Consumers are demanding small and affordable EVs – why traditional automakers are supplying the opposite
15 March 2022
Why regulation matters: The reason the EU beats the US in the race to EVs
8 April 2022
By Léa Falco
Opponents of electric vehicles (EVs) keep repeating it: EVs need six times more minerals than conventional vehicles[1]. Lithium-ion batteries especially are composed of battery cells containing minerals such as lithium, nickel, cobalt, manganese, graphite or copper. To achieve climate goals, the share of EV sales needs to climb rapidly to around 40% by 2030, when 10 million EVs are already on the roads[2]. This leads to an increasing demand for minerals. The International Energy Agency (IEA) estimates in its +2°C scenario that the demand for lithium in 2040 would be 42 times its current consumption[3].
Three major concerns arise. First, the risk of a lack of minerals for electrification, not limited to EVs. Second, the potential global dependency on quasi-monopolies for minerals, as extraction and processes are sometimes concentrated in a few countries. China is processing about 80% of rare earths, but also 60% of lithium and cobalt and about 40% of copper and nickel[4]. Third, mining has a disastrous environmental impact: even anticipating potential technological developments, it will be necessary to seek to limit the need for raw materials. Developing the recycling sector in every country with a significant amount of EVs would play an important role in addressing those three issues, by reducing the demand. By 2040, recycling and reusing storage batteries could reduce the primary supply requirement for minerals by up to 12%, which is far from negligible[5]. This must be one of the EU’s priorities concerning EVs, especially as Europe had the largest percentage increase in sales in 2020, at 110%, to reach 52 GWh[6].
Today, the global capacity for battery recycling is around 180 kilotons per year, with China accounting for almost 50% of this capacity[7]. Recycling of metals from EVs is nevertheless not currently an operational sector in Europe. This is mostly due to the lack of minerals to be recycled yet. The volume of lithium-ion batteries available for recycling is modest, but the fast growth of EVs will shift the situation. In the previously mentioned scenario of the IEA, the share of electric cars in the total car stock grows from today’s 1% to 50% by 2040[8]. An influx of old batteries is expected on the market, and is likely to pose serious management challenges. When all the electric cars sold in 2019 reach the end of their lifetime, 500 000 tons of unprocessed battery pack waste will be generated[9]. By this time, the European recycling sector must be fully operational.
The European Union faces an opportunity. It can develop an industrial sector for the recycling of these batteries, by planning the development of the sector in cooperation with industries and using appropriate regulations. Recycling could provide qualified jobs that cannot be relocated and contribute to reindustrialization. From a geopolitical point of view, it would also be an advantage by reducing (but not eliminating) dependence on imports. Some constraints on the recycling market are technical, especially in terms of the technology needed to scale up sufficiently, but strong policies and clear guidance are crucial. The EU has a major role to play and should take the opportunity of organizing the recycling sector on the territory.
Different ways can be explored, either creating new economic sectors or exploiting those already existing to make economies of scale. In 2019, China mandated producer responsibility[10], followed by the EU Sustainable Batteries Regulation[11]. Manufacturers are thus responsible for the recycling, as well as for the reverse logistics involved in taking back the Li-ion batteries. This approach has the second advantage of incentivizing manufacturers to develop products that will be easier to recycle. But in the absence of major policy changes encouraging manufacturers to relocate their factories to Europe, recycling would take place outside of the territory. Another route must then be taken by creating a web of new medium-sized recycling centers at regional levels. Policy frameworks assigning value to eco-conception and ease of disassembly of EVs components would reduce the processes required for recycling and give the sector an economic advantage.
Supporting second-hand materials to make them economically competitive should also be a priority. Encouraging the use of recycled material is required to help the sector grow, for example through taxation on EVs containing only virgin minerals. A regulation requiring a certain volume of recycled minerals to be incorporated in new batteries seems to be the best option to boost the second-hand economy. The EU is on the right track with the EU Sustainable Batteries Regulation. The proposal sets out minimum levels of recycled content (12% cobalt, 4% lithium and 4% nickel by 2030, which will gradually increase) for batteries to enter the EU market[12]. There is nevertheless no requirement that those minerals go through recycling on the EU territory, which is not likely to help the growth of a European sector. Legislation should therefore encourage recycling within the EU, to avoid having products sent to the other part of the world to be recycled to make economies of scale. EU policies will also have to work across country borders for lower-volume minerals, such as cobalt, lithium or rare earths. Collaboration will be crucial to drive sufficient waste streams to warrant infrastructure investment. Specific guidelines for disassembling and storing batteries are also lacking at the EU level.
The challenges are numerous, but worth addressing them. The next few years will be decisive for the future of EVs in the EU: when everyone talks about reindustrialization, it is unthinkable to miss the possibility of creating an effective EV minerals’ recycling sector in Europe.
About the Author
Léa Falco is a graduate student at PSIA, Sciences Po, Paris where she studies International Development with a focus on environmental issues.
*This Blog Entry was selected for publication under the call with the subject: What future for electric vehicles?
[1] IEA, 2021, The Role of Critical Minerals in Clean Energy Transitions, 76.
[2] IEA, 2021, Global EV Outlook 2021, 17.
[3] IEA, 2021, The Role of Critical Minerals in Clean Energy Transitions, 102.
[4] Ekaterina Bouckley, 2019, “Energy transition could see mineral demand run ahead of supply by end of decade”.
[5] IEA, 2021, The Role of Critical Minerals in Clean Energy Transitions, 117.
[6] IEA, 2021, Global EV Outlook 2021, 187.
[7] Bloomberg, 2019, New Energy Outlook 2019, 112.
[8] IEA, 2021, The Role of Critical Minerals in Clean Energy Transitions, 81.
[9] Harper et al., 2019, 4.
[10] Quinghua Zhu, Joseph Sarkis, Kee-hung Lai, 2019, “Choosing the right approach to green your supply chains”, Modern Supply Chain Research and Applications, Volume 1.
[11] European Commission, Sustainable Batteries Regulation
[12] Ibid