Last month, the Polish Alternative Fuels Association (PSPA) published a report on Poland’s emerging role in the global battery supply chain. As highlighted by the report, global lithium-ion battery production capacity will increase by up to eight times over the next five years. Going forward, Poland has an opportunity to maintain its “leading position” in the global supply chain – currently being the second largest producer worldwide, the report underlined. Looking to hear more about the report’s main findings on the regional electromobility industry, we spoke to PSPA’s President, Maciej Mazur.
We began our discussion about the region’s battery sector, with a particular focus on Poland and Hungary as two leading players in this area, and factors that can explain their competitiveness. “Thanks to their strategic central location in Europe, Poland and Hungary are a great base for further cooperation with European customers and as key countries in a global battery supply chain,” Mr Mazur tells CEENERGYNEWS.
“Poland is also an economically stable and continuously developing country. Well-qualified resources also constitute a significant advantage (particularly engineers and advanced IT). According to studies, there are almost 400,000 Polish engineers who are employed within the internal combustion engine technologies which is a huge potential to be unlocked in the battery segment and more broadly in the emission-free powertrains. What is more, the region is recognised as one of the most digitalised regions not only in the EU but also globally,” he adds.
Role of EU funds in the region’s competitiveness
Poland and Hungary are yet to receive funds from the EU’s Covid-19 recovery programme, as opposed to other countries in the region like Romania, which have received the first instalments of their respective funding packages. We asked how access to this capital has or will have an impact on the region’s competitiveness. “Only Romania in the CEE launched a support program for battery production, PV [photovolatic] and solar panels without new Regional Aid Guidelines which might increase its position in the battery value chain in the long term. This shows the country’s understanding of the challenges looming over the EU, especially in face of the European response to the US Inflation Reduction Act,” Mr Mazur said.
To prevent investment leaving the EU, the Member States should be reviewing policies to boost competitiveness by adopting significant budgets and creating an attractive business environment. This must include subsidies, like in the US, but also policies which will address energy prices and increase the share of renewables in the energy mix (some enterprises put this on top of their list of criteria for the location of their business).
“Moreover, uncertainties surrounding EU and national financial support are delaying investments in the EU battery value chain, as they are unable to match the appealing CAPEX and OPEX incentives offered by the USA via the IRA or similar support schemes in Canada, Japan, and South Korea. Just recently, some of the necessary changes seem to be lagging in Poland and Hungary creating a possible space for other states to catch up potentially, but having those two countries at an already high level of lithium-battery manufacturing requires an only minor impulse of positive adjustment for them to foster their position at the forefront of the global ranking,” the PSPA President adds.
Serbia as an emerging player in the battery supply chain
As noted in PSPA’s report, other countries like Serbia are “poised” to become significant players in the global battery value chain. On this point, we asked Mr Mazur about his assessment of Serbia’s role in Europe’s future battery sector, particularly in terms of its relations with the EU in this area. “The Jadar project in Serbia refers to the mining and exploration project related to the Jadar lithium-borate deposit located in western Serbia. The project is being developed by the mining company Rio Tinto. The Jadar deposit is known for its significant reserves of lithium, a key component in batteries for electric vehicles and renewable energy storage,” he says.
The high-grade, large-scale deposit is a promising addition to the world’s supply of materials. Jadar will be capable of producing three products on an annual basis: refined battery-grade lithium carbonate, boric acid, sodium sulphate. The project has strong backing from the UK, Australia, the United States, and the EU. Rio Tinto claims that it would be the biggest lithium mine in Europe and would make the company one of the top 10 lithium producers in the world.
However, Mr Mazur notes that the projects struggles with permits and licenses being suspended by the Serbian government, as well as a growing public opposition which certainly results in hindering the implementation of the project.
“The EU needs as much critical raw material independence as it can get, which is why the positive regulation for recycling is ramping up at such a pace, but having a lithium mine in the EU value chain would be an immensely positive element,” he adds.
What can policymakers do today?
Access to critical raw materials, boosting production, circularity and skilled labour are among the key recommendations to alleviate today’s challenges, according to the PSPA report. We asked Mr Mazur about the recommendations that policymakers and other decision-makers ought to consider in the short term. “The analysis of the CEE battery industry based on the in-depth review of the Polish and Slovak markets revealed that the main challenges are related to building a long-term strategy and supporting the manufacturing capacities and growing importance of the region by local policies of a lasting nature. The strategic recommendations presented in the report relate to the need for a stable, reliable and unwavering framework for the industry,” he says.
Special attention should be focused on actions regarding the sustainable development of the battery industry which include: growing domestic capacities for raw materials and battery materials, boosting production of components and batteries, enhancing recycling and second-life projects, and growing skills and talent. This includes strategic programs for reskilling and competence-building. On the political level actions should be directed at the acquisition of additional funding for regions with slower growth e.g., dedicated funding baskets within the EU instruments or on developing investment resources, support programs, and financial incentives, with the availability of investment incentives from public administration.
“The third tier of recommendation should definitely be defined within the area of dynamically developing energy production capacities based on renewable energy – to decarbonise the industry, but also to simply attract investors to the region,” he highlights.
Approaching the end of our discussion, we asked the President of PSPA about any other ways in which the region can maintain and grow its competitive position. “The foundation for maintaining and growing a competitive position is a long-term, strategic approach to further developing the lithium-ion battery industry based on three key areas which are strongly interconnected, i.e. competitiveness, competence and net-zero industry,” he points out.
“Moreover, investing in the development of innovations within the sector in order to become a technological centre is highly recommended especially in the fields of Battery Management System technology, thermal sensors and casing, as well as other electronic systems for future battery solutions. Additionally, there should be created public and easily accessible national education programs aimed at providing trained and qualified staff ready to start working in the battery sector,” Mr Mazur adds.
