McKinsey: Europe Can Power Sustainable Battery Value Chains
In a world increasingly focused on renewable energy and sustainable transportation, batteries have become more important.
Batteries can help to stabilise grids for renewable electricity sources, power electric vehicles and don’t emit harmful pollutants during operation.
A report from Transport & Environment (T&E) suggests that Europe could become a formidable player in the global battery industry, potentially achieving self-sufficiency in battery cell production by 2026.
This development presents a significant opportunity for Europe to reduce its reliance on imports and strengthen its energy security.
By 2030, the continent could meet the majority of its demand for critical components and materials, positioning itself as a leader in the ever-growing electric vehicle and renewable energy sectors.
The benefits of a local battery supply chain
The environmental benefits of localising the battery supply chain in Europe are particularly compelling.
According to the T&E report, producing batteries within the region and utilising the EU's electricity grid could reduce carbon emissions by 37% compared to battery production in China.
This figure could rise to an impressive 62% if Europe prioritises renewable energy sources in its production processes.
Benedikt Sobotka, CEO of the Eurasian Resources Group, says: "Our Battery 2030 report, produced by McKinsey together with the Global Battery Alliance, reveals the true extent of global battery demand – and the need for far greater transparency and sustainability across the entire value chain.
"The lithium-ion battery value chain is set to grow by more than 30% annually from 2022-2030, in line with the rapid uptake of electric vehicles and other clean energy technologies.
"The scaling of the value chain calls for a dramatic increase in the production, refining and recycling of key minerals, but, more importantly, it must take place with ESG considerations at front and centre.
"It's time we transition to a more circular, sustainable and just value chain that protects our planet's biodiversity and resources and ensures human rights are respected globally. We can achieve the sustainable future we all desire, but only if we work together for it."
The challenges for scaling up batteries in Europe
The path to establishing a robust European battery industry is not without obstacles.
More than half of the planned gigafactory projects in Europe face the risk of delay or cancellation.
Securing adequate investment, ensuring a steady supply of raw materials, and developing the necessary technical expertise are crucial challenges that need to be addressed.
Despite these hurdles, the potential rewards are substantial. By 2030, Europe could supply more than half (56%) of its cathode needs – the most valuable part of a battery – and fully meet its demand for processed lithium.
This shift towards local production could result in a reduction of up to 133 million tonnes of CO2 by 2030 compared to continuing to import batteries from China.
Mathias Miedreich, CEO at Umicore, explains: "Acceleration in EV sales will go hand in hand with unprecedented growth in the production of rechargeable batteries that are sustainably sourced, manufactured, used and recycled."
How Europe can build more batteries
Umicore, a founding member of the Global Battery Alliance, supports the Battery Passport project, which aims to establish a decarbonised and responsible battery supply chain.
To realise this potential, Europe must adopt a strategic and coordinated approach.
This includes harmonising EU regulations to accelerate the decarbonisation of transport, implementing policies that support local manufacturing, and securing a stable supply of raw materials.
Ensuring sustainable practices throughout the supply chain is crucial to minimising environmental impact and promoting a circular economy.
The development of a sustainable European battery industry represents a significant step towards a greener future.
Benedikt says: "We can achieve the sustainable future we all desire, but only if we work together for it."
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