Europe backs battery material projects

The European Commission has awarded more than $200 million in grants to several battery material projects in Europe. The funding is an effort to boost local battery manufacturing, but some firms have been underwhelmed by government support for European battery projects compared with the generous subsidies in the US Inflation Reduction Act (IRA).

Freyr Battery will receive a $112 million grant to fund its battery project in Norway. Vianode will receive a $101 million grant for a Norwegian facility that will produce synthetic graphite, used to make battery anodes. Additional grants will support BASF’s battery recycling project in Spain and Lignode’s biobased anode facility in Finland.

The European Chemical Industry Council, a trade group, wants European governments to go further. In July, the group warned that without additional government support, Europe won’t be able to compete with the US for clean technology projects.

In a May earnings call, Freyr executives told investors that the company was restricting the pace of spending on its Norwegian battery project, called Giga Arctic, until it was clear how much support the project would receive from the Norwegian government and the European Union. “The Norwegian response to the IRA is critical to ensuring Giga Arctic global competitiveness,” Freyr’s chief financial officer, Oscar Brown, said on the call.

Meanwhile, Freyr says clear support through the IRA is allowing the company to accelerate its battery manufacturing project in the US.

Strong US subsidies won’t spell the end of the European battery industry, says Paddy Ryan, assistant director for European energy security at the Atlantic Center’s Global Energy Center, a think tank.

Ryan says companies will want local factories to avoid shipping battery materials across an ocean, but they’re hoping the IRA will push Europe to offer more support.

“There’s a level of theater going on. Companies aren’t necessarily relocating,” he says. “They’re just trying to get the best deal that they possibly can before committing to a project.”