The document, acquired by Reuters, will serve as the foundation for discussions on Europe’s economic security during an EU leaders’ conference in Granada, Spain, on October 5.
Concerned about China’s growing global aggressiveness and economic weight, the leaders will examine the European Commission’s suggestions to minimize Europe’s reliance on China, as well as the need to expand into Africa and Latin America.
According to the report, because renewable energy sources like solar and wind are intermittent, Europe will need techniques to store energy in order to achieve its target of net-zero carbon dioxide emissions by 2050.
“This will skyrocket our demand for lithium-ion batteries, fuel cells and electrolysers, which is expected to multiply between 10 and 30 times in the coming years,” according to the study prepared by the Spanish EU president.
While the EU has a strong position in the intermediate and assembly phases of creating electrolysers, with a more than 50% global market share, it is highly reliant on China for fuel cells and lithium-ion batteries, both of which are required for electric vehicles.
“Without implementing strong measures, the European energy ecosystem could have a dependency on China by 2030 of a different nature, but with a similar severity, from the one it had on Russia before the invasion of Ukraine,” it added.
According to the European Commission, the EU imported more than 40% of its total gas consumption, 27% of its oil imports, and 46% of its coal imports from Russia in 2021, the year before Russia’s invasion of Ukraine.
The cessation of most Russian energy purchases prompted an energy price shock in the EU and a jump in consumer inflation, compelling the European Central Bank to drastically boost interest rates, stifling economic growth.
According to the Spanish presidency document, lithium-ion batteries and fuel cells were not the only areas of vulnerability in the EU.
“A similar scenario could unfold in the digital-tech space,” according to the study. “Forecasts suggest that the demand for digital devices such as sensors, drones, data servers, storage equipment, and data transmission networks will rise sharply in this decade.”
“The EU has a relatively strong position in the latter, but it shows significant weaknesses in the other areas,” the report added.
According to the report, by 2030, this foreign dependency might substantially impair the productivity improvements that the European industry and service sector urgently require, as well as the modernization of farm systems required to combat climate change.