The European Union is supporting its auto battery making industry with a package of regulations to enforce strict sustainability standards. On December 10 the European Commission proposed a new Batteries Regulation, which seeks to ensure that batteries in the EU market are sustainable and safe throughout their life cycle.

The EU has plans to establish itself as a major global player in battery production. This will not only bring benefits in terms of jobs and economic growth, but will also help achieve “strategic autonomy", notably reducing dependence on imports from China.

The proposed regulation is described as "the single most important tool that enables Europe to build a truly sustainable battery industry supporting Europe’s transition to electrification". It will now move through the legislative process, with amendments proposed until an eventual vote in the EU Parliament.

Under the regulation, batteries will be collected, repurposed and recycled, becoming a true source of valuable raw materials. For this, the proposal establishes specific requirements at each stage of the battery value chain.

All steps throughout the batteries' life cycle, from the extraction of mineral resources used in their manufacture up to their collection and treatment after use, are covered.

The legislation will also provide legal certainty that will help unlock large-scale investments and boost production capacity for innovative and sustainable batteries in Europe and beyond to respond to the fast-growing market.

For requirements related to carbon footprint, levels of recycled content and responsible sourcing of raw materials, the proposal foresees mandatory third-party verification via notified bodies. Market surveillance authorities of the member states will enforce compliance with its provisions.

The European Battery Alliance (EBA), launched in October 2017, seeks to ensure that all Europeans benefit from safer traffic, cleaner vehicles and more sustainable technological solutions. This will be achieved by creating a competitive and sustainable battery cell manufacturing value chain across the region.

Huge market

The EU estimates that the market will have an annual value of up to 250 billion euros (US$306 billion) by 2025. The EBA's industrial development programme is driven by EIT InnoEnegy, which works with the EU industry, academia, and financial sector.

EIT InnoEnergy brought together more than 120 European and non-European stakeholders representing the entire battery value chain. The result is a definition of 43 necessary actions to set up a dynamic and efficient battery alliance, and to capture a significant share of the market.

Along with France and Germany, Sweden is emerging as one of the most important manufacturing bases, and is projected to rank fourth behind China, Japan and the United States by 2025.

In mid-December Fossil Free Sweden submitted a new national strategy on batteries to the Swedish government showing how the country can take a leading position in the development of the sustainable battery value chain.

The national strategy was developed in cooperation with EIT InnoEnergy, and is supported by companies across the value chain as well as universities and environmental organizations.

The Swedish strategy for a sustainable battery value chain shows how actions in Sweden will contribute to the European battery industry development. The development of sustainable battery production is not only important for achieving climate goals, but also enables the emergence of a competitive industry that creates growth and jobs throughout the battery value chain.

”The big demand for electrification in the transport sector and industry processes have made battery manufacturing a bottleneck," says Svante Axelsson, national coordinator for Fossil Free Sweden. "Sustainably produced batteries can become the next big Swedish industry expansion."

Giga factory

In July Nippon Export and Investment Insurance (NEXI) decided to underwrite loan insurance for a lithium-ion battery (LIB) manufacturing plant construction project undertaken by the Northvolt in Sweden. The insurance is provided to a loan for the purchase of equipment delivered by Japanese companies.

This project is to build an LIB giga factory (with a total potential battery capacity of 40GWh), based on the plan of Northvolt, which was founded in Sweden in 2016. The products are to be sold to automobile, truck and machine tool manufacturers in Europe. Several Japanese companies will deliver manufacturing facilities for the factory.

Northvolt will fund this project through project financing provided by the European Investment Bank (EIB) and Export Credit Agencies in Europe and Asia.

Sumitomo Mitsui Banking Corporation, BNP Paribas Bank, Societe Generale, and ING Bank will co-finance US$150 million for a portion of the payment for the Japanese companies. NEXI will underwrite insurance for the co-financing.

This project is also the first case since NEXI signed a memorandum of understanding (MOU) with the EIB in October 2018, and will strengthen NEXI’s economic cooperation with Europe.

In late November the German Federal Ministry for Economic Affairs and Energy held a European Conference on Batteries, taking place within the framework of Germany’s presidency of the Council of the EU.

The focus of the event was on two Important Projects of Common European Interest (IPCEIs) in the field of batteries. More than 60 companies from across Europe are working together in these two projects to promote innovation and create new value chains.

The Federal Ministry for Economic Affairs and Energy is providing funding worth nearly 3 billion euros to the German projects which form part of the two IPCEIs.

Germany, France and Italy have been at the forefront of the EBA, which is now expanding to other EU countries. A second batch of projects is currently being reviewed under state aid rules.