This page offers a small snapshot of the many intricacies of battery supply chains. It only presents information related to procuring and processing virgin raw materials and manufacturing new batteries.
TL;DR
- Moving away from our fossil-fuel-based economy will require adequate energy storage, which means the world will need a lot of batteries and a large-scale increase in mining activities.
- The battery industry has been plagued by fragile, opaque, and unsustainable supply chains, making it difficult for players to keep up with growing demand sustainably. New regulations require better management and reporting of those supply chains, so battery makers and car manufacturers are struggling to keep up with and understand the requirements–specifically, which are applicable to them and what steps are necessary to comply.
- Advances in supply chain monitoring, reporting, and management will enable the battery industry to meet demands and remain compliant with regulations, ensuring a smooth transition into an electric future.
- TL;DR
- Why do we need batteries?
- Impact of batteries
- Materials and production
- Opportunities
- Supply chain tracing
- Sustainable mining processes
- Refining and manufacturing improvements
- Regulation
- European Union
- United States
- Industry initiatives
- Resources
Why do we need batteries?
A global transition to clean technology and renewable energy will only be possible with adequate energy storage. Battery-supplied energy storage is critical to a fossil-free future, as it enables us to power electric vehicles and store and transfer the electricity generated by renewables to the grid.
Individual homes can use batteries to replace diesel-powered generators for power backup and store the electricity generated by rooftop solar panels. New smart batteries even allow homeowners to purchase electricity when it is cheap and green and use it when it isn’t, which also reduces pressure on the grid.
On the scale of electrical grids, batteries can help ensure the phase-out of coal-fired power plants that until now have been necessary to ensure steady electricity supplies. The UK government has estimated that the flexibility offered by grid-scale batteries could even save up to ÂŁ40 billion by 2050, and they are investing heavily in these facilities.
Impact of batteries
Emissions from the production of EV batteries range from 56 to 494 kg CO2 per kWh of battery capacity, that’s more than half of the carbon footprint of the entire vehicle. About half of those emissions come from extracting, processing, and refining the raw materials.
80% of battery component production happens in China, but the materials for those components come from all around the world. The materials that go into an EV battery will travel 20,000-30,000 miles (up to 50,000 miles) before they end up in a vehicle.
Materials and production
The average EV battery contains about 185 kg of minerals, with the cathode containing the widest variety (about 31% of the entire mineral weight). NMC is the most common EV battery. It is a lithium-ion battery using nickel, manganese, and cobalt in the cathode.
- Lithium: Demand for lithium is expected to rise by over 40x by 2040, and the world is facing a lithium shortage by 2025 if production does not increase. Not because of a shortage in the natural supply of lithium but mostly because we will face difficulties in sustainably extracting enough lithium in time to meet demands.
- Extracting lithium requires a lot of water, and more than half of lithium production is in water-stressed regions. In South America in particular, lithium extraction comes at the expense of indigenous people who are being left without water to drink.
- Nickel: Most nickel today goes towards stainless steel production, with 5-8% going to the EV battery market, but that share is expected to increase to more than 30%. Currently, less than half of all nickel produced (Class 1 Nickel*) can be used in batteries.
- Large sustainability challenges in nickel production relate to the release of sulfur dioxide gasses from smelting and toxic chemicals from refining.
- Nickel mining in Russia (specifically Norilsk Nickel, aka Nornickel) has created “one of the most polluted places on Earth” with 5.98 million acres of dead forest and caused the largest Arctic oil spill in history. Nornickel joined the Responsible Sourcing Blockchain Network in 2021 and will undergo regular assessment.
- Manganese: The Institute of Electrical and Electronics Engineers calls manganese “abundant, safe, and stable” but capable of less energy density than nickel. Manganese can actually be very toxic in high concentrations, especially in aquatic and coastal ecosystems where it is normally found at very low levels and can have complex interactions with other components of that environment. The mineral can also accumulate in the tissue of fish, presenting a human health concern for those who would consume the fish.
- Cobalt: Considered the highest risk in the EV battery supply chain. 74% of the world’s supply comes from the Democratic Republic of Congo, and about 70% of all cobalt is refined in China
- There are cobalt-free batteries (like sodium-ion), but one of the problems is that battery recycling becomes tricky when cobalt is removed. Cobalt is the most valuable part of the battery and drives the economics of battery recycling.
- Amnesty International produced a scalding report in 2016 called “This is what we die for” about human rights violations in DRC cobalt mines.
- Most cobalt mining in DRC is done by hand (called artisanal mining), where workers are paid a few dollars a day for the dangerous work. One of the concerns with moving away from this kind of mining is that it might actually increase child labor in the long run by reducing the income of households that depend on the mines.
Most processing is done in China, which means there is a high degree of transportation from the mining location.
Opportunities
Supply chain tracing
One of the biggest challenges in battery production is that manufacturers don’t typically know exactly where their materials come from or how they were extracted. The critical minerals needed by batter makers are scarce, and many blind eyes have been turned in the name of getting ahold of those materials at any expense. What we don’t measure, we can’t improve.
- Critics of blockchain traceability, specifically, say it will increase the divide between the producers and the consumers, putting an extra burden and cost (and not profits) on laborers that are already paid very little. The data recorded at the mining level has not typically included the conditions it claims to fight against, i.e., poor labor and environmental conditions.
Sustainable mining processes
- Renewables: Source electricity for mining activities from renewables like wind and solar.
- Geothermal lithium: Lithium is sourced as a byproduct of geothermal heating. Test projects are underway in the US, where the Salton Sea is believed to contain 10x the current US demand for lithium.
- Advanced water technologies:
- Desalination: Rather than using valuable freshwater resources, Chile plans to build 15 desalination plants by 2028.
- Water recovery: Creating closed water loops by recycling wastewater.
- Repurposing waste streams:
- Carbon sequestration projects: Some mining byproducts can be used to capture and mineralize CO2.
- Creating useful products from waste:
- Reprocessing - extracting metals from leftover mining materials
- Downcycling - using the bulk material as is
- Upcycling - modifying mining tailings into useful material
Refining and manufacturing improvements
- Renewables: The battery production process is very energy intensive, so renewable energy deployment will also be important here.
- Process optimization: Implementing ways to reduce the consumption of energy during battery component manufacturing.
- Recuperation of energy discharged during battery cell testing back into the production line could reduce overall energy consumption by 17%.
Regulation
This is only a small snapshot of the regulatory landscape related to battery supply chains.
European Union
In 2022, the EU agreed on a new Batteries Regulation, the industry's most comprehensive battery reporting and compliance laws. Starting in late 2023, battery manufacturers will be subject to mandatory targets on sustainability, performance, labeling, and recycling, increasing yearly through 2027.
The new EU Batteries Regulation replaces the Batteries Directive of 2006, which allowed for interpretation and implementation by the individual member states. The Battery Regulation will overrule national laws and prohibit battery manufacturers from selling their products on the EU market unless they are able to maintain and prove compliance.
Other related regulations:
- The Corporate Sustainability Reporting Directive (CSRD): Sets rules around what social and environmental data companies are required to report. Entered into force in January 2023, with 2024 being the first financial year where the rules apply.
- Corporate Sustainability Due Diligence Directive: A proposal was adopted in Feb 2022 to ensure that businesses address any adverse social and environmental impacts of their operations and governance. Once adopted, member states will have two years to implement.
United States
There is a big push for the US to produce its own batteries, and that includes supplying its own minerals. The Inflation Reduction Act (IRA) has set goals through critical mineral and battery requirements and offers tax credits and incentives to jump-start production and adoption. Under the IRA, tax credits will only go to producers that can show that 40% of the minerals were extracted or processed in the US or a close trade partner. This will gradually increase to 80% by 2027, but the targets have been criticized for lacking clarity and specificity.
Other related regulations:
- The Environmental Protection Agency is in the process of developing battery labeling requirements (and guidelines for recycling). They are expected to be delivered in late 2026.
- Dodd-Frank Act: Enacted in 2010 in response to the 2008 recession, the Wall Street Reform and Consumer Protection Act (commonly called the Dodd-Frank Act) put major regulations on the financial industry. The act contains disclosure provisions around the responsible sourcing of minerals designated as “conflict minerals.”
Industry initiatives
There are many consortiums developed around mineral tracing. These are made up of NGOs, mining operations, mineral refiners, automotive makers, finance institutions, etc.
- Initiative for Responsible Mining Assurance (IRMA): A multi-stakeholder coalition that certifies the social and environmental performance of mining sites around the world. They use a combination of self-assessment, third-party assessment, and public reporting to rank individual mining sites on a performance scale.
- The Mining and Metals Blockchain Initiative: Founded in 2019 by the World Economic Forum and seven mining companies to do R&D around blockchain solutions.
- Re|Source: ReSource is a partnership of 20+ actors across EV batteries to track and trace Cobalt; it is technologically backed by kryha.
- Responsible Mineral Initiative: Founded in 2008 by the Responsible Business Alliance and the Global e-Sustainability Initiative to focus on tungsten, tantalum, tin, gold (3TG), and cobalt smelting and refining. RMI has developed “blockchain guidelines” for the wider metals and minerals industry. The idea is to promote common definitions, data formatting rules, and a shared ID system for all actors across these supply chains.
- Responsible Sourcing Blockchain Network: A pilot project launched in 2019 by Ford, Volkswagen, LG Chem, and Huayou Cobalt to develop an open blockchain platform (built on IBM Blockchain Platform) to trace consumer minerals. Volvo, Fiat, and Chrysler have since signed on. This pilot falls under the umbrella of the Responsible Sourcing Network, and the organization primarily focuses on human rights issues in the mineral industry. Every organization in the network is audited by RCS Global Group’s VINE Platform.
- The Global Battery Alliance (GBA): Started by the World Economic Forum in 2017, and as of 2021, the GBA is an independent alliance consisting of 80 NGOs, governments, academics, and industry actors. The GBA’s flagship program is the GBA Battery Passport which is meant to offer a seal of quality assurance for companies to purchase responsibly produced batteries. The GBA’s implementing partners are Everledger, Levin Sources, SAP, Drielsma Resources Europe.
Resources
- [VIDEO] The Startup Tank Climate Investor Pitch: Infyos: A revolution in battery supply chain transparency (The Startup Tank Climate Tech Investor Pitch Show, Jul 2022)
- [VIDEO] Why The EV Industry Has A Massive Supply Problem (CNBC, Mar 2022)
- [VIDEO] COBALT IN EV BATTERIES? The Story of Cobalt & its importance to Batteries & Electric Cars (Fully Charged Show, Jun 2021)
- [VIDEO] Cycle Assessment. Optimising raw materials for renewables (Just Have a Think, Mar 2021)
- Assessing the feasibility of the Inflation Reduction Act’s EV critical mineral targets (Trost & Dunn, 2023)
- The race to decarbonize electric-vehicle batteries (McKinsey & Company, Feb 2023)
- How 'modern-day slavery' in the Congo powers the rechargeable battery economy (NPR, Feb 2023)
- Vulnerabilities of the Battery Supply Chain for European Utility Storage Providers (Afry, Jan 2023)
- A review of circular economy strategies for mine tailings (Kinnunen et al., 2022)
- Manganese: The overlooked contaminant in the world largest mine tailings dam collapse (Queiroz et al., 2022)
- Production planning and process optimization of a cell finishing process in battery cell manufacturing (Wanner et al., 2022)
- Batteries: deal on new EU rules for design, production and waste treatment (European Parliament News, Dec 2022)
- How the Inflation Reduction Act Will Spur a Revolution in EV Battery Supply Chains (RMI, Oct 2022)
- The world needs 2 billion electric vehicles to get to net zero. But is there enough lithium to make all the batteries? (WEF, Jul 2022)
- Meet a startup that plans to use mining waste to capture carbon dioxide (Canary Media, Jul 2022)
- Cobalt Market Report 2021 (Cobalt Institute, May 2022)
- The Key Minerals in an EV Battery (Visual Capitalist, May 2022)
- Lithium Mining Is Leaving Chile’s Indigenous Communities High and Dry (Literally) (NRDC, Apr 2022)
- Manganese Could Be the Secret Behind Truly Mass-Market EVs (IEEE, Apr 2022)
- Electric cars fend off supply challenges to more than double global sales (IEA, Jan 2022)
- The Role of Critical Minerals in Clean Energy Transitions (IEA, May 2021)
- What you need to know about minerals and the clean energy transition (Canary Media, Feb 2022)
- Digital extraction: Blockchain traceability in mineral supply chains (Calvao & Archer, 2021)
- Assessing impacts of responsible sourcing initiatives for cobalt: Insights from a case study (Mancini et al., 2021)
- Towards sustainable extraction of technology materials through integrated approaches (Pell et al., 2021)
- How Norilsk, in the Russian Arctic, became one of the most polluted places on Earth (NBC News, Nov 2021)
- Management, treatment, and reuse of water for the mining sector in Latin America (Smart Water Magazine, Oct 2021)
- Role of energy storage systems in energy transition from fossil fuels to renewables (Kalair et al., 2020)
- How clean can the nickel industry become? (McKinsey & Co, Sep 2020)
- New report on climate impact of electric car batteries (IVL, Dec 2019)
- Life Cycle Analysis of Lithium-Ion Batteries for Automotive Applications (Dai et al., 2019)
- The life of Ni (Nickel Institute, 2016)
Last updated: April 2023