{"id":74154,"date":"2025-10-23T13:57:57","date_gmt":"2025-10-23T13:57:57","guid":{"rendered":"https:\/\/europeanbusinessmagazine.com\/?p=74154"},"modified":"2025-10-23T13:57:57","modified_gmt":"2025-10-23T13:57:57","slug":"the-european-union-is-working-hard-to-catch-up-with-the-competition-in-the-green-energy-sector","status":"publish","type":"post","link":"https:\/\/europeanbusinessmagazine.com\/sustainability\/the-european-union-is-working-hard-to-catch-up-with-the-competition-in-the-green-energy-sector\/","title":{"rendered":"The European Union Is Working Hard to Catch up With the Competition in the Green Energy Sector"},"content":{"rendered":"
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The European Union is widely known to have the most ambitious\u00a0climate change\u00a0mitigation policies in the world today, and with these goals come a correspondingly high demand for critical minerals. This demand for the raw materials necessary for the construction of renewable technologies is expected to\u00a0grow even further\u00a0over the next two to three decades.<\/div>\n
At the same time, the EU\u2019s supply chains are\u00a0heavily dependent\u00a0on a few foreign sources while its indigenous technological innovation in the battery, solar and wind power industries appear to lag behind its international competitors. The carefully calibrated policies of the United States in this field, balancing between energy sovereignty and protectionism in the form of tariffs and trade barriers on the one hand, and continuing to attract foreign direct investment on the other hand, could serve as a worthwhile strategy to consider for the EU too.<\/div>\n
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The EU strives to become the world\u2019s first\u00a0climate-neutral\u00a0continent by 2050, and this plan relies heavily on increasing the proportion of energy produced by renewable resources. Seeking to almost\u00a0double\u00a0the share of renewables from 23% in 2022 to 42.5% by 2030, the EU requires a substantial amount of nickel, cobalt, lithium and rare earth elements, among other minerals.<\/div>\n
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Mineral demand could\u00a0quadruple\u00a0by 2040, according to the International Energy Agency. When it comes to the sourcing of raw materials for the production of batteries, fuel cells, solar panels, traction motors, and wind turbines, the EU registers a\u00a0supply risk<\/a><\/u>\u00a0that increases from moderate to very high.\u00a095%\u00a0of the EU\u2019s rare earth elements come from China, Russia and Malaysia, while unstable economies like Brazil, Turkey and Tajikistan provide the majority of its ferro-niobium, borates, and antimony imports. China\u2019s near-monopoly over rare earth production stands at nearly 70% globally. Such dependence poses risks in real terms. Japan, for instance, experienced severe\u00a0disruptions\u00a0to its supply chain and industrial production in 2010, following a diplomatic dispute with China.<\/div>\n
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This is in stark contrast with the US government\u2019s approach, which has been making efforts to increase\u00a0domestic production\u00a0by\u00a0exploration, research into extraction from non-traditional sources, as well as ramping up cooperation with a variety of\u00a0foreign partners\u00a0for imports, including Canada, Australia, and a number of African and South American countries.<\/div>\n
Securing raw materials, both via domestic production and imports, however, only represents one side of the coin in a resilient critical minerals and green energy strategy. Innovation and manufacturing capabilities are just as crucial, and the EU has encountered roadblocks in both of these areas.<\/div>\n
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On the one hand, while\u00a0investment<\/a><\/u>\u00a0in research programs for the development of climate-neutral solutions has increased consistently for years, the performance of the EU in its patent portfolio is notably\u00a0weaker\u00a0when it comes to solar panels, batteries, and fuel cells.<\/div>\n
Flexibility in energy grids would be vital in connecting new energy sources and consumers, but\u00a0grid congestions<\/a><\/u>\u00a0are holding back energy transition in several EU countries. Grid capacities have simply not expanded sufficiently to be able to accommodate new electricity supply. Combined with other infrastructural issues, the EU is facing bottlenecks in building up its renewables industry to scale, an area in which\u00a0China\u00a0has notably excelled.<\/div>\n
Indeed, China\u2019s leadership in the global critical minerals and renewables manufacturing industry has positioned Beijing as an attractive partner for trading technologies as well as participating in joint research and investment projects. Gotion is building a $2 billion plant in\u00a0Illinois\u00a0for the production of lithium-ion batteries, while EVE Energy is constructing a $3 billion factory in\u00a0Mississippi\u00a0to produce batteries for electric trucks.<\/div>\n
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Lucrative opportunities and mutually beneficial production notwithstanding, some foreign investment in the US has proven to be not as straightforward. In September 2025, Hyundai\u2019s plant in Georgia was raided by immigration officers, who uncovered\u00a0visa regulation violations\u00a0in the case of nearly 500 workers. The scandal highlighted how companies might abuse their access to the United States for locally-based production and thereby, the avoidance of tariffs and trade barriers, and push their luck too far in the pursuit of minimizing costs.<\/div>\n
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A more prudent approach will certainly follow in the US as a result, especially when it comes to firms that have a questionable balance sheets or track records in business. Xiamen Hithium Energy Storage Co. is a case in point, which already features on the\u00a0ban list<\/a><\/u>\u00a0of the Homeland Security Committee of the US Congress.<\/div>\n
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As a company that overwhelmingly relies on subsidies provided by the Chinese government and which registered negative cash flows for multiple years, Hithium\u2019s rise in the battery manufacturing industry has been viewed with suspicion, especially in the context of joint investment and production projects.<\/div>\n
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Hithium\u2019s recent losses in its applications for tenders for large-scale energy infrastructure development projects in China\u2019s\u00a0Xinjiang<\/a><\/u>\u00a0Province, including\u00a0Kokdala\u00a0and\u00a0Karamay\u00a0cities, followed by an unsuccessful listing in Hong Kong which was\u00a0stopped by regulators<\/a><\/u>, mark a continuing downward trend for the company. While industry rumors have been circulating regarding Hithium\u2019s intentions to open a manufacturing plant in Texas, it is unclear how a company with such a checkered past would even secure the visas needed for specialist employees, if at all.<\/div>\n
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The European Union should pursue a similarly careful strategy in its business relations with potential foreign partners if it is to scale up its production in the renewables sector while protecting its competitiveness in global markets.\u00a0Foreign direct investment\u00a0has been notable in the EU\u2019s battery industry too\u2014mostly centered around Poland, Slovakia and Hungary. Nevertheless, foreign investments targeting the EU in general\u00a0declined\u00a0for the second consecutive year in 2024.<\/div>\n
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The EU finds itself at a challenging crossroads, where it should incentivize foreign direct investments in its renewables industry all the while diversifying its supply chains and building up its domestic production capabilities.<\/div>\n
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One policy area in this matrix might evidently come at the expense of the other. Aiming to strike a balance exactly between these two streams of policymaking: protectionism and foreign investment will certainly be something the EU will focus on in the coming years.<\/div>\n
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In addition to critical minerals, the EU and the US rely heavily on China for active pharmaceutical ingredients\u2014above 80%\u2014rendering such balancing strategies more and more important. While the US\u2019 own model has a number of tests to pass over the coming years, proactivity and getting a head start are already proving to be crucial in this increasingly competitive area of business.<\/div>\n
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The European Union is widely known to have the most ambitious\u00a0climate change\u00a0mitigation policies in the world today, and with these goals come a correspondingly high demand for critical minerals. This demand for the raw materials necessary for the construction of renewable technologies is expected to\u00a0grow even further\u00a0over the next two to three decades. At the […]<\/p>\n","protected":false},"author":4,"featured_media":74155,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[42],"tags":[763],"class_list":{"0":"post-74154","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-sustainability","8":"tag-green-energy"},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/posts\/74154","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/comments?post=74154"}],"version-history":[{"count":1,"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/posts\/74154\/revisions"}],"predecessor-version":[{"id":74156,"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/posts\/74154\/revisions\/74156"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/media\/74155"}],"wp:attachment":[{"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/media?parent=74154"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/categories?post=74154"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/europeanbusinessmagazine.com\/wp-json\/wp\/v2\/tags?post=74154"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}