What to do with retired EV batteries?

The growing popularity of electric vehicles (EVs) and rising environmental consciousness among consumers are giving a push to the EV market’s growth. EV sales accounted for 18% of total vehicle sales worldwide in 2021, achieving a remarkable growth rate of 40%. The current market share has even hit the 25% mark. EV sales have surpassed those of conventional cars in some Scandinavian countries. In Germany, the birthplace of the automobile, the sales of EVs are forecast to officially overtake internal combustion engine vehicles within this year. According to Bloomberg, two-thirds of the global passenger vehicle fleets will turn electric by 2040.

Although EVs are generally considered more environmentally-friendly than gasoline or diesel vehicles, their environmental impacts still remain a concern, specifically battery handling. Theoretically speaking, EV lithium-ion batteries can last for 8-10 years, but in practice, the battery capacity would drop to 80% or less after 5-6 years, deeming it no longer suitable for powering EVs. By 2035, about 10 million EV batteries worldwide will be unsuitable for use. The reuse and recycling of retired EV batteries has therefore become ever more pressing.

EV batteries contain metals such as lithium, cobalt and nickel, which take lots of power and cost to extract, refine and manufacture. Treating them as disposable products would go against environmental principles. Regarding lithium-ion battery disposal, the market is currently implementing producer responsibility based on the "polluter pays” principle, compelling polluters to bear the cost of environmental pollution. EV manufacturers will need to consider the design, reusability and recyclability to foster the sustainable use of resources. From the economic point of view, we have yet to come up with a sustainable business model for EV battery recycling.

China is now at the forefront of EV industry, with sound policy incentives and the world’s highest production rate of EV batteries. China holds 80% of the world's lithium-ion battery manufacturing capacity, with Ningde Times alone accounting for one-third of the global EV battery market. As the world's largest battery producer, China has made an encouraging move by including the "Development of a Power Battery Recycling System" in its 2021 government work report. At present, China has established a well-developed network for the collection and tracking of new energy vehicle batteries, along with the "Power Battery Recycling Service Network”. Policies have also been set to regulate the recycling rate of EV batteries.

The world is also speeding up the formulation of relevant policies. For example, the European Union states that EV, light transport and industrial batteries sold in Europe must disclose their carbon footprint starting from 2024. Producers must also disclose the content of recycled raw materials in those batteries from 2027, followed by requirements to use a minimum share of recycled metal from 2030. To promote the recycling and reuse of EV batteries, the California Lithium-ion Battery Recycling Advisory Group has launched support programmes for handling retired EV batteries and recycling key materials for clean energy vehicle batteries.

There is good news from the EV industry as well, manufacturers around the world are announcing plans to build large-scale EV battery recycling plants, with main incentive coming from highly-valued recyclable materials in the batteries. In addition, the COVID-19 outbreak has caused a serious decline in worldwide cobalt mining production, which, coupled with the pressure on logistics, has led to escalating cobalt prices. Under the surging cost of raw materials for batteries, the recycled value of metals such as nickel, cobalt and manganese in EV batteries has increased significantly, making them high-value recyclables. Without a doubt, the EV battery recycling industry is bound to prosper and grow.

Considering the ever-rising recycling value and transportation costs, countries tend to avoid shipping batteries back to their places of origin and recycle locally if possible. From the environmental perspective, transporting retired EV batteries back-and-forth from afar would create a huge carbon footprint, which is not in line with the low-carbon principles. With the growing maturity of lithium-ion battery recycling technology, the EV battery recycling industry will surely have a promising future. In view of this, the Hong Kong government should implement a producer responsibility and enhance the treatment of retired EV batteries by improving recycling support infrastructure, so as to pave way for the development of a local circular economy.

Interested Topic:
Green Economy

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