Renewable electricity generation and storage requires huge quantities of mined raw materials. In Europe, most of these elements are currently imported and unsustainably produced. So the European Commission has hatched a new plan for obtaining them within its borders, to make the industry more sustainable and resilient against outside disruptions.
The commission has launched a new industry alliance aimed at building a complete EU supply chain for such raw materials, which are vital to renewable energy, electric vehicles and the circular economy. This will “increase EU resilience in the rare earth and magnet value chains”, it says.
The new policies are connected to the European Green Deal and the Just Transition Fund, which have been strengthened by their important relevance to the bloc’s post-pandemic economic recovery program.
There will be an industry-driven process led by EIT RawMaterials (funded by the European Institute of Innovation and Technology), whose task will be to identify opportunities and barriers and to create relevant investment cases with stakeholders and industry partners.
Currently, the EU is heavily reliant on other countries, being dangerously dependent for 98 per cent of its rare earth elements on China, and the same amount of its borate – used in detergents – on Turkey, while 71 per cent of platinum is sourced from South Africa.
Many of these countries do not have the required high standards of environmental and social protection which the EU demands. For example cobalt production in the Democratic Republic of Congo uses artisanal mining practices and child labour, according to Amnesty International.
According to a recent OECD report, the growth in materials use, and the consequent environmental consequences of material extraction, processing and waste, is likely to increase pressure on the planet and jeopardise gains in well-being. Without addressing the resource needs of low-carbon technologies, this may simply cause new environmental and social problems, such as heavy metal pollution, habitat destruction, or resource depletion.
A mini-industrial policy, a group – the European Battery Alliance – plus changes to existing legislation, will help new start-ups in the market to increase production, hopefully more sustainably, in order to meet Europe’s burgeoning battery demands, which could be worth €250 billion (A$406 billion) a year by 2025, driven by the growth in electric vehicles.
The 30 raw materials
The EC action plan now lists 30 critical raw materials including bauxite, lithium, titanium and strontium. It intends to help identify new sources that can be up and running by 2025, with priority given to coal-mining regions aiming to move away from fossil fuel production as part of the Just Transition.
The commission will also map the potential of secondary critical materials by 2022. Their presence in the list will affect trade negotiations, investment and industrial policy.
The plan estimates material needs for growing technologies such as clean energy technologies (photovoltaic, wind, storage), electric mobility and digital technologies (ICT, robotics, 3D printing) based on the EU’s 2050 climate-neutrality scenarios and other forecasts. It provides an outlook to 2030 and 2050 of material demand for these sectors and identifies supply risks and bottlenecks at different levels of the supply chains.
The commission estimates that demand for lithium will increase 16-fold by the end of the decade and 60-fold by 2050. Cobalt will see a 500 per cent increase by 2030 and 15-fold by 2050.
However, many battery manufacturers – Tesla included – are trying to reduce or eliminate cobalt use in power packs, given its cost, the environmental impact and human rights abuses linked to its extraction.
Countries to profit
Finland and Portugal are two countries in a position to profit from this policy shift.
Finland already has all the raw materials needed to produce the power packs they need in a sustainable manner. It is the only European country with cobalt mines, although others have untapped reserves: Spain, Sweden, and possibly Cyprus, Slovakia, Austria, Czech Republic, Germany, Italy and Poland.
One of its mines uses “a unique and energy-efficient way to extract metals with about 40 per cent less greenhouse gas emissions and 20 per cent less energy consumption than the average for nickel production”, according to an EU report.
Finland, which opened a lithium-ion battery assembly plant in 2019, also aims to be carbon neutral by 2035, a target shared by Sweden and Norway.
A €5.8 billion (U$ 9.42 billion) project called BATTRACE will guarantee the supply chain sustainability credentials of these raw materials going into battery production, coordinated by the Technical Research Centre of Finland (VTT) and Geological Survey of Finland.
“If it was possible to trace the production chain of battery materials from the battery plant all the way to the mine, certification could be given to sustainably produced batteries,” said VTT’s Päivi Kinnunen. “This would give mines and metal refineries with responsible operating practices a competitive advantage, which would encourage the European production chain to develop and grow.”
Sweden’s Northvolt company has recently begun construction of a battery “Gigafactory”, and gone into partnership with aluminium producer Hydro to take the usable components from old batteries and recycle them.
France is also constructing a battery factory in the south west. Its Renault and Citroen automotive companies have been obligated to join the Battery Alliance if they want to receive their part of an €8 billion (A$13 billion) government post-pandemic bailout of the car sector.
The plan is not without its critics.
Green pressure group the European Environmental Bureau (EEB) warned that “simply opening the flood gates to new mining projects would contradict the Commission’s ambition to keep resource consumption within planetary boundaries, as set out in the circular economy action plan.”
“What we need is more efficient, recyclable and durable batteries produced from responsibly sourced materials to alleviate the burden on the planet,” said its resource efficiency expert Jean-Pierre Schweitzer.
Friends of the Earth Europe denounced the strategy as “a desperate plunder for raw materials – seemingly at any cost” and warned that the plan risks “gifting industry further influence over policy-making”.
The Commission has said it wants to use its Horizon Europe R&D funding stream to clean up mining and production processes, but unfortunately its budget has been slashed in 2021-2027.
Car industry must go electric to receive bailouts
As part of their bailouts for the sector, which has suffered catastrophic collapses of sales due to the pandemic, Spain, Germany and France are obligating their carmakers to increase electric vehicle production; Spain will churn out at least 700,000 per year. They are also giving motorists incentives to either buy a cleaner car or trade in their old model for a new one.
EVs’ prices will continue to fall as the costs of batteries decline. According to Bloomberg NEF’s Electric Vehicle Outlook, electric car and combustion engine vehicles will reach price parity in 2024 when battery costs are expected to hit the magic $100 ($137) per kilowatt-hour – about 15 per cent of the total vehicle cost, as compared to the current 30 per cent.
The Commission has allocated €1.5 billion (A$ 2.44 billion) in its latest EU budget plan for the Connecting Europe Facility project to roll out more EV charging infrastructure. The Schleswig-Holstein Federal government for example is installing charge points for electric buses.
All of the above will take some time to develop. In the meantime, Europe will remain dependent on imports of raw materials for the foreseeable future.
David Thorpe is the UK based author of the books The ‘One Planet’ Life and the new ‘One Planet’ Cities. From October he is teaching an online Post-Graduate Certificate in “One Planet” Governance.