As the temperature climbed above 28C last weekend in my garden in Bray, I reflected on how the EU’s legislative programme ‘Fit for 55′ is gathering momentum to reduce carbon emissions by 55 per cent by 2030 compared to 1990. Political support for the programme apparently remains strong despite the repercussions of the Russian invasion of Ukraine and the resulting impact of rising fossil fuel prices across Europe.
The EU Parliament’s committee on industry, research and energy confirmed significant measures on July 13th. These include a more aggressive requirement for carbon permits to reduce emissions from electricity generation than originally proposed by the commission. Free carbon permits have been used to discourage European companies from simply relocating so as to avoid carbon permit costs, but these credits will now be removed by 2032 and instead be replaced by a carbon tariff on products imported into Europe. Emissions from all international maritime traffic to and from EU ports will be included by 2027, rather than just 50 per cent as was proposed by the commission.
Fuels used by all companies – including for office blocks, factories and transportation – will now be subject to carbon permits in just two years’ time, but fuels used for private residential buildings and private transport will not be included until 2029. A €59 billion social package to help support low-income families transition to low carbon emissions will be launched, albeit a smaller fund than the commission had proposed. A complete ban on sales of new petrol and diesel cars will come into effect in 2035.
The Ukrainian crisis has catalysed the climate crisis across Europe. But ironically, as Europe is moving rapidly to mitigate fossil fuel shortages, the moves to renewables and electric vehicles (EVs) are facing their own shortages of the materials used to manufacture electronics and other parts, and especially storage batteries. The transition away from a dependence on Russian gas to alternative energies is vulnerable due to a dependence on single suppliers of many relatively rare metals essential for digital and battery technologies such as lithium, manganese, cobalt and gallium. While Russia controls major gas supplies, China currently controls the global production of some 16 out of 26 rare metals.
More than half the global production of lithium and cobalt is used for batteries. About 60 gigawatt-hours of electric vehicle battery capacity have been deployed in about 1 million electric vehicles in the USA since 2010. By 2030, up to 8,100 gigawatt-hours worldwide – an astonishing 135 times as much capacity – may be needed.
Given the extraordinary demand for heavy-duty battery storage, and the scarcity of the metals required for battery manufacture, both start-ups and established players are innovating to recycle parts and treasure materials.
Refurbishment after insurance write-offs with inspection and testing before re-sale as replacement parts is certainly a direct approach, but makes a relatively small impact on the market. Alternatively, the materials used in an EV battery can be recovered, albeit with some difficulty, at the end of life. Once shredded, the higher-value metals within EV batteries can be recovered in a furnace with various acids, and then reused.
Current EV battery packs generally last about 10 years before they degrade to about 70 per cent of their original capacity and the point at which they are insufficient for EV usage. By 2030, about 15 million tons of lithium-ion batteries are expected to reach this point worldwide. However, degraded EV batteries may often then be reused in other applications, such as storage batteries to smooth output from renewable power from wind farms and solar grids. EV vehicle manufacturers are enthused by second-life battery applications because of the potential for revenue to flow back to them when the batteries are taken out of cars – and even more so if national regulators mandate that the EV manufacturers must recycle scarce materials. Nissan, BMW and Audi have all demonstrated EV battery reuse in large energy storage projects.
Redwood Materials, founded by JB Straubel (a Tesla co-founder and the former CTO of Tesla), has raised $775 million (€757.7 million) from Amazon, Panasonic, Ford and T Rowe Price, and is an early leader in EV battery recycling. The company has partnerships with Toyota, Ford and Volvo. However, the EV battery recycling market is becoming crowded and has not only new start-ups but also established specialist players such as Accurec Recycling, American Battery Technology Company, AquaMetals, Li-Cycle and Retriev Technologies involved.
Among the EV manufacturers, the Volkswagen Group has established a new subsidiary, PowerCo, for the procurement of raw materials to the recycling of EV batteries. It has started building six battery factories across Europe. Daimler AG has announced plans for its own battery recycling plant as well as collaborating with Beijing Electric Vehicle to reuse retired EV batteries. General Motors is known to be actively scoping battery reuse strategies.
Regional industrial initiatives are emerging. The state of Georgia is positioning itself as a leading battery recycling ecosystem, offering tax and other incentives. Hyundai, SK On (a South Korean EV battery maker), Rivian (a US EV start-up) and Ascend Elements (a US EV battery recycling start-up) have all recently made substantial investments into the state.
The change to carbon neutrality by 2030 is increasingly impacting our lifestyles. Beyond our own personal behaviour, the changes for industry and the economy will be as challenging.
