June 19, 2024
Mission to build Europe’s battery hub, no matter the cost


(Bloomberg) — Next to fields of corn and sunflowers near the city of Debrecen in eastern Hungary, workers in hard hats are pouring concrete into the foundation of Europe’s largest factory making batteries for electric vehicles.

Most read from Bloomberg

The airport-sized project is the crown jewel of a nearly €20 billion ($21.3 billion) investment by China’s Contemporary Amperex Technology Co Ltd, which Prime Minister Viktor Orbán says will help the economy lead Europe’s green transition. will allow. Nowhere in the world is battery production growing faster on a per capita basis than in Hungary.

Yet the plan to become one of the largest suppliers on the planet goes beyond economics. Environmental activists, community leaders and political opponents say there is a cost that is being ignored by a leadership that controls everything from courts and regulators to the media as Orban seeks to outline the next era of his rule.

The $7.8 billion facility, which CATL is building in partnership with Mercedes-Benz AG, has been billed by the government as the largest foreign direct investment in Hungary’s history. Adjacent to the site, two other battery suppliers are building their own plants. Across town, another factory by Chinese firm EVE Energy Co Ltd is being built next to German carmaker BMW AG’s new factory.

Concerns range from the loss of prime agricultural land to strains on water and energy resources and questions over the disposal of used batteries. Then there is the possibility of accidents in factories dealing with hazardous materials like lithium.

Town hall meetings over new battery-related investments have turned into shouting matches. Even in strongholds of Orbán’s ruling Fidesz party, people have called local officials “traitors”. The government has since changed the laws so that in-person counseling is no longer required.

“Nobody asked us if we wanted this plant,” said Zoltan Timmer, the Fidesz mayor of Micapras, the Debrecen suburb closest to the CATL plant. “It may be part of the green transition, but what we see locally is that they will be working with hazardous substances. People are scared.”

CATL said it knows what it is doing, using its extensive experience to ensure no pollution is released into the air or water. The company also said it would like to work with local authorities to prevent possible contamination outside the plant.

Yet, based on more than a dozen interviews with residents, officials and environmental groups, the concerns Timmer spoke about are shared across all Hungarian communities, with hardly any corner of the country spared from the battery boom in some way. Has remained untouched by.

increasing EV production

The tension highlights the difficulty of going green: While electric vehicles are seen as a way to cut emissions and slow climate change, there are local environmental costs that critics say largely outweigh the economic benefits. This is being ignored by the government which is focused on it.

There are other examples of opposition to the EV revolution, too. In Germany, Tesla Inc’s first European plant faced delays as a court ruled the cutting of trees was a legal challenge by environmentalists. But under Orbán, Hungary is moving forward like nowhere else.

Within a few years, the country of less than 10 million people is projected to become the fourth-largest producer of batteries globally, behind China, the US and Germany, according to BloombergNEF data.

Hungary currently has six battery plants already in production or in the process of being built. Additionally, there are about two dozen other companies that are part of the production chain that have set up shops.

The first plant to open was in Göd, on the banks of the Danube River, north of the capital Budapest. South Korean conglomerate Samsung SDI converted its plasma screen factory to focus on battery production for EVs in 2017.

The factory borders housing and almost immediately, residents began raising concerns over noise pollution and alleged water pollution. Years of complaints went largely unheeded as the government and the company moved forward, with Samsung SDI doubling the size of its investment.

Juliana Lam Palla, a teacher in God, complained about the smell of “rotten fish” coming from the taps in her home. Although he had no evidence that the battery plant was the cause, he was forced to move after years of neglect by local authorities. “There are a lot of questions, a lot of anger and disillusionment,” Lamm Palla said while playing with her dog on the banks of the Danube.

The situation worsened when an opposition party took control of the local municipality in 2019 and promised to look into claims of environmental damage. Orbán’s government responded by redistributing the factory’s lucrative trade tax receipts away from Gód to surrounding areas.

Workers began measuring the pollution themselves and found N-methyl-2-pyrrolidone, or NMP, the most common solvent for manufacturing cathode electrodes in batteries, in wells.

“We’re not afraid that they’re polluting, we know they’re polluting,” said Zsuzsa Bodnar, vice president of local environmental group GOD-ART. “Only the authorities refuse to test and they do not accept our results.”

A study published this year in the journal Scientific Reports found lithium in tap water in cities in 19 counties in Hungary, although the amounts are not dangerous to humans.

After five years of operation, Samsung SDI is now conducting a comprehensive environmental impact study. The company said it has applied for a pollution prevention and control permit because its activities have now reached a level that requires a permit.

Samsung SDI “In close cooperation with the Hungarian authorities and citizen groups, Göde is making continuous efforts to reduce concerns over the city’s environment, including water testing that proves there are no NMPs or any No other harmful ingredients were found.” The company also said this in an e-mail response to questions.

The municipality of Gode, which is now again led by a Fidesz-backed mayor, declined a request for an interview.

The debate whether or not environmental concerns were justified echoed throughout Hungary. For opponents, it also underlined the potential risks to communities if the battery plant went ahead, and the costs of opposing it.

Meanwhile, the government has reiterated its statement that if you want to revive Hungary’s economy, you have to get behind its plan. Foreign Minister Peter Szijjarto, the point-person for these investments, called the battery plants “our life insurance” that the country will come out as a winner from the green transition to electric cars.

“Misguiding the people and creating a movement is extremely inappropriate and contrary to the national interest, so these factories are not in Hungary but in Germany, France, America, Sweden and who knows where else,” he told young supporters of the ruling party. “

Hungary has a lot to lose. Orbán has spent much of his time in government since 2010 clashing with the EU over the erosion of the rule of law and the flourishing of corruption and cronyism in his “illiberal democracy”. The European Parliament has branded Hungary an “electoral autocracy”. Yet he remains a close ally of German carmakers like BMW and Mercedes, offering tax breaks and heavy subsidies to set up new plants in his country.

Orbán’s political choices

The European Union has set a 2035 deadline to stop selling new petrol and diesel cars, forcing manufacturers to switch to electric cars. Factories that fail to transform are at risk of closure. This has increased Hungary’s appeal by attracting mainly Chinese and South Korean battery manufacturers. They could be next to their biggest customers inside the world’s largest trading block.

“Battery plants are increasingly defining the Hungarian economy, but they are also a political choice,” said Andrea Aletto, a researcher at the World Economy Institute in Budapest. “They coincide with Orbán’s goal of connecting East and West in the hope that for-profit companies will work to keep him in power.”

The CATL plant in Debrecen will be seven times the size of the Chinese company’s only other European factory in Germany. The company said production would begin within three years. The city’s mayor, Laszlo Papp, has described his region as “where the marriage between the Western European car sector and the battery industry is taking place”.

What residents are concerned about is the cost of marriage. The battery plants require large amounts of water to cool and, unlike most other battery plants in landlocked Hungary, the city has no major rivers or lakes nearby.

Papp said the city has conducted detailed assessments that have shown there will be no shortage of water for either the plants or its residents. But a study of regional water works published locally says otherwise, predicting that the city’s water resources could be stretched to the limit.

Read more: EU steps up tensions with China to block cheap EVs after arming immigrants Europe’s east thinks they need them €10 as Macron hails Europe jockeys for Green Deal Billion won, Biden’s green subsidies risk accelerating the decline of the UK car industry

Peter Kadarczak, head of Hungary’s battery lobby group and a former high-ranking energy official in the previous Orban government, is outspoken about the risks to the environment. He said the government should also fund monitoring stations where local people demand it. Local communities also need to try to understand the economics, he said.

“The point is not to make Hungary the world champion in battery production,” said Kadárczak, who helped Orban establish the ruling Fidesz party in the last days of communism in the late 1980s. “This is only positive for the Hungarian economy if it is environmentally sustainable and communities feel they gain more than they lose.”

There are signs of change. Last month, Hungarian authorities suspended the operations of South Korean battery recycling company Sungeil Hitech Co. Ltd. for several violations that threatened the safe operation of the plant. New investors are now also required to conduct environmental impact studies.

In Debrecen, the city is building air and water monitoring stations to quickly detect any potential contamination, CATL said in a written response to questions, adding that it welcomes the move.

However, activists will need some explaining to do. Next to a wooden cabana rented for summer vacations on the banks of the Danube near Goda, representatives of about a dozen environmental groups from across Hungary were meeting for the first time in August. They were there to learn from God’s giants and join the army.

“We know we won’t be able to stop the world’s largest battery makers,” activist Bodnar said. “But if it is so important to the government, we also want to have a voice when it comes to formulating legal, environmental and safety regulations. We refuse to be ignored.”

Coming soon: Get the Eastern Europe Edition newsletter, delivered every Tuesday, for insights from our correspondents on what’s shaping economics and investing from the Baltic Sea to the Balkans.

Most Read from Bloomberg Businessweek

©2023 Bloomberg LP

Source: finance.yahoo.com

Leave a Reply

Your email address will not be published. Required fields are marked *