Battery investments likely casualty in EU budget battle for Ukraine, migration

Battery investments likely casualty in EU budget battle for Ukraine, migration

Battery investments likely casualty in EU budget battle for Ukraine, migration 1024 761 Batteries International

January 4, 2024: Proposals to slash European research and innovation funding by billions of euros risk making “a catastrophic decision” to battery and raw material investment plans, industry leaders have warned.

The flagship Strategic Technologies for Europe Platform (STEP) is set to be cut from €10 billion ($11 billion) to just €1.5 billion. At the same time €2.1 billion is being axed from the €95.5 billion Horizon Europe research programme under budget proposals for the next seven years.

The proposals from the European Council — the heads of state or government of EU members— emerged after crunch talks on December 15 and 16 were blocked. The talks aimed to revise the multi-annual financial framework and find cash for political priorities including a €50 billion aid package for Ukraine and support border management for migration front-line member states.

However, the proposals were blocked by Hungary, the only one of the EU’s 27 member states to do so, with top-level talks aimed at resolving the deadlock expected later this month.

Hungarian prime minister Viktor Orbán said the EU should be working for a ceasefire and peace talks between Ukraine and Russia rather than providing financial support.

Competition

The proposals were part of a mass of budget data released in the run up to the festive holiday period. They stand in stark contrast to a much-trumpeted pre-Christmas pledge by the European Commission to give the bloc’s battery sector a €3 billion boost in the face of competition from the US, China and other regions.

Now lithium batteries trade body RECHARGE, European metals association Eurometaux and clean transport lobbying group Transport & Environment are calling on European Commission president Ursula von der Lyen and Commission VP and battery czar Maroš Šefčovič to urgently reconsider the proposed cuts.

In a December 21, the trade bodies warned the cuts “would be a catastrophic decision in Europe’s attempt to catch-up in the global cleantech manufacturing race”.

The bodies, which represent companies from across the EU raw materials and battery value chain, welcomed the Commission’s December 6 announcement that the sectors would share in a €3 billion “stimulus boost” through the EU Innovation Fund.

But the subsequent proposed cuts would mean continued “investment leakage” to other parts of the world, the letter said.

Challenges

According to the trade bodies, building a lithium refinery in Europe is already two to three times more expensive than in Asia and it is 35% more expensive to build a battery plant in the bloc than in the US.

“We understand the financial challenges facing the EU and its member states, but the next two years are crucial to deciding where the world’s clean technology manufacturing capacity and supply chains will be built.”

Europe cannot sacrifice its chance of establishing long-term climate leadership, the letter said.

A key priority of the STEP program, also known as the renewables fund, is to support the rapid development and deployment of clean energy technologies including energy storage systems.

Analysis published by Transport & Environment last March warned that nearly 70% of Europe’s overall planned pipeline of lithium ion battery cells production capacity by 2030 was at risk of being delayed, scaled down or cancelled — and EU battery manufacturing was “caught in the crossfire between America and China”.

In September, the EU launched an investigation into Chinese subsidies for EVs and batteries, amid fears Beijing could steer Europe’s green energy transition off course.

Meanwhile, the US government continues to roll out loans and tax incentives in support of the battery industry, with federal funding worth up to $3.5 billion announced last month alone for battery materials processing and manufacturing technologies.

Pictured: Batteries czar Maroš Šefčovič as industry warns EU risks exiting the climate leadership stage. Photo: EU Audiovisual Service