Why Norway Has a Unique Advantage in the Global Battery Market
There are few places in the world with the conditions to create a battery industry that is both sustainable and circular.
Norway is an exception – and that is why we must invest in battery production.
Truls Johansen, Director of Strategy at Elinor Batteries
The international battery market is experiencing tremendous growth, and many wonder if there is any point in attempting to establish a battery industry in Norway. We believe the answer is simple: Because no one (yet) can beat us in sustainability, we should produce batteries here in Norway.
“All the conditions are in place for a Norwegian battery industry to become profitable and meet a critical demand for sustainably produced batteries.”
For a long time, battery production has been dominated by the Asian market, but this dominance is being challenged by international forces, creating opportunities for Norway going forward. The EU imposes very strict requirements on European value chains and sustainable production, and this is precisely where Norway and Elinor Batteries will have an opportunity.
Sustainability Drives Growth
Several factors drive the explosive growth in the international demand for batteries. There are global, ambitious climate goals and commitments to reduce greenhouse gas emissions, which means that the need for energy storage in the form of batteries is increasing dramatically. Globally, renewable energy production is finally on the verge of overtaking power plants based on fossil fuels – it has simply become cheaper. At the same time, energy storage in the form of batteries enables the efficient use of these power sources, to match a day-variable production with the various consumption patterns of households, businesses, and industries worldwide.
Led by Chinese manufacturers, Asia has long owned complete value chains within battery production, from extraction to battery cell production and the design of finished energy storage systems. But now, both the USA and the EU are rapidly catching up.
Both the EU and the USA have introduced strategic and financial initiatives in industrial policy promoting batteries. Becoming self-sufficient with batteries based on European value chains is an explicitly stated goal for the EU, which at the same time also adopts increasingly stringent requirements for batteries to be produced in an environmentally friendly and sustainable manner.
Therefore, batteries with a low environmental and climate footprint throughout the value chain will gain a significant competitive advantage in the market. And this gives Norway a unique opportunity to take a leadership position.
“In Norway, we have renewable power that can be used in production – and we have a forward-looking industry that is heavily investing in developing circular solutions for battery production. ”
Norway's Competitive Edge
Indeed, Norway is considered one of the most interesting places in the world to establish a battery industry, precisely because of our conditions for sustainability and circularity.
The reason is quite simple:
No matter where in the world you place a battery factory, there are some necessary factors that are the same – regardless of geography. Technical and technological competence, a highly educated workforce, access to raw materials, and a well-facilitated infrastructure are required.
But battery production is also power-intensive. This is where Norway stands out, due to our nearly 100 percent renewable power production. In addition, many companies in Norway have come far in developing solutions for recycling and reclaiming batteries and materials, partly because Norway has been a pioneer country in the electric car revolution. There is also much research on developing more environmentally friendly battery technology.
Sustainability is about more than just climate and the environment – and Norway is already far ahead in terms of both economic and social sustainability. All this contributes to making sustainability Norway's foremost competitive edge in the international market for battery production – a market that is growing rapidly.
Explosive Demand for Batteries
In just the past few years, the development has been incredibly fast. The world's total capacity for energy storage in large battery systems increased by 60 percent from 2020 to 2021, according to the International Energy Agency (IEA). In 2022, the capacity increased by a further 68 percent, according to Bloomberg NEF.
Still, we are only at the beginning of the green transition. That the growth will continue is supported by the IEA, which has calculated the global storage capacity in batteries in light of the international climate goals.
Many countries, companies, and organizations commit to working for net-zero greenhouse gas emissions by 2050, and the IEA's calculations are explicit: If the world is to have a chance of achieving the net-zero emissions goal, battery production must skyrocket.
A Shift Towards the EU and USA
The more renewable energy that enters power production, the more the need for batteries will increase. Bloomberg NEF anticipates that the storage capacity in batteries will grow by an average of 23 percent annually, corresponding to the expansion of around 88 GW every year until 2030.
This is a formidable growth, and both the EU and the USA are making a big push to become major players in the battery market.
Different analysis agencies predict a clear trend towards 2030, where Asia's market share will gradually decrease to 55-65 percent, the USA and North America will be between 15-25 percent, and the EU will increase to somewhere between 20-30 percent of the battery market.
Why sustainability is so important
Batteries are vital in achieving the green transition in the world's energy, transport, and industrial systems.
“When the whole world aims for climate goals that indicate net-zero greenhouse gas emissions by 2050, it is obvious that the production of batteries must become more environmentally and climate-friendly.”
The importance of achieving an environmentally and climate-friendly battery industry is made increasingly evident by the demands placed on manufacturers. In June this year, the European Parliament agreed on a new law that regulates battery production. The regulations are designed to cut the EU's need for battery imports and for the battery value chain to be almost entirely circular and based in Europe.
The value chain includes extraction, production, reuse, material recycling, and handling discarded batteries. According to the Norwegian Environment Agency, the law will most likely also become a regulation in Norway in 2024. Batteries will have their own sustainability passport documenting the quality and the climate footprint from the entire value chain.
A Unique Advantage for Norway
It seems counterintuitive to produce much-needed batteries to store renewable energy but use coal power in the production. But the reality is that this is what's happening in several countries right now.
Therefore, there's a significant gap in the market that must be filled by players who take sustainability seriously. Battery manufacturers that use renewable power and decarbonized, circular value chains will have a competitive advantage that is difficult to beat in the global market.
“No other country can produce the batteries the world needs in as clean and sustainable a way as Norway. Therefore, we believe that we must bet on a Norwegian battery industry”