The deployment of electric vehicles (EV) can significantly contribute to the global clean energy transition.
Lithium-ion batteries (LIB) are a key component of EVs, accounting for up to 40% of their cost.
The affordability and accessibility of LIB are thus central factors in EV market development.
The concentrated supply of, and prevalence of export restrictions on, primary resource input into LIB make the EV value chain vulnerable to disruptions and price volatility.
Recycling LIB can help address these vulnerabilities, while reducing environmental costs associated with the mining of these inputs, as well as the resource intensity and emissions associated with battery production.
Recycling would also help address waste and disposal problems, as increasing numbers of LIB reach end of life (EoL). The transition to circular value chain for LIB will thus be critical in supporting the expansion of EV markets.
Circular economy (CE) solutions for EoL batteries include reusing discarded batteries still in good condition and fulfilling their original function; repurposing them to a different function, such as stationary energy storage; and recycling them to recover component materials.
The technical and regulatory challenges of collection, transportation, sorting, and dismantling are the same for all types of CE solutions.
Additionally, these options are not mutually exclusive: it is both technically possible and economically viable to re-use or repurpose LIBs for EV before recycling them.
LIB can be re-used in less energy-intensive applications such as energy storage, back-up power and grid management when their energetic efficiency is too low for use in EVs.
LIBs for reuse or repurposing currently retain a much higher value than those sent for recycling, although this is expected to change as the cost of new batteries declines.
More mature recycling chains will also need to be developed for batteries at the end of their second life, especially since, at full development of the EV market, the quantity of EoL-LIBs is expected to exceed demand for second-use.
The LIB recycling market is still in its infancy. The complexity of battery design, material chemistries and current lack of sufficient waste stock to supply the LIB recycling industry all hamper its economic viability.
But the projected growth should enable sufficient economies of scale to ensure profitability.
Innovation and research in the sector is also progressing rapidly, and several established LIB producers are already integrating battery recyclers into their supply chain.
Current global recycling capacity is estimated to greatly exceed the existing supply of waste LIB.
To date, this overcapacity has been driven by the People’s Republic of China (hereafter “China”), where LIB recycling has been supported by government policies, while other LIB recycling markets are as yet relatively underdeveloped.
However, foreign direct investment and new government incentives are expected to gradually expand recycling capacity in Europe and North America, such that the market will become much less concentrated by 2025 and China’s share is predicted to drop to around 50%.
At present, international trade in LIB waste remains essential for LIB recycling and is likely to remain so in many markets, as domestic LIB waste streams will often be insufficient to achieve the scale necessary for economic viability. Furthermore, lack of the necessary infrastructure in smaller, developing and emerging economies where many LIBs will come to EoL, will likely see them relying on recycling capacities in other markets.
A number of national and international regulatory requirements apply to the cross-border movement of EoL-LIB, along with a range of policies to promote reuse, repurposing, remanufacturing and recycling. These measures can significantly promote, or hinder, circular economy solutions.
A number of actions could promote circular value chains for LIBs, in particular:
• Clarity on the status of EoL-LIB as a waste would result in smoother, less onerous circular value chains, while preserving the efficiency of necessary health and safety controls;
• Consistency of transport and storage safety regulations would remove disincentives for crossborder LIB circular value chains and facilitate the traceability of consignments;
• Trade facilitation approaches, including wider use of pre-consent for multiple shipments to specific facilities, risk assessment of shipments and the gradual digitalization of prior informed consent (PIC) procedures would considerably reduce sunk costs in reverse value chains for LIBs;
• Harmonisation of standards for LIB design would promote expansion of the pool of qualified service providers for used LIBs, support second life solutions and facilitate disassembly and module exchange, but care must be taken to prevent restrictions on innovation which would hinder further improvements.
Certification of second-life LIB in relation to performance and safety can help promote market development and consumer trust;
• Regulatory targets for waste collection and recycling rate, coupled with well-functioning stewardship and take-back schemes operated jointly with the private sector could provide incentives for more efficient circular supply chains.