Growing demand in battery industry calls for innovation – and recycling

Solutions are need to meet increasing demand for lithium-ion (Li-ion) batteries. According to an analysis by McKinsey & Company in cooperation with the Global Battery Alliance, manufacturers will face challenges in meeting demand and must aim for more sustainability.

The Li-ion battery market, the backbone of green mobility, including electronic vehicles (EVs), is expected to grow faster than previously thought. More than 30% annual growth could see the market reach a value of over $400 billion by 2030. In addition to shoring up new sources of raw materials, battery manufacturers could look to recycling as a solution to shortages.

Battery manufacturers will need to secure reliable sources of raw material and equipment while also making bold strides towards sustainability in order to meet global demand. A combination of increased mining and recycling in addition to more new manufacturing plants will be required.

Manufacturers will also need to emphasize sustainability in order to stay competitive in an industry that prioritizes protecting the environment. Sustainable mining and decarbonization of manufacturing will be essential for the future of the battery industry.

True sustainability in the battery industry calls for recycling materials and more options for reusing or refurbishing used batteries.

Recycling battery material would benefit both the industry and the planet. It is estimated that only 11% of Li-ion batteries end up in a recycling plant in the US, Canada, and the EU. Improperly discarded batteries are a major hazard for the environment and the huge batteries used in electric vehicles could present an opportunity where there is currently a risk.

Though more needs to be done to increase the recycling of batteries and make the process cleaner, some positive steps have been taken recently. In 2019, the US Department of Energy invested $15 million in a Li-ion battery recycling center, supported by researchers from various laboratories and universities, with the aim of making recycling competitive and profitable. Bold investment and innovation in recycling could create a $6 billion profit pool by 2040.

In addition to recycling, however, new sources of lithium and other raw materials in Europe and North America will still need to be shored up. Moving away from sources in China, new sources in Europe and North America could make up over 30% of the lithium used in battery production by 2030.

Some raw materials needed for making batteries like lithium and nickel are increasingly in short supply, while others like manganese are expected to remain stable. Demand for lithium alone is expected to surge by 90% in the next two decades, according to the IEA. The supply chain will be under pressure to find a sustainable way to increase mining for raw materials, keeping harmful emissions low. A green approach to growth is important for the credibility of battery makers.

Lithium production, in particular, will need to be increased dramatically to keep up with demand. Argentina, Australia, Chile, and China are home to the most significant deposits of high-grade lithium.

An overhaul of the battery industry would solve shortages, have social and environmental benefits, and could contribute up to 18 million jobs. Innovation, transparency, and higher energy efficiency will also be essential for the future of lithium batteries.

These changes to battery production are part of what the McKinsey & Company analysis calls a “circular” rather than linear value chain. In addition to helping the world avoid increases in global temperatures, circularity in battery manufacturing would also solve practical issues like material shortages.

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