Green Battery: the European Union tightens up the Rules

With the green battery, Europe is trying to gain a competitive edge in a battery market currently dominated by Asia. To this end, Brussels tightened its battery directive in December 2020. Criticism is now mounting over the short-term economic and social impact of this text.

Share:

Comprehensive energy news coverage, updated nonstop

Annual subscription

8.25€/month*

*billed annually at 99€/year for the first year then 149,00€/year ​

Unlimited access • Archives included • Professional invoice

OTHER ACCESS OPTIONS

Monthly subscription

Unlimited access • Archives included

5.2€/month*
then 14.90€ per month thereafter

FREE ACCOUNT

3 articles offered per month

FREE

*Prices are excluding VAT, which may vary depending on your location or professional status

Since 2021: 35,000 articles • 150+ analyses per week

With the green battery, Europe is trying to gain a competitive edge in a battery market currently dominated by Asia. To this end, Brussels tightened its battery directive in December 2020. Criticism is now mounting over the short-term economic and social impact of this text.

Europe catches up with green batteries

The green battery, the EU’s new battle-horse to compete with and stand out from Asian producers. According to BloombergNEF, China produces 60% of the world’s batteries. Its dominance even reaches 77% in cell manufacturing and 80% in the refining of the materials used.

By contrast, Europe accounts for less than 5% of cell manufacturing worldwide. However, this situation is set to change in a few years’ time, with the first effects expected from theEuropean Battery Alliance. According to the European Commission, Europe should be self-sufficient in cells by 2025. Yet despite this increase, the continent is expected to account for only 15% of global production.

High level of pollution caused by battery production

Another difficulty for Europe is that battery manufacturing is still extremely polluting. Today, the carbon footprint of battery production is estimated at 60kg CO2/kWh. You’d have to drive an electric vehicle more than 18,000 km (data vary widely from study to study) to emit less than a combustion vehicle. According to BloombergNEF,sales of electric vehicles have alsofallen in 2020.

Lithium mine
Aerial photo of the processing plant at the SQM lithium mine in the Atacama Desert, northern Chile (source: AFP).

This environmental cost is due to the level of pollution generated by the mining of raw materials. Added to this is the extremely negative impact of refining and metal processing on CO2 emissions. Above all, manufacturing a battery requires a significant amount of electricity, which can come from fossil fuels such as coal.

A new directive for low-carbon batteries

Faced with competition from Asia, Europe intends to use green batteries as a lever to catch up. For Brussels, given their low environmental footprint, these batteries will give Europe a competitive edge in this market of the future. Indeed, the expected multiplication of carbon taxes will favor producers of batteries with the highest environmental standards. This will give us a real advantage over China, whose electricity production is largely coal-fired.

Already today, Chinese emissions from electric vehicles are 60% higher than in Europe. The EU also has a leading company in this battery segment, with Sweden’s Northvolt. The latter manufactures batteries with a very low carbon footprint, and has signed a major partnership with BMW.

A three-stage timetable

To capitalize on this strategic advantage, the European Commission has just proposed a directive for low-carbon batteries. This directive requires manufacturers to publish the carbon footprint of their battery production by 2024. On this date, the Commission is expected to propose a CO2 emissions limit to be met from 2027.

Subsequently, Europe hopes to impose a minimum percentage of raw materials to be recycled by 2030. The aim is to stimulate the recycling of critical materials such as cobalt, nickel and lithium. In addition, the Commission has proposed raising its target for recycling portable batteries to 65% by 2025.

Green batteries
Renault plant in Flins, France, where electric car batteries are produced.

How to access rare earths?

Despite its ambition, the European Green Battery Directive is likely to face a number of obstacles. The first of these concerns Europe’s dependence on the extraction and refining of raw materials. Today, Europe imports around 98% of the rare earths it needs to manufacture batteries.

For European manufacturers, the challenge will be to ensure that their foreign suppliers comply with the Commission’s environmental criteria. However, Europeans will inevitably face competition from Chinese airlines that do not have the same environmental requirements. China already owns 50% of the cobalt mines in the Democratic Republic of Congo. In other words, differences in environmental standards could make access to raw materials more difficult for Europeans.

Fear of rising manufacturing costs

Moreover, the European directive is under fire for its impact on production costs. Indeed, recycling ambitions require additional R&D spending by companies. Added to this are the extra costs involved in assessing the carbon footprint of the entire value chain.

Above all, the directive requires battery manufacturers to source low-carbon electricity directly. Today, however, the bulk of our production takes place in Eastern Europe or Germany, regions still dependent on coal. The directive will therefore force these manufacturers to either relocate or switch their electricity suppliers to more renewable sources. All this will come at a high cost to European manufacturers, who are engaged in genuine competition with their Asian rivals.

As a result, the European directive has been widely criticized for its often unrealistic objectives. Last March, the European Council itself expressed doubts about the European Commission’s objectives. It is therefore unlikely that this directive will be adopted as it stands in the coming months. The Council nevertheless agreed that green batteries are the future of the European industry.

Japanese company Sun Village has connected its first energy storage facility to the grid and formalised a strategic partnership with Marubeni Power Retail to operate the asset on electricity markets.
Lightshift Energy has secured $75mn in funding from KeyBanc to support six operational projects and launch ten more, in response to rising demand for electric storage on the US East Coast.
Austrian battery optimisation specialist enspired enters Japan in partnership with Banpu NEXT, backed by a Series B extension to over €40mn.
Ameresco has completed a 50 MW battery storage system to support Nucor’s expansion in Arizona, marking one of the largest behind-the-meter industrial projects in the United States.
Rondo Energy has launched commercial operations of the world’s largest industrial heat battery, delivering 24-hour steam from off-grid solar power.
SUNOTEC expands in the Bulgarian market with seven projects combining battery and solar, totalling 763 MWh of storage and 115 MWp of photovoltaic capacity.
Danish fund Copenhagen Infrastructure IV transfers half of its stake in the UK-based Coalburn 2 project to AIP Management, strengthening AIP's energy storage portfolio in the United Kingdom.
Lyten has completed the acquisition of the Northvolt Dwa site in Poland, Europe’s largest energy storage system factory, and plans to deliver its first commercial units before the end of 2025.
SNG Holdings launched trial operations of a 2MW/6MWh energy storage facility in Gotemba, backed by Digital Grid and PHOTON, ahead of commercial commissioning scheduled for November.
The Winchester project will combine 160 MW of storage with two 80 MW solar plants in Cochise County, with delivery expected in early 2027.
Greenflash Infrastructure has acquired a 200 MW standalone storage project in Texas, marking a strategic asset transfer aimed at reinforcing local grid reliability.
Gotion High-Tech presented in Saudi Arabia a modular 20 MWh storage solution aimed at strengthening the country's energy capacity under its Vision 2030 strategy.
The Japanese developer has commissioned a storage unit in Karatsu and plans to deploy 80 facilities by the end of 2026, relying on agreements with local governments and industrial partners.
Energy Plug, Malahat Battery Technology and Quantum eMotion sign strategic agreement to develop quantum-secured energy storage systems, including a NATO-aligned defence initiative.
Greenflash Infrastructure has finalised the acquisition of Rock Rose, a 200 MW energy storage project located in Fort Bend County, to strengthen its ERCOT market portfolio.
SALA Energy commissions its first grid-scale battery storage facility using sodium-sulfur batteries, supported by both public and private financing.
Utility-scale battery storage system costs continue to fall across Asia-Pacific, but the pace of reductions is expected to slow significantly by 2029, according to Wood Mackenzie projections.
StarCharge has secured a 500MWh energy storage order through a strategic agreement with ENERGY INVESTMENT LLC, strengthening its position in rapidly evolving Eastern European markets.
The Vilvoorde site in Belgium now hosts 400 MWh of operational capacity on a total 800 MWh project, marking a key milestone for electricity storage on the continent.
Idemitsu Kosan has commissioned a 15MW/48MWh energy storage facility in Himeji, marking the start of its deployment in grid-scale storage with Japanese public funding.

All the latest energy news, all the time

Annual subscription

8.25€/month*

*billed annually at 99€/year for the first year then 149,00€/year ​

Unlimited access - Archives included - Pro invoice

Monthly subscription

Unlimited access • Archives included

5.2€/month*
then 14.90€ per month thereafter

*Prices shown are exclusive of VAT, which may vary according to your location or professional status.

Since 2021: 30,000 articles - +150 analyses/week.