European Central: Europe quietly leads the global battery recycling race

kUMPAN eLECTRIC

The world is increasingly digitally powered. From the rise of AI to drones and electric vehicles, energy storage and usage are vital issues for today’s governments. While they don’t make flashy headlines and often fly under the radar, the battery is what quite literally powers these technologies.

Europe has long acknowledged the power of the battery. In 2017, Vice-President for Energy Union Maroš Šefčovic emphasized their importance:

“Batteries are at the heart of the ongoing industrial revolution. … Batteries embody our ambition, as set out in President Juncker's State of the Union, to help our industries remain or become world leaders in innovation, digitisation and decarbonisation.”

In the years that followed, the European Union has targeted this strategically important industry, and while it has endured some ups and downs in recent months, Europe is preparing a rejuvenated push to create a renewable circular economy and become a global leader in high-end battery technology. 

Circular Economies and Batteries. Why Are They Important?

First, it is important to address what a circular economy actually is. In a normal, linear economic model, resources are mined, made into products, and then reduced to waste afterward. This model often leads to a lot of resources being inefficiently resigned to landfills and other forms of waste.

In contrast, a circular economy aims to reduce material use through redesigning products to be less resource-intensive, and reusing as much waste as possible in new products. Recycling takes center stage, allowing materials to be used multiple times before being eventually discarded as residual waste.

Circular economies have a host of benefits, from reducing the reliance on foreign material imports and creating jobs to reducing carbon footprints.

Batteries are a particular nuisance for recyclers. Their parts and compositions aren’t standardized between manufacturers, making dismantling and recycling them tougher, while lithium-ion batteries’ propensity for catching fire as they degrade adds a safety element. Being able to recycle them would allow the reuse of their often expensive materials, including nickel and cobalt.

But once they are able to be easily recycled, sustainable batteries can be a huge boon. They are also core to energy and transportation sectors across Europe, and their recycling is capable of meeting a quarter of the battery industry’s cobalt demand, 14% of its lithium demand, 16% of its nickel demand, and 17% of its manganese demand by 2030.

Europe’s First Push

Europe was quick to recognize the value in creating a circular economy. Their efforts began in 2015, with the European Commission’s first circular economy action plan, consisting of efforts to update waste management practices, give incentives for recyclable products, and simplify the cross-border circulation of raw materials.

In 2017, Europe followed up with the launch of the European Battery Alliance, an industrial development program aiming at building a “pan-European battery industry to capture a new market worth €250 billion per year in 2025.” Over 120 European and non-European stakeholders joined, representing every step in the manufacturing chain. Today, that number nears 800.

Both these initiatives were bolstered by the 2019 European Green Deal, which facilitated faster access to funding for climate and tech companies, created a proposal for a Net-Zero Academy to give training for high-skilled jobs, and expanded the EU's network of Free Trade Agreements to solidify access to raw material imports. 

On the funding front, over €100 billion was given to the EU’s net-zero start-ups in 2021, double what it was in 2020. Since 2022 alone, the European Battery Alliance has been developing 111 major battery projects in the EU, creating a total investment upward of €127 billion.

The aforementioned Net-Zero Academy last year began training 100,000 workers for high-skill jobs in the solar industry, while the European Raw Materials Alliance has helped ensure reliable, secure, and sustainable access to raw materials for Europe’s blossoming circular economy. 

At its current rate, Europe is expected to produce 2,000 gigawatt-hours (GWh) of battery capacity annually by 2030, up from 25 GWh produced in 2020. Leading this charge has been Germany, projected to have a production capacity of 353.5 GWh by 2030, while Hungary and France are close behind at 215.3 GWh and 174.5 GWh respectively. 

Germany, in particular, has been deeply invested in battery technology, with one in four electric cars produced in Europe in the next few years to have a German-made battery. With all of this growth, the foundation was laid for Europe to take pole position in the global battery race. 

The First Stumbling Block

But the continent’s push hit a snag late last year. Northvolt, a prominent Swedish battery maker, filed for Chapter 11 bankruptcy in December 2024. It was once a flagship for the future of the EU’s battery policy, attracting $5 billion for a circular gigafactory in Skellefteå, Sweden, since its founding in 2017. It aimed to capture 25% of Europe’s battery market by 2030, with planned gigafactories in Germany and Canada, and recycling facilities in Poland. 

However, cracks appeared in 2023 due to missing production targets, shortfalls in domestic personnel with the requisite experience, and unfulfilled orders. The company’s failure has shocked Europe’s clean-tech landscape, with Germany exposed to a potential €620 million loss. 

But while Northvolt’s shuttering was certainly a blow, it has provided important lessons for the Bloc’s leaders.

Firstly, the Bloc hasn’t fully insulated itself from its reliance on foreign suppliers for critical material and machinery, as Northvolt banked on Chinese personnel and capital to run its model. Secondly, the scale of funding available has been adequate but not fully optimized. More funding always helps, but clear incentives and goals will go a long way, according to experts. Finally, innovation and growth at the pace that Europe’s leadership seeks will never be without risk, and Northvolt is a case of trial and error leaning towards the latter.

Once More Unto The Breach

With all of this in mind, Europe is undertaking another push, but now equipped with lessons learned over the past decade. As trade wars ebb and flow on the global scale, the EU unveiled in March 47 strategic critical raw material projects aimed at enhancing Europe’s domestic raw material capacities while reducing its reliance on Chinese imports. They also updated their battery-related waste codes, exemplifying the Bloc’s attention to detail this time around. 

But most importantly, the European Commission unveiled its Clean Industrial Deal in February, containing a range of important changes. It set up mechanisms allowing the EU to jointly buy raw materials with more leverage on behalf of companies. Furthermore, it mobilized an additional €100 billion to support EU-made clean manufacturing, and it created Erasmus+, an education and training program to develop a skilled workforce and address skills shortages.

This legislation is coming at an excellent time as well, with multiple battery companies having breakthroughs in recent months. In February, two European startups hit milestones in recycling electric vehicle battery materials, while BMW has developed a closed-loop battery recycling process so successful it is set to expand to North America next year.

With the early kinks in its circular economy vision beginning to be ironed out, Europe is pushing towards being a reliable and renewable economy. As technology improves and spreads, the battery will only grow in importance. With enough time and investment, Europe has the potential to become a revitalized technology hub once again, and sits in a prime position to hold the keys, or rather the batteries, that will power the world moving forward.