How China’s battery hub shows the future of energy and industry

Yichang: A city at the crossroads of industry and environment

On 26 May, in the framework of our collaboration with Peking University, Prof. Dr.  Gang Liu and I spoke at the conference on energy storage and batteries in Yichang, a city that brings together two of the defining challenges of the current phase of the industrial age: the contradiction between economic development and environmental protection, and the rise of integrated industrial supply chains in which China increasingly sets the pace.

Yichang is a city of 3.9 million people in Hubei province, small for China. The Three Gorges Dam, the world's largest hydropower plant, sits just upstream, with an installed capacity of 22.5 GW. Its construction itself had a major environmental impact, flooding a long stretch of the Yangtze valley, altering the river's ecology, and at the time displacing more than a million people. Yichang also sits on one of the largest phosphate basins in China, on the Yangtze with direct shipping access to Shanghai, and is developing one of the most concentrated battery and battery-materials clusters in the world.

The phosphate paradox: Feeding China, harming nature

Yichang exemplifies the tension between industrial development and nature. This is visible in the pressures placed on the Yangtze River — one of China's great rivers — and in the phosphate chemical industry that has long underpinned the region's economy. That same phosphate industry played a vital role in supporting agricultural productivity and food security across China through large-scale fertiliser production. Yet, it also came at an environmental cost: phosphogypsum waste generation, nutrient run-off, eutrophication, and soil degradation. The contradiction is clear — the same industry that fed the country also damaged the living system it relied on.

From remediation efforts to green agriculture in the 15th five-year plan

Since 2016, with major implementation from 2017 onwards, the central, provincial, and municipal governments have launched a significant effort of remediation, industrial upgrading, and ecological restoration along the Yangtze River Economic Belt. Yichang has become one of the leading sites of this transformation: relocating or shutting down polluting chemical plants, restoring river ecosystems, and redesigning industrial development around greener, more sustainable principles. The challenge has been considerable, and the remediation is far from complete and will continue further in the 15th Five-Year Plan.

Circular economy as the future?

A central pillar of this transition is the development of the circular economy. The integration of phosphate resources, industrial by-products, and advanced materials into lithium iron phosphate (LFP) battery value chains demonstrates how legacy industrial capabilities can become strategic assets for the clean-energy transition. Major industrial groups such as Brunp, Cornex, Xingfa, Yihua, and other Hubei chemical companies are part of this new industrial ecosystem.

Battery and storage integrated supply chains

The figures are substantial. Yichang already has more than 100 GWh of battery-cell capacity in operation or under construction. CORNEX is building towards 145 GWh on a single site. CATL's subsidiary Brunp went from signing a contract in January 2025 to operating a 450,000-tonne-per-year LFP cathode plant by December of that year. The cluster runs from phosphate rock through cathode and cell to recycled material, on a river with direct access to global markets.

High-paced innovation

The conference focused on the future of battery technology. One of us (Arvea Marieni) works in technology foresight, focused on high-TRL (Technology Readiness Level) innovations — technologies close enough to deployment to matter commercially. On that measure, the near-term direction is clear. Lithium iron phosphate continues to improve, and manganese-enhanced variants (LMFP) raise energy density at low cost. Sodium-ion cells, which use no lithium, are moving into stationary storage and entry-level vehicles, suited to grid applications where cost matters more than weight. Semi-solid and condensed designs (CATL’s definition) are already in production. Fully solid-state and lithium-metal cells have moved faster than the consensus of even a year ago: pilot lines for automotive-format cells are now running, China has drafted its first national standard, and the major producers — CATL, BYD — alongside carmakers such as GAC, SAIC, Changan, Geely and Chery have converged on demonstration vehicles around 2027 and mass production towards 2030, at prototype energy densities of 400–500 Wh/kg. Cost, cycle life and fast charging remain the binding constraints, so these chemistries are nearer than they were, even if not yet a mass-market reality. Companies in Yichang indicated that ternary nickel chemistries will give way to LFP and sodium for most storage and mass-market applications — a shift Chinese producers are already leading.

Green agriculture: Will China end fossil-based chemistry and fertilisers?

Another major challenge, under the forthcoming 15th Five-Year Plan, will be the transformation of agriculture towards a greener and more sustainable model. This will require the wider adoption of organic and bio-based fertilisers, precision agriculture, advanced nutrient management, low-impact inputs, nature-based and biological solutions, and more effective soil restoration practices.

China’s future food security will depend not only on maintaining productivity and scale—both of which are increasingly threatened by the degradation of ecosystem services, soils, and water resources—but also on its ability to reduce nutrient leakage, curb phosphorus and nitrogen pollution, improve water-use efficiency, and regenerate degraded ecosystems. Here again emerges the central contradiction: how to increase agricultural output while simultaneously reducing the environmental damage associated with that output.

The wager—and indeed the civilisational challenge — is to transition towards an economic model in which sustainability is embedded from the outset rather than treated as a corrective measure. Such is the ambition of China’s planners. The more agriculture can align itself with natural cycles, embrace soilless cultivation at scale, and reduce its dependence on resource-intensive practices, the greater the benefits will be not only for China, but for the planet as a whole.

A systemic transformation: Ecosystem services

What is taking place in Yichang is far more than a local industrial transition. It exemplifies the wider contradiction between economic growth and ecological transformation. The direction in China is clear. Ecological civilisation and Beautiful China are enshrined in the Constitution and law, and used as key performance indicators for Party officials. Yet the work is far from complete: the Yangtze remediation is unfinished, the agricultural transition has barely begun, and tools such as Gross Ecosystem Product (GEP) are only starting to be integrated into governance and development frameworks. None of these contradictions has been fully resolved.

Even commercial success is not guaranteed. Markets are changing, overcapacity is pushing battery prices down and hampering profitability, as industry players noted during the conference. 

Morocco supply-chain integration

The phosphate-to-battery model is not unique to China: Morocco, which holds most of the world's phosphate reserves, is building its own integrated value chain near the European Union. The Moroccan buildout, however, is largely Chinese-financed — Gotion's planned 100 GWh gigafactory at Kenitra, CNGR's majority stake in the CobCo venture beside OCP's phosphate (with OCP in feedstock talks to supply its LFP line), and plants from CATL, Sunwoda, BTR, and others — and it is built explicitly as a route for Chinese producers into the EU and US, around tariffs and trade agreements. The lesson is not that Europe has found a way to diversify away from China. Even the alternative relies on Chinese capital and technology. You cannot tariff your way to a China-free supply chain when the supplier simply builds the plant on your doorstep.

Lessons beyond China: Europe and the global energy shift

For Europe, the conclusion from Yichang and Rabat is not the obvious one. The EU's central problem is the cost of energy. It is what holds back European industry — high enough that even Chinese firms encounter the same barrier when they try to build here. That cost will not be reduced by tariffs, local production content or subsidising domestic cell factories. It will be addressed through fast-paced electrification driven by renewables: replacing imported fossil fuels with electricity generated at home and stored cheaply.

This is where real independence lies. Europe's deepest dependence is on imported fossil fuels, not on imported batteries. The technology that ends that dependence — cells, storage, and the equipment to electrify transport, heat, and industry — is made in China, and made cheaply. As noted by the Draghi Report, buying it now is the route forward: cheap, home-generated, well-stored electricity allows Europe to lower energy costs and start producing again. Delaying imports until domestic production scales only prolongs dependence on expensive imported energy. Provided we will be able to sustain the efforts required to build at the scale that is required.

The EU needs engineers, innovators and planners for the next generation technologies

This is not an argument against European manufacturing. It is an argument about sequence. Importing at scale now reduces energy costs immediately; a share of those savings can then fund areas where Europe can realistically compete — recycling, next-generation chemistries such as solid-state, and storage-related equipment and software — rather than trying to out-build China on commodity LFP cells, which is unlikely this decade. Build where there is an edge, not where the race is already lost.

The EU's Net-Zero Industry Act and Critical Raw Materials Act offer an ambition, but their success is uncertain. Another weakness is speed. Whilst environmental standards do not make Europe slower — on safety, environment, and labour — in fact they are so valuable that China is raising its own. The failure is not in having them, but in not turning them into competitive processes. The problem is the pace of work and procedures. In Yichang, Brunp went from contract to operation in eleven months. Energy and construction costs remain high. These are administrative and political challenges, not reasons to lower environmental standards.

Order matters. Until Europe electrifies its economy, it will not achieve genuine energy independence. The priority should be to win the energy-cost challenge using technologies that already exist and can be deployed at scale. Only then should Europe focus on innovating in sectors where it can develop a durable competitive advantage.

In certain areas, particularly those that enhance mutual security and resilience, cooperation should not be ruled out. On the contrary, Europe should work with international partners — including China — where collaboration can accelerate innovation and deployment, provided that sovereign control over critical technologies and technical systems is maintained. As Mario Draghi argues in his report, the challenge is not to choose between cooperation and competition, but to sequence them correctly: cooperate where it accelerates progress, compete where it matters most.

Attempting to build a globally competitive battery-cell industry from scratch before completing the electrification of the economy risks putting the cart before the horse. Europe cannot manufacture its way out of energy dependence while remaining structurally exposed to high energy costs. Electrification must come first. Otherwise, the pursuit of industrial leadership may become the surest path to continued dependence.