Europe’s tech sector has a concerning aversion. While the continent has produced many successful cleantech startups, European investors are reluctant to invest in difficult, hardware-based innovations—and the extraction industry that could power them. But it is just these innovations and the raw materials that make them possible, specifically in the sectors of transportation and energy storage, that will foster a successful energy transition and accompanying mobility revolution.
In order to reach already agreed upon, and ever more ambitious climate goals, investment in these more challenging sectors needs to increase dramatically. Climate science is unambiguous on the one degree of global warming already attributable to anthropogenic causes (as per the IPCC 6th assessment report). Without immediate, serious focus on decarbonising the energy and transportation sectors, we have no hope of limiting warming to 1.5 degrees and meeting global commitments. The spotlight is aimed squarely at these sectors and they must deliver.
Europe is well-equipped to leverage its innovation legacy. Germany, the economic heart of the EU, has a long history of engineering excellence, as its automotive and industrial giants illustrate, from Mercedes and BMW to Siemens and Bosch. Yet, there is a paucity of well-funded new players following in their footsteps. A few young stars like Volocopter and Skeleton Technologies could grow into global players in emerging sectors, but they alone cannot achieve Europe’s decarbonisation goals. The financial and political systems working in tandem could encourage European investors to finance the innovative companies that will produce the technologies of tomorrow. Not just software but hardware, as well as more sustainable methods of producing the raw materials required for the cleantech solutions we need at scale.
Europe has the immediate opportunity to construct a robust battery and electric vehicle (EV) value chain. This will support the exponential growth in EV take up, estimated to expand to 30 million vehicles by 2030, the equivalent of 75% of the all the cars in Italy or 63% of all vehicles on the road in Germany. All these EVs will need a supply of lithium-ion batteries. Energy storage is set to be one of the most important growth areas in the energy sector in coming decades, and not only for cars.
This wider sector movement will also drive demand for lithium ion and battery innovation. At present, however, the EU has only six gigafactories in operation with circa 62 GWh of lithium-ion cell production—a scale that pales in comparison to China, which has 93 gigafactories in operation at last count. By 2025 another 25 gigafactories plan to come online in Europe, increasing production capacity to 590 GWh. Taking meaningful steps towards establishing a battery supply chain is paramount, not only for the continent to reach the decarbonisation goals laid out in last year’s European Green Deal and the Battery Action Plan. It is also necessary the European automotive industry to stay competitive.
Crucially, Europe has a major advantage that will allow it to quickly and sustainably scale up this battery market. A massive lithium deposit lies nestled in the Rhine valley between Germany, France, and Switzerland. This basin not only holds enough lithium to supply Europe’s automotive market for decades, but it can be accessed with far more sustainable methods than most existing lithium deposits. Much of the world’s current lithium supply originates in South America, where the extraction process places considerable pressure on water supplies, in some instances even devastating local ecosystems. The lithium deposits in the Rhine valley can be mined in a wholly carbon-free process.
Tapping such resources will not just enable Europe to be more self-sufficient. It will also allow for a considerable reduction in emissions, since the deposits are located next to one of the most important industrial regions on the continent and will not need to be transported over long distances for European companies to turn them into batteries. Europe’s own lithium thus affords the continent a chance to drastically cut imports, transportation costs, and emissions in one blow, offering a massive boost to the burgeoning European battery industry—and the mobility sector depending on it.
Cost-effective energy storage has the ability to unlock a large swath of new economic and environmental possibilities in Europe, with a transformation of the traditional automotive industry representing only one of those. Building a local battery value chain will facilitate the growth of other emerging sectors too. These range from micromobility and vehicle-to-grid initiatives to co-location of storage for solar and wind plants, utility scale storage, and drones.
The pace of innovation accelerates continuously, and it is vital that Europe takes the steps necessary to assume a leading role in the new economy. Having access to one of the world’s largest lithium reserves means that the procurement of raw materials need not be a major barrier to a strong battery value chain. Right now, the biggest obstacles to the emergence of this industry in Europe have simply been lack of political will, along with a bad case of NIMBYism—a “not in my back yard” attitude that hampers crucial developments in the energy transition. One of the most well-known examples is, of course, aesthetic objections to wind and solar parks. Likewise, some regions have worried about the geological impact of geothermal energy extraction. We can be sympathetic to the fear of change, but the climate will wreak much more devastating changes on our lives if we do not invest and speed up the deployment of these essential technologies. Nothing could be more myopic, though, than falling behind in the energy transition out of an aversion to the certain essential parts of the innovation process.
Tackling the difficult challenges of climate tech is essential for Europe to remain competitive on the global stage and to reach its climate goals. Many of the necessary pieces are already in place: a well-educated and technically competent workforce, ample raw materials, and a culture of innovation positions Europe to succeed in this transformation. The only thing left to do now is to get in the driver’s seat (of an EV, of course) and start leading the way towards a greener future.
Josephine Bush, former senior EY Global Renewables Partner, now Non-Executive Director of Vulcan Energy Resources