Battery recycling could cut raw material use by 12pc

Demand for battery materials is set to increase sharply and outpace supply in the next 20 years, with electric vehicles (EVs) and battery storage leading the change. But recycling and reusing batteries could cut demand for raw materials such as lithium and nickel by up to 12pc by 2040, according to the International Energy Agency (IEA).

In a sustainable development scenario — which limits global temperature rising to 1.8°C rather than the 2°C stipulated in the Paris Agreement — overall demand for raw battery materials is set to be 30 times higher than 2020 levels by 2040, with demand for lithium rising by 40 times.

But consistent supply of these raw materials remains a stumbling block for major expansion, particularly given a shortage of new projects in the pipeline, the IEA said. Additionally, the rising of costs of raw materials in batteries could remain a problem, with raw materials now accounting for 50-70pc of battery costs, up from 40-50pc five years ago, it estimates.

Recycling could therefore play a crucial role in bridging the gap in metal supply. Under its 2040 sustainable development scenario, secondary production from recycled minerals would account for "up to 12pc of total supply requirements for cobalt, around 7pc for nickel, and 5pc for lithium and copper", the IEA said.

The IEA added that recycling end of life Li-ion batteries could "relieve a proportion of the burden from mining them from virgin ores". The agency did warn that this would not eliminate the need for investment in primary supplies but "contributions from recycled minerals could be even more prominent in the total supply if effective recycling policies are adopted more widely across the globe, with larger benefits particularly for the regions with higher EV deployment".

Stockpiling and policy initiatives

More stringent policy measures to encourage recycling and secondary supplies of battery metals could also be needed.

Barriers currently impeding the development of secondary supply chains include competition from primary supply, information deficits and limited waste collection. But policies such as "minimum recycled content requirements, tradeable recycling credits and virgin material taxes all have potential to incentivise recycling and drive growth of secondary supplies", as would government subsidies, the IEA said. But the agency warned that international co-ordination would be "critical because of the global nature of metal markets".

"If policies designed to stimulate demand for secondary supply are enacted unilaterally, they may have unintended consequences that lead only to a geographical change in use rather than a change in market supply. In addition, collaboration between countries or regions may be needed to sufficiently understand market stock, costs and dynamics."

The IEA also suggested that strategic stockpiling could "weather short-term supply disruptions," but that minerals with low pricing transparency and liquidity could make this task more difficult. The agency used the example of Japan's strategic stockpile of critical materials through its state-controlled energy agency Jogmec.

By Yusuf Khan