Expert Talk Powering the Future: Rebuilding Europe’s Battery Industry in a Time of Change

The Need for a Strong, Self-Reliant Europe

Europe’s global position has evolved significantly in recent years, revealing the vulnerabilities inherent in its dependence on external resources. This has left Europe exposed, particularly in areas critical to the continent’s future security and energy needs.

 Security has become a priority. In a world that is increasingly unpredictable, Europe must enhance its defense capabilities and industrial base—not just for military strength, but to ensure sovereignty. The recent geopolitical landscape has underscored that Europe must take charge of its own security and rebuild a strong defense sector.

An important part of security is energy security. Despite efforts to transition to renewable sources, around 60% of Europe’s energy is still imported. A significant portion of this comes in the form of natural gas, with 85% of our gas being imported. The reliance on expensive LNG—coupled with the high costs of production, transportation, and regasification—has made energy prices in Europe substantially higher than in other major industrial regions like the U.S. and China.

Decarbonization: Opportunities and Challenges

Europe is committed to decarbonizing its economy. The goal of reaching a low-carbon future is vital for combating climate change, but this transition brings its own set of challenges. The EU Emission Trading System (ETS) is a critical tool to decarbonize European industries by 2040. However, energy-intensive sectors like steel production, ammonia manufacturing, and basic chemicals such as ethylene and propane are under immense pressure to meet these stringent environmental standards while dealing with high energy costs.

Europe has also seen its clean energy value chains move to countries like China, which now dominates in areas such as solar panel production and the refining of essential raw materials like lithium, cobalt, and nickel. This shift has put Europe behind in the race for critical components that will drive the energy transition forward.

Rebuilding the European Battery Industry

One area where Europe has a crucial opportunity to lead is in the battery industry. As the demand for electric vehicles (EVs) grows and the need for renewable energy storage intensifies, Europe must rebuild its battery manufacturing capabilities to remain competitive in the global economy.

Batteries as the backbone of the energy transition

Sufficient, affordable battery storage will prove essential not only for electric mobility but also for energy storage, allowing renewable sources like wind and solar to become more reliable. However, Europe has fallen behind in the race for battery production, with much of the market now dominated by Asia. To catch up, Europe must focus on three key areas:

1. Domestic Battery Manufacturing: Europe must ramp up its battery production capacity. The continent has the know-how, the industrial expertise, and the engineering talent to become a global leader in battery technology. By investing in battery gigafactories and scaling up production, Europe can reduce its reliance on imports and create a sustainable, self-sufficient supply chain.
2. Raw Materials and Recycling: Securing access to the raw materials required for battery production is another critical piece of the puzzle. Europe has vast potential to source lithium, cobalt, nickel, and other vital minerals through domestic mining and recycling initiatives. Investing in the circular economy, where materials are recycled and reused within Europe, can significantly reduce dependency on third-party nations. This approach will also lower the environmental impact associated with extracting and transporting these materials.
3. Innovation and R&D: To reclaim its leadership, Europe must foster innovation in battery technologies. The focus should not just be on scaling existing technologies but on pushing the boundaries of solid-state batteries, energy density, and recycling efficiency. Collaborations between universities, research institutions, and industrial players can help accelerate the development of next-generation batteries. Just as ASML and imec have created powerful innovation ecosystems in the semiconductor industry, Europe can build similar ecosystems around battery technology.

The Role of Policy: create space and time for learning

Europe’s ability to rebuild its battery industry will depend heavily on policy frameworks that support investment, domestic manufacturing and eco-system learning. In principle, there is no reason why roduction of batteries (or solar panels) in Europe would be more expensive than in China. As the production is heavily automated, the share of labor costs in the production costs of batteries is not substantial anymore. However, the costs do depend on the CAPEX and OPEX of the production equipment, the know-how on operating them together in a production facility, the tuning of the battery characteristics to the end-users and the constant improvements that are being made by this whole ecosystem. Currently, we lack this eco-system dynamics in Europe. Therefore we know that, for the time being, European battery products might be a bit more expensive than Chinese ones. As long as investors are not sure that there will be a market for the European products, they will be hesitant to invest. That is the reason that the European Union must prioritize local content requirements to incentivize companies to produce batteries within Europe. Additionally, creating market certainty and financial incentives for battery research and infrastructure investments will attract private capital into the sector.

The EU’s Green Deal and other policy initiatives should be leveraged to ensure that European battery production is aligned with climate goals. Europe must also strike the right balance between global partnerships (to accelerate  production and eco-system learning)—such as with countries like China—and maintaining control over strategic areas of the value chain. Once Europe has regained its technological leadership, it can consider revisiting trade policies, moving toward a level playing field that supports both economic growth and sustainability.

Accelerating the Energy Transition

Beyond batteries, the energy transition itself is critical to Europe’s future. The goal should be to produce nearly 100% of energy domestically from renewable sources. This means focusing on electrification across sectors such as transportation, heating and cooling, and industrial processes. As these sectors transition to clean electricity, the demand for batteries will skyrocket.

To meet this demand, Europe will need to invest heavily in electricity infrastructure—an interconnected grid that allows renewable energy to flow freely from Norway to Portugal, Bulgaria to the North Sea, and beyond. These investments in energy infrastructure will be essential for ensuring the smooth transition to a renewable future.

In Conclusion

The challenges facing Europe are clear, but the opportunities are equally compelling. By focusing on rebuilding the battery industry, accelerating the energy transition, and embracing creative destruction in key industries, Europe can position itself as a global leader in the sustainable, self-reliant economy of the future.

The time for action is now. Europe has the expertise, the resources, and the drive to reclaim its leadership in clean energy and technology. By reinvesting in battery production and the broader clean energy value chain, we can secure a strong, sustainable future for Europe and help lead the world in the fight against climate change.

This Expert Talk was written as an appetizer to the Powering the Future workshop going on Tuesday, March 25.
Interested in participating? All information can be found on https://energyville.be/event/powering-the-future-how-to-sustainably-grow-industrial-battery-storage/