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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.
- 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.
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 £40 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.
Source: McKinsey & Company, 2023
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.