To ensure the transition to electric vehicles is truly sustainable and just, Europe needs strict environmental and social safeguards for its battery supply chains and the onshoring of core parts of the EV value chain.
Demand for battery raw materials in Europe will increase rapidly between now and 2050 as the continent races to switch to zero-emissions road transport, which is essential for its climate goals.
The concerns about a sharp increase in demand are two-fold: insufficient raw materials supply could lead to market volatility and slow down the transition to a net-zero economy; and that mining expansion, without appropriate regulatory safeguards in place, can pose environmental and social risks.
2026 The year by when Europe could produce enough EV battery cells to meet its own demand – if planned gigafactories go ahead
36-49% Cutting battery sizes, improving chemistries and reducing private car journeys can cut expected metal demand for EV batteries by 36-49% by 2050
50% of lithium used in 2027 will need to be recovered by battery-makers under the EU Battery Regulation, rising to 80% in 2031
Today, Europe finds itself in a global race to lead the production of cleantech and the minerals that go into them, with China having a longstanding advantage fuelled by decades long subsidies and the US offering generous tax credits to investors. In the US, the Inflation Reduction Act (IRA) has reshaped the battery landscape, drawing substantial investments in battery factories and raw material processing plants. To keep up, and to ensure that the transition is just, Europe must continue developing a robust industrial strategy to build a local battery value chain, ensuring security of supply, job creation and economic resilience.
But Europe is not starting from scratch. Years of ambitious policy to secure a local electric vehicle market, as well as the efforts of the European Battery Alliance, have resulted in dozens of battery investments and announcements throughout the supply chain. T&E’s analysis of investment announcements finds Europe can become self-sufficient in battery cell production within a few years. By the end of the decade the region should be able supply over half of the most valuable battery components - cathodes - that it needs. Europe should also become self-sufficient in processed lithium in a similar timeframe. The recycling industry for batteries is also ramping up and, by 2030, significant amounts of the battery minerals supply for Europe should come from locally recycled sources.
At the same time, it is important to take measures to reduce reliance on primary production such as: decreasing raw materials intensity by optimising battery sizes and diversifying battery chemistries, and decreasing private car dependency and increasing public and active transport usage.
A Europe-wide strategy is needed to shift to smaller, more affordable and resource light electric vehicles than the large SUV models coming to market today. National measures should include tax incentives for smaller models, while at EU level, battery efficiency standards and requirements on automakers to produce more entry-level models are needed.
Smaller electric cars are also perfect for batteries built with less resource intensive chemistries that can reduce metal demand by up to 20%. Strong industrial policy is needed to scale up European production of new technologies such as iron-based (LFP) and sodium-based (Na-ion) batteries. Reducing journeys by private cars can deliver a further 7-9% reduction in demand.
Unlike today’s fossil fuel powered cars, electric car batteries are part of a circular economy loop where battery materials can be reused and recovered to produce more batteries. The recycling of battery materials is crucial to reduce the pressure on primary demand for virgin materials and ultimately limit the impacts raw material extraction can have on the environment and on communities.
New EU recycling targets - under the Battery Regulation - will extend the climate advantage of batteries over fossil fuels even further. From 2027, battery-makers will need to recover 90% of nickel and cobalt used, rising to 95% in 2031. They would also need to recover 50% of lithium used in 2027, rising to 80% in 2031. The new rules apply to all batteries sold in the EU and will spur the investments needed to establish more recycling capacity and create local jobs in Europe. By 2030, significant amounts of the battery minerals supply for Europe should come from locally recycled sources.
Extraction of all manner of resources, including fossil fuels and minerals, has a history of mismanagement. As the world shifts to renewables and electric vehicles, attention is also turning to the centuries’ old problem of how supply chains can become more responsible and sustainable.
In 2016, Amnesty International came out with its landmark report on human rights abuses in the Democratic Republic of the Congo which at the time put extreme pressure and scrutiny on mining companies and cobalt buyers. But the good news is that the technology – such as filtered tailings for waste, or less water-intensive mining methods – and the practices, notably on how to engage with local communities, are all available; these must be used consistently in Europe and globally.
The EU Battery Regulation puts in place due diligence rules that will be a turning point for sustainable batteries. But to ensure that they are truly effective, not only across cobalt, but also nickel, lithium and graphite supply chains, they must be implemented well. Lawmakers must ensure the guidelines for implementation are developed according to best practice and existing international standards no later than January 2025. Europe must work with producing countries to inform them about the implications of the regulation – and adequately support smaller companies in meeting the requirements.
Beyond batteries, the EU has also agreed the Critical Raw Materials Act (CRMA). This law aims to onshore strategic projects in extraction, processing and recycling of raw materials, while making the EU less dependent on a global concentrated supply. Crucially, the CRMA also locks in environmental and social safeguards, including the rights of local communities, to make sure that accelerated projects do not result in weaker standards. The next big step will be for Europe to implement this good framework, including strategic projects to ensure the new responsible supply of critical metals scales quickly, more sustainably and with local communities on board.
To support a homegrown battery industry, the EU urgently needs to revamp its trade and investment policies.
A recycling company, business associations and NGOs have called on the EU to ensure battery recycling targets include all lithium battery types.
A T&E briefing argues that Europe has significant potential to produce lithium, but focus and the right policies are needed to develop it sustainably.