The EU needs to invest more than €13 billion ($14 billion) by 2040 to guarantee just a quarter of key battery materials from European sources to power its green energy agenda, says analysis released on May 9. The study by European electrochemical and thermal energy storage research center, CIC energiGUNE, assessed the impact of the Critical Raw Materials Act published by the European Commission in March.

Study author and CIC sustainability expert, Andrea Casas, says analysis of the European Commission’s own estimates show the bloc will need to invest €7 billion by 2030 and €13.2 billion by 2040 to guarantee European sources of 25% of the region’s demand for lithium, cobalt, nickel, manganese and natural graphite.

EU member states could expect to contribute up to €5 billion in public funding by 2040 towards the overall total, if the bloc wants to follow the lead of the US in supporting its battery sector under the Inflation Reduction Act. However, the study does not comment on whether the bulk of the investment will come from European Commission coffers or private investors. According to Casas, other strategic raw materials are also likely to require large investments such as copper for electrifying infrastructure, silicon for solar panels or platinum group metals for hydrogen electrolysis.

To date, the EU is almost exclusively dependent on imports for many critical raw materials, Casas says. “In addition, the suppliers of these imports are often highly concentrated in a small number of third countries, both at the extraction and processing stages.”

All this becomes even more relevant when taking into account global demand for lithium to manufacture batteries for mobility and energy storage is expected to increase 89-fold by 2050, Casas says. Meanwhile, the demand for rare earths used to manufacture permanent magnets used in wind turbines or electric vehicles should increase six to seven times by 2050.

Casas says it is indisputable that critical raw materials are essential to EU plans for a network of battery gigafactories to support the clean energy transition. However, she says it is also necessary “to be clear that deploying this plan will require significant investments to ensure the effectiveness of the measures taken”.

The European Commission’s Critical Raw Materials Act defined this year, for the first time, a list of strategic raw materials vital to powering the bloc’s green tech agenda, including domestic battery manufacturing for EVs and energy storage systems. The Commission said the EU must increase the use of its own geological resources and generate capacity to produce at least 10% of the bloc’s consumption of strategic raw materials. The EU must also increase its processing capacity along the supply chain to produce at least 40% of its annual consumption of strategic raw materials and increase the use of secondary raw materials.

By 2030, Europe should not be dependent on any single third country for more than 65% of its supply of any strategic raw material, unprocessed and at any stage of processing, the Commission said. In response, the European Automobile Manufacturers’ Association has urged the EU to form a ‘raw materials club’ with the US to help ensure a stable battery supply chain.

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