Statement by Executive Vice President Vestager on approval of €2.9 billion public support by twelve Member States for a second pan-European research and innovation project along the entire battery value chain - Hoofdinhoud

Today, the European Commission has approved under EU State aid rules up to 2.9 billion euros of public investments in an important project for batteries.

12 Member States - Austria, Belgium, Croatia, Finland, France, Germany, Greece, Italy, Poland, Slovakia, Spain and Sweden - will join forces to support research and innovation in this strategic value chain. The project, called the “European Battery Innovation” project, will cover the whole batteries ecosystem from extraction of raw materials, design and manufacturing of battery cells and packs, and finally the recycling and disposal in a circular economy.

The public support will unlock an additional 9 billion euros of private investments. This brings the total investments in the project to almost 12 billion euros. So, the industry's investments more than triple the size of the public money.

We will not recover from this crisis by rebuilding the world, as we knew it before the pandemic. We now have the historic chance to build a greener, more digital and resilient Europe. To tackle climate change, we have to transform how we power our world, how we heat our homes - and how we travel and move between places.

Electric vehicles will play a key role in this. They're increasingly present on our roads, and sales have continued to rise even during the corona crisis. Innovative batteries are one of the key factors for the success of electric cars. They can make up about a third of the total price and determine how far cars can travel.

Beyond the automotive sector, battery technologies play a crucial role, for example to better store renewable energy. So, we can tap into stored energy when the sun isn't shining and the wind isn't blowing.

All these efforts will only really pay off for the environment, if we improve the production and recycling processes of batteries.

State aid rules offer Member States many possibilities to support the necessary research and innovation. In recent years, those have enabled more than 10 billion euros per year in public support.

But for those massive innovation challenges for the European economy, the risks can be too big for just one Member State or one company to take alone. So, it makes good sense for European governments to come together to support industry in developing more innovative and sustainable batteries. Especially when the resulting innovation can benefit the entire European economy.

That's why we have put special State aid rules in place to smooth the way. So, Member States can pool their resources and cooperate in an important project of common European interest.

Today's decision follows the Commission's approval in December 2019 of a first batteries project, with seven Member States participating. That project is currently being implemented.

This time, Germany took the lead in coordinating an even larger group of Member States and industry players to deliver the project which we are approving today. It is expected to lead to new technological breakthroughs and innovations in the battery value chain.

More details on the project

Let me tell you a bit more about this project.

It will focus on research and innovation in four interconnected work streams: (i) raw and advanced materials; (ii) battery cells; (iii) battery systems; and (iv) recycling and sustainability.

42 companies, active in one or more of the 12 Member States, will directly participate in this project. They include well-known large industrial players, such as BMW, Fiat, Northvolt and Tesla, but also small and medium-sized enterprises and start-ups.

The fact that it is an integrated project across the value chain is important because the various components of a battery have to work together seamlessly, to be safe, high performing and affordable. Innovations in one component, say the battery cathodes, have to be matched by innovations of the others, such as its anodes, separators, electrolytes.

And when it comes to how batteries are produced, the project will bring about new innovative approaches, for example to reduce energy consumption and industrial waste.

To give you three examples:

First, the project aims to improve the real-time control and measurement systems of batteries. So that once batteries come to the end of their first life, for example after ten years in an electric vehicle, we will have information about its state of health. That will determine what the second life of the battery should be. Either as stationary energy storage, or to recycle them so that the precious materials can be recovered for the production of new batteries.

Second, the project is expected to significantly improve the environmental footprint of battery cell production, for example, through solvent free production processes.

Third, the project also aims at an optimal use of digital technologies in processes across the value chain, using advanced data analytics to optimise production processes.

Commission assessment under State aid rules

The Commission needs to assess and give its green light to the public support to such projects. That's because of the size of the support to a select group of companies and the potential impact on competition.

The State aid framework for important projects of common European interest allows sufficient levels of aid for highly innovative research projects to bridge the financing gap, while limiting competition distortions.

So, our assessment focused on three key elements:

First, the Commission experts have confirmed that each individual part of the integrated project aims at breakthrough innovation.

Second, companies can only receive what is necessary for the project to happen and potential competition distortions must be kept at bay. That's why we closely analysed the companies' financial projections to make sure they are realistic. And large beneficiaries will have to return part of the aid received, if their projects turn out to be more profitable than expected.

Third, with significant support also comes responsibility: the public has to benefit from its investment. That's why companies receiving aid have to generate positive spillover effects across the EU.

This means that the 42 direct participants will engage with over 150 indirect partners all over Europe, including SMEs, universities and research organisations. They will share results and knowledge gained in events, publications and collaborations. They will license certain intellectual property generated on non-discriminatory terms. Finally, they will open certain pilot facilities for interested third parties to test their products.

On this basis, we have concluded that the proposed public support is appropriate and necessary to give companies involved an incentive to engage in truly ambitious research and innovation. And, as mentioned, this will be accompanied by 9 billion euros of private investment.

Conclusion

In 2017, we launched the European Battery Alliance under the excellent leadership of my colleague Maroš Šefčovič. Since then, a lot has happened that put European battery production on track to be the most innovative and sustainable in the world. Having batteries that are more sustainable throughout their life cycle is key to achieve our ambitious climate targets. This is at the core of the Sustainable Batteries Regulation proposed by the Commission last December.

Today's project fits right in with these objectives. It is an example of European cooperation at its best, where all parties have to play their respective role - companies, Member States and the Commission. And this happened under very challenging circumstances in the midst of a pandemic. Still, Member States and industry shaped the project in just over a year and we have approved it today within a few weeks from its formal notification in December.

It is also an example of how competition policy works hand in hand with other policy objectives in terms of innovation and competitiveness. By making sure that limited public resources are used to crowd in private investment, that benefits are shared widely and that competition distortions are minimised. And enable important projects of common European interest for the really big challenges where the market alone cannot deliver.

Member States are already actively working on other such projects in key value chains, for example in hydrogen. The Commission will do its utmost to support their plans, provide guidance and coordinate efforts. All while preserving a level playing field in the Single Market.

So that public investments truly serve European citizens.