As society drives toward electric cars, the electric vehicle (EV) battery value chain demands real consideration. While societies cheer on the environmental benefits of greener transportation, which includes electric vehicles, it’s irresponsible to present the EV as a revolution without consequences. The electric car may produce zero emissions. But one of the biggest challenges for EVs – environmentally, in particular – is the battery.
Batteries depend on intensive mining for rare minerals, such as lithium and cobalt. This exacts a steep cost environmentally (water use, damage to land, and water, soil and air pollution to name a few side effects). It exerts a human toll in many places where mining happens. And it makes for murky visibility into the full supply chain.
The resource-intensive nature of end-to-end battery production makes it an ideal candidate for a makeover. The future of electric vehicles, and more broadly, renewable energy, may well depend on batteries. The EV battery revolution must by default embrace circularity.
Plugging in to change: Regulatory and industry charge toward EV battery circularity
Given these challenges, the regulatory outlook for EV batteries is shifting. The European Union is poised to adopt extensive rules governing EV battery life cycles, which would require – for example – automobile manufacturers to measure and disclose the total carbon footprint of their batteries (potentially through a digital product passport/battery passport). At the same time, industry consortia, such as the Global Battery Alliance, together with industry, are converging to establish a more sustainable, responsible battery value chain.
Taming the battery value chain means regulatory, battery makers’ and automotive industry ambitions must expand. These ambitions must extend beyond just battery manufacturing itself. The scope of consideration must encompass the entire value chain and battery life cycle, including mineral extraction/battery materials, environmental impacts, human labor, battery use, reuse (circularity), and battery recycling.
EU Green Deal moves EV batteries into the green zone
Part of the EU’s Green Deal taxonomy is for the EU to become carbon neutral by 2050. Batteries are a key component of this strategy. Making batteries more sustainable throughout a battery’s life cycle contributes to achieving the goals of European Green Deal and to delivering on the EU’s Circular Economy Action Plan. Modernized legislation on batteries is the EU’s opening gambit in this endeavor.
What the EU has proposed is a set of end-to-end compliance criteria around a battery’s complete lifespan. Automakers, for example, would be obligated to comply with various reporting regulations. These due-diligence regulations focus on everything from labeling, supply chain data, information on battery recycling and recycling efficiency to the minimum level of recycled content, maximum carbon footprint, and other responsibilities.
A digital battery passport, or some form of data-carrying Digital Product Passport, will collect the key events/data across the battery’s entire life. Such a passport will enable the fulfillment of compliance demands. But the passport can contribute much more than that. Globally, regulatory motions, business goals and consumer demand are converging around ESG initiatives. As these expectations grow, the impetus for greater sustainability and circularity grows. What the EU manages to do in this sphere is a leading indicator and potential model for transforming the battery supply chain.
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