EU may become as depending on China batteries as it was on Russian energy
The European Union risks becoming as reliant on China for lithium-ion batteries and fuel cells as it was on Russia for energy prior to the Ukraine war, according to a report prepared for EU leaders ahead of an October summit.
The document, acquired by Reuters, was created by the current Spanish EU president and will serve as the foundation for discussions on Europe’s economic security during a meeting of the bloc’s leaders in Granada, Spain, on October 5.
Concerned about China’s growing global aggressiveness and economic weight, the leaders will address European Commission measures to minimize Europe’s reliance on China, as well as the need to diversify into Africa and Latin America.
According to the report, because renewable energy sources like solar and wind are intermittent, Europe will need techniques to store energy in order to achieve its target of net-zero carbon dioxide emissions by 2050.
“This will skyrocket our demand for lithium-ion batteries, fuel cells, and electrolysers, which is expected to multiply between 10 and 30 times in the coming years,” according to the research.
While the EU has a strong position in the intermediate and assembly phases of creating electrolysers, with a more than 50% global market share, it is highly reliant on China for fuel cells and lithium-ion batteries, both of which are required for electric vehicles.
“Without strong measures, the European energy ecosystem could have a different nature, but similar severity, dependency on China by 2030 than it had on Russia before the invasion of Ukraine,” it added.
According to the executive European Commission, the EU-27 took more than 40% of its total gas consumption, 27% of its oil imports, and 46% of its coal imports from Russia in 2021, the year before Russia’s invasion of Ukraine.
The cessation of most Russian energy purchases prompted an energy price shock in the EU and a jump in consumer inflation, compelling the European Central Bank to drastically boost interest rates, stifling economic growth.
According to the Spanish presidency document, lithium-ion batteries and fuel cells were not the only areas of vulnerability in the EU.
“A similar scenario could unfold in the digital-tech space,” the document said. “Forecasts suggest that the demand for digital devices such as sensors, drones, data servers, storage equipment and data transmission networks will rise sharply in this decade.”
“The EU has a relatively strong position in the latter, but it shows significant weaknesses in the other areas,” it said.
According to the study, by 2030, this foreign dependency might substantially impair the productivity improvements that the European industry and service sector urgently require, as well as the modernization of farming systems required to address climate change.
In July, Spain assumed the EU’s six-month rotating presidency.
