June 23. 2024. 8:08

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A Green Deal Industrial Plan for the Net-Zero Age: European Carbon and Graphite Producers’ recommendations


The Green Deal Industrial Plan, published on 1 February by the European Commission, promotes a more supportive environment for the deployment of clean-tech manufacturing capacity to meet Europe’s ambitious green targets which the ECGA welcomes.

A predictable and simplified regulatory environment: Europe’s resilience of the graphite supply chain for batteries, windmills, solar energy, electrolysers as well as steel recycling.

Europe’s functioning carbon and graphite industry could satisfy a larger share of the expected demand growth for natural and synthetic graphite which can substitute each other in a number, though not all applications. The industry’s own forecast is that by 2030 about 5-7 % of the natural graphite demand could be supplied if all current projects would be permitted and could start production. Synthetic graphite could satisfy 40% of the demand from existing and extended capacities of production if the regulatory and investment climate was right.

If the capacities are not built there could be a serious supply risk for battery production since the demand growth for the lithium-ion battery is going to be extraordinary, followed by the fuel cell technology.

Security of supply of graphite

The EU’s Critical Raw Materials Act should recognise that in order to access the necessary raw materials the Member States need to invest more in exploration for graphite and need to speed up the permitting of natural graphite and its processing.

However, the EU Commission and the Member States, having concentrated on natural substances in their criticality assessment only, should not turn a blind eye to the obvious substitute for many applications and therefore:

  • the Member States need to permit the extension of existing synthetic graphite production as well as possibly permit new installations,
  • EU and Member States need to ensure access to needle coke, which is currently mostly imported; hindering the use of fossil-based resources for chemical and mineralogical manufacturing purposes is not compatible with the EU’s strategic objectives of the Green Deal,
  • EU and Member States need to ensure the continued possibilities to use HT Coal tar pitch as an essential intermediate; the continued discussions on “industrial intermediate“ or “essential” uses under REACH are counterproductive to regulatory predictability and policy coherence.

Establishing a priority list of strategic raw materials

The Commission should identify priority materials, not projects, accelerate permitting procedures and unlock new finance is a very welcome step to improve the speed and viability of related new projects. However, it should not follow the rule of “the bigger the better”, but it should apply a transparent selection process and ensure competitive operating conditions and a level playing field (i.e. energy costs, trade defence, joined-up environmental policies) with non-EU producers.

The revision of the GBER will contribute to further streamlining and simplifying the roll-out of IPCEI, specifically of smaller, IPCEI-related, innovative projects. Graphite projects should be considered viable candidates for the IPCEIs.

Improving permitting and financing for new and existing production

The industry strongly welcomes the planned Critical Raw Materials Act and the Net-Tech Act for improving permitting and financing for new mining, processing, manufacturing and recycling facilities.

Energy cost and contribution to green energy

The competitiveness of graphite companies, truly energy-intensive, has also been severely weakened by high energy prices and disruptions in some of its supply chains. At the same time, graphite is a key resource for renewable and clean energy generation and batteries, in the photovoltaic and wind industry today and in the future.

Simpler and more flexible state aid rules

Such rules can have an important role to play in facilitating new investment. But they should not be delivered at the expense of a durable strategy for rebalancing the European industrial landscape, nor Single Market principles.

General Block Exemption Regulation

In the context of the Green Deal Industry Plan, the Commission has announced the intention of revising the General Block Exemption Regulation (“GBER”). The graphite industry should be recognised for what it is: although a smaller industry in Europe is a major enabler of the green transition since it supplies crucial material to a number of industries recognised as “green” and a sector with considerable growth potential to provide taxes and employment. It belongs to their supply chain and their ecosystems.

Skills

Like in many other sectors, the need for a skilled workforce can be felt in the graphite industry as well. The sector would certainly benefit from a general and specific programme for upskilling the existing workforce and attracting new capacities.

Maintaining the level-playing field

Europe will remain reliant on imports for a range of strategic materials to supply its medium and long-term growth even with a successful domestic investment strategy. The proposed policies must include a global strategy for securing responsible and diversified imports, avoiding an overdependence on single suppliers while safeguarding the EU industrial base.

EU trade defence measures need to safeguard new investments into nascent industries and address global market distortions. Not only the synthetic graphite producers who have been exposed to unfair trade practices and subsidy schemes from India and China but also the European natural graphite producers are threatened by substantial subsidy regimes in China.