Wed. Sep 27th, 2023
    The European Union’s Potential Dependency on China for Lithium-Ion Batteries and Fuel Cells

    A paper prepared for EU leaders has warned that the European Union could become as reliant on China for lithium-ion batteries and fuel cells by 2030 as it once was on Russia for energy before the conflict in Ukraine. The document, which will be the basis of discussions during an upcoming EU leaders’ meeting in Granada, Spain, highlights the need for strong measures to prevent excessive dependence on China.

    The paper emphasizes the importance of energy storage to achieve Europe’s goal of net-zero carbon dioxide emissions by 2050, given the intermittent nature of renewable energy sources like solar and wind. It states that the demand for lithium-ion batteries, fuel cells, and electrolysers could multiply between 10 and 30 times in the coming years. While the EU holds a significant global market share in the intermediate and assembly phases of manufacturing electrolysers, it heavily relies on China for fuel cells and lithium-ion batteries, particularly for electric vehicles.

    The EU experienced the negative consequences of excessive reliance on Russia for energy prior to the invasion of Ukraine. The disruption in energy supplies caused an energy price shock and inflation, leading to the European Central Bank raising interest rates and negatively impacting economic growth. Therefore, it is crucial for the EU to avoid a similar scenario with China in the coming decade.

    According to the paper, the EU also faces vulnerabilities in the digital-tech space. The demand for digital devices is expected to rise sharply, and the EU’s strength lies primarily in data transmission networks, with weaknesses in other areas such as sensors, drones, and storage equipment.

    The document warns that the EU’s foreign dependency on China could hinder productivity gains and impede the modernization of agriculture systems necessary to combat climate change. Taking these concerns into account, EU leaders will discuss proposals to diversify towards Africa and Latin America and reduce the risk of excessive dependence on China.

    In conclusion, the European Union must take strong measures to address its potential dependency on China for lithium-ion batteries, fuel cells, and other critical technologies. Diversifying energy and technological partnerships can safeguard the EU’s economic security and ensure progress towards climate goals.

    – Paper prepared for EU leaders during the meeting in Granada, Spain
    – European Commission data on energy imports from Russia
    – Jan Strupczewski’s article on Reuters: “EU may become as dependent on China for lithium, fuel cells as on Russia for energy: paper”