Analysis, Energy storage

Batteries “made in Europe” – will Romania be at the big production table? Europe’s rivals: China, USA

68% of Europe's planned annual battery production capacity is at risk, says a study by the European Federation for Transport and Environment (Transport & Environment), while in Romania 99% of essential resources remain unused.

In 2017, the European Commission set up the European Battery Alliance, a network through which the EU aimed to close the major gap with its main competitors in the market: China and the United States. At the time of the Alliance’s establishment (EBA), the Union was not producing battery components on a large scale at all and covered only 3% of the global market for profile.

The European Battery Alliance starts from a simple idea: joining forces and cooperating within the EU on a value chain so that batteries, the heart of the green industrial revolution, are made “in house” – batteries “made in Europe” for when demand for electric cars explodes. The Commission’s 2017 call has been issued to all interested EU Member States and industrial actors to join the battery value chain from raw or processed raw material, battery cell component production, battery cell production, battery cell production, battery cell production, electric machine production, to the component of recycle.

All with funding from the European Investment Bank. Six years after the launch of the EBA, the network comprises 800 industrial stakeholders from the public and private sector covering the entire value chain and involving investments of around €180 billion. euro.

In the first few years since its launch, the European Union, through the Battery Alliance, has become the largest investor in the battery sector in the world, with twice as much investment as China. In 2019, for example, the EU invested €60 billion while China invested only €17 billion. billion.

Perhaps one of the most notable achievements within the EBA is the construction of gigafactories – factories that produce batteries for electric vehicles on a large scale. In 2020, with an investment from the European Investment Bank, the Swedish company Northvolt was building Europe’s first gigafactory. Northvolt’s plans estimated the plant’s annual production capacity at 16 GWh, which would increase to 40 GWh.

By comparison, China, the leading battery producer, produced 230 GWh in 2019. EBA set out with ambitious plans, aimed not only at closing the gap with major competitors but also at making the European Union a world leader in the industry batteries.

A goal that seems rather distant at the moment due to problems that have arisen in the battery value chain and also due to major events: the pandemic and the war in Ukraine, which led to the energy crisis and rising energy prices. This has resulted in bottlenecks and disruptions in the supply chain threatening the investment climate and European competitiveness in the market. batteries.

In the value chain, the European Commission has identified major problems in terms of access to essential raw materials for battery manufacturing and a shortage of skilled labour. In other words, there’s no point in building giga factories if you don’t have raw materials and engineers with special training in the battery industry. As early as 2020, special attention and major investment was required for access to raw materials within EU.

Raw materials such as lithium or cobalt are currently mostly sourced from outside Europe.

Demand for lithium is expected to increase 16-fold by the end of the decade and 60-fold by 2050.

Problems have deepened with the launch of the US Inflation Reduction Act, which offers substantial tax breaks to buyers of US-assembled electric cars that use batteries made with American components.

A study by the European Federation for Transport and Environment (Transport & Environment) shows that 68% of Europe’s planned annual battery production capacity is at risk.

With the American law to reduce inflation, the US has positioned itself as the most exciting place in the world to produce battery cells. Estimates show that battery production would cost 30-40% less in the US if the European Union does not take action to counteract US financial incentives. The European Union has answer.

This month, on 16 March 2023, the European Commission presented the Zero Emissions Industrial Plan Act in which the Commission readjusted some of its targets. The proposed law aims to speed up the permitting process and increase access to finance for clean technologies, including batteries.

According to Frans Timmermans, the law will allow for faster permits, shorter deadlines, one-stop shops – easier procedures. On essential raw materials, the EU has announced that it aims to extract at least 10% of the raw materials needed from the Union’s soil by 2030, process 40% of what is needed, and 15% to recycle.

How does Romania relate to the European Battery Alliance, a network that, beyond the challenges, offers huge opportunities - access to funding, investment, a strategic industrial leap and the creation of tens of thousands of jobs?

Unfortunately, Romania’s profile in the European Battery Alliance is almost non-existent compared to the big players Germany, France, the Nordic countries and countries in the region such as Poland, Hungary or Czech Republic.

On the list of companies that are part of the European Battery Alliance, Romania appears with only one player, Prime Batteries Technology SRL, a manufacturer of lithium-ion batteries.

The start-up founded in 2016 by two local entrepreneurs have joined forces with EU co-founded conglomerate EIT InnoEnergy and plans to invest €1 billion to increase its production capacity to 8GWh by 2026, from the current 0.2 GWh. By comparison, a gigafactory can produce even 200 times more per year, up to 40 GWh, i.e. batteries for more than half a million cars. electrical.

Why only one Romanian company is part of the European Battery Alliance is a question that can be a topic in itself

What is certain is that Romania can do much more in the European battery value chain to become a major player in the region. Resources are in the East, industry is in the West.

That’s a broad picture of the European Union at the moment. And Romania has resources. According to the Romanian Geological Institute, our country has deposits of resources on the recently updated list of strategic raw materials, essential for the value chain of batteries.

For example, Europe has a 7% lithium requirement for lithium-ion battery production but produces only 3%, so production needs to be doubled. Stefan Marincea, former director of the Romanian Geological Institute says that our country can “definitely” be an important source of lithium and graphite.

The site is located in the Cindrel Mountains, at Contu-Negovanu. Potential lithium-bearing clays are in Dobrogea and Moldova Noua, but we also have lithium-bearing geothermal waters in the South Bihorul area. Romania also has deposits of graphite, from which graphene, the most resistant material known and the best conductor of electricity.

It is used in batteries and the increasingly aggressive advance of electric car production makes graphene a highly sought-after material. In Romania, graphite is explored and mined in the Valea Galbenă area in Gorj.

According to the same expert, our country has “huge deposits” of magnesium in the Budureasa area but also boron, a critical element that others do not have and which Europe is currently importing from Turkey. According to the geology professor, the Romanian state would have a clear picture of the situation of critical resources and the exact quantities we hold if there were investments in this sense.

The fact is that 99% of Romania’s resources are currently unused and any interest in activating and exploiting such a resource would mean a waiting time of at least 3 years. Another weakness in the battery value chain where Romania can play a key role is the acute lack of specialists.

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