The European Union Warns of Growing Dependency on China for Batteries and Fuel Cells

A paper prepared for EU leaders has highlighted the risk of the European Union becoming as dependent on China for lithium-ion batteries and fuel cells by 2030 as it was on Russia for energy before the war in Ukraine. The document, obtained by Reuters, will be discussed during a meeting of EU leaders in Granada, Spain on 5 October.

The European Commission has proposed measures to reduce Europe’s dependence on China, as concerns grow over China’s global assertiveness and economic influence. The paper emphasizes the need for Europe to diversify towards Africa and Latin America to mitigate risks.

The intermittent nature of renewable energy sources such as solar and wind means that energy storage solutions, including lithium-ion batteries and fuel cells, are crucial for achieving the EU’s goal of net-zero carbon emissions by 2050. The paper highlights the growing demand for these technologies, which is expected to multiply between 10 and 30 times in the coming years.

While the EU has a significant market share in the intermediate and assembly phases of making electrolysers, it heavily relies on China for fuel cells and lithium-ion batteries used in electric vehicles. Without taking strong measures, the European energy ecosystem could face a similar dependence on China as it did on Russia before the invasion of Ukraine, according to the paper.

In addition to batteries and fuel cells, the paper also raises concerns about the EU’s vulnerability in the digital-tech space. Forecasts indicate a sharp increase in demand for digital devices, including sensors, drones, data servers, and storage equipment. The EU has a relatively strong position in some areas, but it shows significant weaknesses in others.

The paper warns that this growing dependency on China could hinder productivity gains and impede the modernization of agriculture systems needed to address climate change. Strategic measures are required to ensure the EU’s economic security and reduce its reliance on China.

Sources: Reuters