With the emerging need for electrification, batteries are about to become new “gold” in Europe. The European Union’s goal of becoming climate neutral by 2050 would only be accomplished if batteries start replacing oil for generating power. However, batteries could add to pollution if not properly re-used and recycled, or ethically sourced or produced with clean energy. Can EU new battery law lead to sustainable future and boost recycling industry?
In the coming decades, batteries will be at the centre of mobility revolution. Europe has already invested billions in its Battery Alliance project to compete with Asia and is likely to become the world’s second largest battery producer. According to the European Commission estimates, Europe’s market value is expected to reach EUR250 billion by 2025.
The low-carbon batteries are better alternative to fossil fuels as they can be re-used and re-cycled, which can help establish a circular economy and reduce environmental impact. Electric vehicles utilizing green batteries are three times cleaner than conventional gasoline vehicles. While a diesel car burns over 10,000 liters of fuel over its lifetime, an electric vehicle battery uses/burns up to 10 kg of cobalt to drive the vehicle during its first life. As the need for electrification is growing due to enhanced focus on sustainability, the European Union has proposed Sustainable Batteries Regulation to reduce the carbon footprint of battery production and enhance re-usability and re-cycling of batteries. The battery law is a part of EU’s plan to reach climate neutrality by 2050.
Are Batteries Really Eco-friendly?
To expand electric vehicles market and energy storage, the Europe Union requires up to five times more cobalt and 18 times more lithium by 2030, compared with the current battery supply value chain. However, the exponentially increasing battery market raises some serious concerns for the environment and disrupts sustainability goals.
Critical raw materials embedded in the batteries are rare earth elements such as antimony in lead-acid batteries, cobalt, and natural graphite in lithium-ion batteries, etc. Utilization of natural elements require mining and exploitation of minerals, that causes adverse effects on the environment.
The carbon footprint of batteries directly depends upon the energy sources required for their production. Most of the lithium-ion cells are manufactured by burning fossil fuels such as coal, or utilizing nuclear energy and gas, which accounts for 60% more greenhouse gas emissions than what hydroelectric power could produce to generate same amount of energy. Besides, every year Europe creates around 1.9 million tons of waste batteries, out of which almost 35 kilotons of portable batteries end up in municipal waste and remainder is either exported outside EU or ends in e-waste recycling.
Improper disposal of batteries leads to land, air, and water pollution as they contain hazardous, toxic, and corrosive materials. According to the Agency for Toxic Substances & Disease Registry, toxic metals such as cadmium and nickel found in the batteries could lead to cancerous disabilities.
Can EU Regulations for Batteries Bolster their Sustainability Goals?
In December 2020, the European Commission proposed the new Circular Economy Action Plan that calls for the responsible reuse and recycling of batteries in the Europe Union. The legislative proposal under the Circular Economy Action Plan aims to enhance sustainability across the entire life cycle of products, from design and manufacturing to consumption. The Commission proposes mandatory requirements for the use of responsibly sourced materials with limited use of toxic substances and meeting of collection and recycling targets. Besides, the Commission intends to unlock large-scale investments to increase the production of sustainable batteries in Europe to boost the growth of electric vehicles in the region. Moreover, the regulations establish new targets for the collection, treatment, recycling of batteries used in industrial, automotive, or electric vehicles.
Under the new EU Battery Regulations, the industrial and EV batteries would be required to declare the content of recycled raw materials used for the production of batteries by 2027. The proposed regulations also define a framework for facilitating the repurposing of batteries used as energy resources. Moreover, a battery passport system would be utilized to enhance transparency in the supply chain and enable traceability of large batteries.
EU Battery Law: A Significant Boost for Recycling Industry
Battery electric vehicles are more efficient than vehicles with internal combustion engines, but inappropriate disposal of batteries is still a major issue for many countries. However, future batteries that maximize longevity and are recycled effectively could reduce environmental impact drastically. When the battery in a car or a truck does not offer satisfactory performance, it can be put to use in less demanding applications. Second life use of batteries reduce carbon footprint by preventing the emissions associated with battery manufacturing as well as allow higher penetration of renewables across Europe region. Besides, a 42% price reduction compared to new batteries for stationary storage could provide economic benefit to the end user.
Although reuse of batteries is a viable alternative to reduce environmental stress and price, mandating reuse over recycling could lead to delay in the recovery of valuable raw materials such as lithium, nickel, and cobalt. The high demand and low supply of rare earth materials owing to the fast-growing electric vehicle industry could accelerate mining activities, which could be even more damaging to the environment. However, recycling can help to prevent the extraction of rare earth metals and contribute towards sustainable growth of electrification in the region.
Ambitious and binding targets for recovery of key battery materials, mainly cobalt and nickel, that are 97% recoverable would require investments to establish the recycling capacity in Europe. Industry leaders are readily investing in new recycling plants to meet the rising demand. Besides, plenty of recycling opportunities are expected to open up in the lower-volume markets of Li-ion batteries for e-bikes, lawn-mowing robots, and cordless electric drills. Moreover, growing demand for recycling is expected to create more jobs as new companies would venture into the recycling space.
One of the world’s largest providers of sustainable technologies, TES has signed a deal with Port of Rotterdam in Netherlands to secure the future of its 10,000 sq. mt. battery recycling facility. The site will be fully functional by the late 2022, complementing the other two TES lithium battery recycling facilities in France and Singapore. The strategic move of TES is in line with European Commission Battery regulations to improve recycling of portable and industrial batteries in the region.
Setting high recovery rates for lithium as much as 90% could be paramount for Europeans to lead in the green battery market. The economic benefits of the recycling process are multi-fold. The recycling of a medium-sized battery pack with the latest cell chemistry can sum up to EUR600 to EUR11200. Based on the recycling rate of 80% after 10 years of battery use, the recycling market’s profit could amount to EUR4.8 billion in 2040. Besides, if 1.7 million tons of batteries could be recycled by 2030, almost 250 thousand tons of active materials can be recovered, which could put less stress on the environment with reduced mining activities.
The global battery demand is expected to increase 14-fold by 2030, driven by the electrification of automobiles and deployment of batteries in electric grids. Europe Union could account for 17% of the battery demand by 2025. The development, production, and use of batteries for facilitating the rollout of zero transmission mobility and storage of intermittent renewable energy could help boost the digital economy and ever-expanding market of portable electronics.
The battery law proposal may strengthen the US-EU relationship as both the countries have an intention to seek alignment on climate change and related issues. Many similar regulatory and market dynamics are already at play. California state governor has issued a state budget proposal calling for billions towards the adoption of EVs. Massachusetts Governor has also outlined a plan to reduce carbon emissions in the state by phasing out sales of new gasoline-powered cars by 2035 as an interim target on the path to net-zero emissions by 2050.
According to TechSci research on “Global Electric Vehicle Charging Infrastructure Market By Type (AC Charger & DC Charger), By Installed Location (Commercial & Residential), By Region (North America, Europe & Asia-Pacific), Competition, Forecast and Opportunities, 2024”, the global electric vehicle charging infrastructure market is expected to grow at a CAGR of 17% owing to the increasing concerns for environment and rising government support for electric commercial vehicles.
According to another TechSci research report on “Global Wireless Electric Vehicle Charging Market By Charging Type (Static & Dynamic), By Power Supply Range (3-11kW; 12-50kW; Above 50kW), By Charging System (Magnetic Power Transfer; Inductive Power Transfer; Capacitive Power Transfer), By Vehicle Type (Electric Passenger Car; Electric Commercial Vehicle), By Region, Competition, Forecast & Opportunities, 2025”, the global wireless electric vehicle charging market is anticipated to grow over 35% owing to growing awareness about vehicular emissions and rising government subsidies.