A paper prepared for EU leaders warns that by 2030, the European Union could become as reliant on China for lithium-ion batteries and fuel cells as it once was on Russia for energy before the Ukraine war, unless it implements strong measures. This document, obtained by Reuters, will form the basis of discussions on Europe’s economic security during an upcoming meeting of EU leaders in Granada, Spain, scheduled for October 5. Concerned about China’s increasing global influence and economic strength, the leaders will deliberate on the European Commission’s proposals aimed at mitigating the risk of excessive dependence on China and the necessity of diversifying toward Africa and Latin America.
Due to the sporadic characteristics of renewable energy sources such as solar and wind, Europe must establish energy storage solutions to achieve its target of reaching net-zero carbon dioxide emissions by 2050. The paper, drafted by the Spanish presidency of the EU, emphasized that this will lead to a substantial increase in demand for lithium-ion batteries, fuel cells, and electrolysers, with expectations of demand multiplying between 10 to 30 times in the foreseeable future.
Although the EU holds a dominant position in the intermediate and assembly stages of electrolyser production, boasting over 50% of the global market share, it is heavily dependent on China for fuel cells and lithium-ion batteries, which are essential for electric vehicles.
The paper warned that without the implementation of robust measures, the European energy ecosystem could develop a form of dependency on China by 2030 that, while different in nature, could be equally severe as the dependency it had on Russia prior to the Ukraine invasion.
As per the European Commission’s data for 2021, which was the year preceding the Russian invasion of Ukraine, the European Union relied on Russia for over 40% of its total gas consumption, 27% of its oil imports, and 46% of its coal imports.
The decision to cease most energy purchases from Russia had a profound impact on the EU, resulting in an energy price shock and a significant increase in consumer inflation. This compelled the European Central Bank to implement a substantial interest rate hike, a move that has constrained economic growth.
The vulnerability of the European Union extended beyond just lithium-ion batteries and fuel cells, as highlighted in the Spanish presidency paper. The document pointed out that a similar risk could materialize in the realm of digital technology. It noted that forecasts indicate a substantial increase in demand for digital devices such as sensors, drones, data servers, storage equipment, and data transmission networks during this decade.
In the latter aspect, the EU maintains a relatively robust position; however, it exhibits notable vulnerabilities in the remaining domains.
By 2030, such reliance on foreign sources could pose a substantial obstacle to achieving the productivity enhancements urgently needed in the European industry and service sectors. Furthermore, it could hinder the necessary modernization of agricultural systems, which are essential for addressing climate change.
