Beijing’s role in the energy transition

The key role of lithium batteries

The advancement of the global energy transition over the last few years has inevitably drawn attention to some particular devices that are contributing significantly to the change underway, even if only as components placed within more complex systems. Among these devices, the best known are perhaps rechargeable lithium batteries, which today represent one of the most important components for the operation of new-generation electric vehicles and many other technologies directly involved in the green transition.

The increase in the strategic and economic centrality of these devices has also determined other effects, such as the increase in demand for the raw materials necessary for their manufacture (such as lithium, copper, or cobalt) or the geopolitical weight of some nations that, nowadays, hold firmly in their hands the entire production chain, from the sourcing of the raw material to the manufacturing of the final result. One of these, as is well known, is China.

According to BloombergNEF, in 2023, China was able to reach such a high battery production that it equaled the overall levels of global demand for these devices. One of the most interesting facts when talking about batteries has to do with their multiple applications: these devices are not only useful for the automotive and electric vehicle sector but also for the emerging branch of energy storage systems, very useful for storing and releasing certain quantities of clean energy. All this, together with the cyclical nature of some economic situations, could contribute to further underlining the role of producing countries in the great game of batteries manufacturing.

Future scenarios

In most of the economic scenarios hypothesized for the next decades, China continues to maintain its world leadership in battery production almost unchanged, managing to satisfy a good part of the global demand for these precious devices. Over time, this situation has pushed many Western economies to build their own lithium-ion battery supply chain, in order to reduce their dependence on Chinese supplies and achieve a certain degree of diversification. This desire has translated into the development of state or government policies to support the green transition, with the aim of making it easier to spread energy infrastructure and increasing the sustainable potential of nations.

One of the most important factors in clarifying China’s role in the battery production chain is the data relating to its production capabilities and the know-how related to the sourcing and processing of the most important raw materials in these processes. In the production of materials needed for battery cathodes and anodes, China holds a production share of between 85% and 95% at a global level. According to the World Energy Outlook 2024, China is also the main global power in the processing of some specific materials closely related to the production of batteries, such as cobalt, graphite, and rare earths. These figures, together with 80% of global production capacity in the renewable solar photovoltaic sector, are transforming China into a true global power in the clean energy sector and one of the main standard-bearers of the green transition.