The European Commission has approved under EU State aid rules an Important Project of Common European interest (“IPCEI”) jointly notified by Belgium, Finland, France, Germany, Italy, Poland and Sweden to support research and innovation in the common European priority area of batteries.
The seven Member States will provide in the coming years up to approximately €3.2 billion in funding for this project, which is expected to unlock an additional €5 billion in private investments. The completion of the overall project is planned for 2031 (with differing timelines for each sub-project). It will involve 17 direct participants, mostly industrial actors, including small and medium-sized enterprises (SMEs), some of which with activities in more than one Member State. The direct participants will closely cooperate with each other and with over 70 external partners, such as SMEs and public research organisations across Europe.
The project supports the development of highly innovative and sustainable technologies for lithium-ion batteries (liquid electrolyte and solid state) that last longer, have shorter charging times, are safer and more environmentally friendly than those currently available. It involves ambitious and risky research and development activities to deliver beyond the state-of-the-art innovation across the batteries value chain, from mining and processing the raw materials, production of advanced chemical materials, the design of battery cells and modules and their integration into smart systems, to the recycling and repurposing of used batteries.
Innovation will also specifically aim at improving the environmental sustainability in all segments of the battery value chain. It aims to reduce the CO2 footprint and the waste generated along the different production processes as well as develop environmentally friendly and sustainable dismantling, recycling and refining in line with circular economy principles.
More specifically, the project participants and their partners will focus their work on four areas:
(1) Raw and advanced materials: The project aims to develop sustainable innovative processes allowing extraction, concentration, refining and purification of ores to generate high-purity raw materials. With respect to advanced materials (such as cathodes, anodes and electrolytes), the project aims to enhance existing materials or create new ones, to be used in innovative battery cells.
(2) Cells and modules: The project aims todevelop innovative cells and modules designed to meet the safety, and performance required for both automotive and non-automotive applications (e.g. stationary energy storage, power tools, etc.).
(3) Battery systems: The project aims to develop innovative battery systems including battery management software and algorithms as well as innovative test methods.
(4) Repurposing, recycling and refining: The project aims to design safe and innovative processes for collection, dismantling, repurposing, recycling and refining of recycled materials.
The Commission assessed the project under EU State aid rules, more specifically its Communication on Important Projects of Common European Interest (IPCEI). Where private initiatives supporting innovation fail to materialise because of the significant risks such projects entail, the IPCEI Communication allows Member States to jointly fill the gap to overcome these market failures and boost the realisation of innovative projects.
In order to qualify for support under the IPCEI Communication, a project must, in particular: (i) contribute to strategic EU objectives; (ii) involve several Member States; (iii) involve private financing by the beneficiaries, (iv) generate positive spillover effects across the EU, and (v) be highly ambitious in terms of research and innovation, i.e. it has to go beyond what is widely regarded as the “state of the art” in the sector concerned.
The Commission has found that the proposed IPCEI on batteries fulfils all the required conditions set out in its Communication.
In particular, the Commission notes that:
The Commission also found that the aid to individual companies is necessary, proportionate and does not unduly distort competition.
On this basis, the Commission concluded that the IPCEI on batteries notified by Belgium, Finland, France, Germany, Italy, Poland and Sweden is in line with EU State aid rules.
The project will involve 17 direct participants from the seven Member States, some of which will have activities in more than one Member State. The overall project should be completed by 2031 (with differing timelines for each sub-project).
The direct participants could receive up to approximately €3.2 billion in funding. More specifically, Belgium has sought approval to grant up to approximately €80 million; Finland up to approximately €30 million; France up to approximately €960 million; Germany up to approximately €1.25 billion; Italy up to approximately €570 million; Poland up to approximately €240 million and Sweden up to approximately €50 million. Nonetheless, significant share of additional profits made by the participants will be shared with taxpayers through a claw-back mechanism. In other words, if the projects turn out to be successful, generating extra net revenues beyond projections, the companies will return part of the taxpayer money received to the respective Member States.
The Commission has verified that the total planned maximum aid amounts are in line with the eligible costs of the forecasted projects and their funding gaps.
The Commission has identified batteries as a strategic value chain where the EU must step up investment and innovation in the context of a strengthened industrial policy strategy aimed at building an integrated, sustainable and competitive industrial base.