The EU battery market potential is estimated up to €250 billion annually from 2025. Today, however, the European share of global battery cell manufacturing is just 3%, while Asia’s is 85%. To prevent dependence on non-European competitors, Europe has embarked on a path to consolidate its technological and industrial leadership across the entire value chain.

In 2017, the Commission launched the European Battery Alliance (EBA) to support scaling up innovative solutions and manufacturing capacity in Europe. Around 260 industrial and innovation actors have since joined, leading to a pool of up to €100 billion in public investments. Moreover, late last year, the Commission gave the green light to €3.2 billion in state aid for battery projects in Belgium, Finland, France, Germany, Italy, Poland and Sweden. This sum is expected to attract a further €5 billion in private investment.

EU carmakers are already expanding their EV plans, jointly aiming to invest approximately €145 billion. The increasing focus on EVs is completely revolutionising the automotive sector, leading to the loss of jobs in the production of internal combustion engines, with 88,000 such jobs at risk only in Germany according to a recent study commissioned by the German government. Most of the cars presented at the recent Brussels Motor Show are electric. By 2025, the production of EVs in Europe is expected to reach more than 4 million vehicles. However, this growth at this scale raises questions beyond affordability and availability of charging infrastructure: where the raw materials used in batteries sourced, and how much energy is used in their production?

Upcoming legislative developments

By October 2020, the Commission will propose a new regulatory framework to ensure a safe, circular and sustainable battery value chain for all batteries.

The Reviewed Batteries Directive – or Regulation, as still to be confirmed – is expected to continue the path to more circularity, setting ambitious recycling and collection targets, and offering clarifications on second life, materials recovery, and disposal.

The Commission will also propose sustainability requirements for batteries (in both mobility and energy storage applications). The requirements will focus on transparency in the supply chain through responsible sourcing of raw materials, creating a level playing field for all batteries regardless of origin. They will also aim at providing information on the carbon footprint of batteries during the entire lifecycle including energy used in manufacturing. With minimum requirements set for the first life of batteries, further emphasis will be put on design for circularity, with the purpose of enabling recycling and bringing down costs.


Setting up a sustainable European value chain for batteries comes with a set of serious challenges. With multiple and at times overlapping pieces of legislation applicable to the battery industry (e.g. hazardous substances management under the Batteries Directive, on the one hand, and exposure risk of workers under REACH and Occupational Health and Safety Legislation, on the other), a coherent and unified legislative framework with a futureproof approach for 2050 is necessary. Developing such legislation is difficult, however, given the uncertainty about certain technologies and the speed at which the sector is moving, where major breakthroughs in storage capacity are still expected. Moreover, battery manufacturers are hesitant to share data on new technologies and research (for instance, with recyclers), fearing they would lose their competitive advantage in a very competitive sector.

There are concerns that the EU does not have sufficient resources to meet the supply chain demands – even with improved levels of recycling. Businesses involved in battery production, or automotive/energy companies who are reliant on the end product, will need to make concerted efforts to ensure that the Commission’s plans on circular economy ensure recycled materials are focused on this sector. Similarly, from a reputational perspective, those sourcing materials from outside the EU will need to ensure that proper verification and due diligence is applied to ensure sustainable supply chains.

Researchers and industry have the daunting task of inventing the batteries of the future, which would help enable long-term European leadership in both existing markets (e.g. road transport, stationary energy storage) and emerging applications (e.g. robotics, aerospace, medical devices, internet of things). Skills and competences are required across the entire value chain, with funding urgently needed from the Commission, EU Governments and business coalitions to prevent skills gaps. Given the increased emphasis on achieving the highest possible recycling rates, further investment in sustainable mining and recycling is necessary.

Against such a complex backdrop, the upcoming legislation is unlikely to answer all outstanding issues. Cooperation and coordination between industrial stakeholders and policy-makers both at EU and national level is necessary to ensure a sustainable and competitive European battery value-chain. To this end, it would be a good idea to set up a multi-stakeholder platform which brings together industry (both battery producers and users), NGOs, think tanks, the scientific community and policy-makers, facilitating regular dialogue to discuss challenges, opportunities and solutions in order to contribute to creating that coherent and sustainable policy framework.