The European Union may be as hooked on China batteries as it was on Russian energy before the war in Ukraine unless it takes strong measures, a paper prepared for EU leaders said. The document will be the basis of discussions on Europe’s economic security during a meeting of EU leaders in Granada in Spain on Oct. 5.
While the EU aims to decouple from Russian fossil fuels by switching to renewables, it risks becoming dependent on China, which controls most of the sector’s critical materials and supply chains. The EU needs to address this risk as it seeks to accelerate the growth of clean energy.
As European leaders grapple with a tumultuous year of Russia’s war in Ukraine and soaring oil and gas prices, tackling the bloc’s energy needs has become a priority. The European Commission’s new Green Deal (EGD) requires a 36 percent drop in coal, a 21 percent decrease in natural gas, and a 36 percent cut in fossil fuel use to meet the EU’s climate goals by 2030.
To achieve that, the EU will need to phase out fossil fuels faster than it did in recent years and make up for them with a larger share of renewables. The plan also calls for gradually replacing gas with hydrogen and other clean gases to help reduce carbon emissions.
However, many markets that could cover rising EU demand for raw materials used in EVs, intelligent grids, and renewable energy production are controlled by authoritarian regimes with questionable human rights records, including China and the Democratic Republic of Congo. As a result, the EU faces an uncomfortable moral dilemma as it seeks to move away from fossil fuels and embrace clean technologies.
As the EU seeks to rebalance its energy mix, it should take steps to ensure long-term access to critical raw materials by negotiating with the countries that control them, the document said. It should also consider limiting the number of companies that can be suppliers of critical minerals, such as nickel, cobalt, and platinum, by requiring them to form joint ventures with European firms to increase transparency and accountability.
The paper cited China’s dominance in producing lithium-ion batteries, crucial to electric vehicles and fuel cells, which convert liquid fuel into electricity. It also pointed to the EU’s dependence on China for components, such as silicon, aluminum, and copper, needed in producing solar panels and wind turbines. It urged the EU to explore opportunities to diversify its supply sources and look at options in Africa and Latin America. It also suggested that the EU could use its trade policy to pressure Beijing for more transparent and reciprocal ties. In this way, the European Union can limit its dependency on a country that lacks democracy and respect for human rights. That will be a crucial test of the EU’s commitment to a global rule-based order and the spirit of its sanctions against Russia.
