Report: sustainable batteries represent the best prospect for meeting Paris climate goals; requires $550B investment over 10 years
Advances in the production, use and reuse of batteries mean that the technology could become the most significant intervention to keep global warming within the limits set by the Paris Agreement on climate change between now and 2030, according to a new report commissioned by the Global Battery Alliance, a public-private partnership led by the World Economic Forum.
The report—A Vision for a Sustainable Battery Value Chain in 2030—suggests that, with a concerted push to put the right conditions in place, batteries could enable a 30% reduction in carbon emissions in both the transport and power sectors. These two sectors alone collectively account for 40% of all greenhouse gas emissions today.
Such a reduction in emissions would help keep the world within its 2°C Paris Agreement goal, the report finds. It requires immediate action along the battery value chain alongside investments in other technologies such as hydrogen and in other industries. This would also contribute to achieving the more ambitious 1.5° goal of the Paris Agreement’s, the report concludes.
In addition to examining the role batteries could play in helping to tackle climate change, the report finds that wider economic and societal benefits could also be accrued from systemically investing in the entire battery value chain from mining to reuse or recycling. In terms of employment, 10 million high-quality jobs would be created. More than half of these would be in emerging economies. Additionally, 600 million people would be provided with electricity for the first time. This would close the world’s existing energy access gap by 70%.
Reducing the world’s carbon footprint is the defining challenge of the 21st century. For the next 10 years, modern batteries that are powering the 4th industrial revolution represent the greatest prospect for reducing atmospheric pollution from many of our most energy intensive economic activities.—Dominic Waughray, Head of the Platform for Global Public Goods and Managing Director at the World Economic Forum
Achieving the scale to make these goals achievable requires considerable change, the report finds. First, today’s global battery value chain would have to expand 19 times the size it is today. This would require $550 billion of cumulative investments along the entirety of the value chain over the next 10 years, along with a set of targeted interventions.
Along with the massive expansion of the battery value chain comes a wide array of challenges throughout the value chain. These include:
Battery production has a significant GHG footprint. CO2 emissions during the production of batteries are significant, while the full life cycle emissions of batteries including its use phase are lower compared to traditional vehicles.
The battery value chain has significant social, environmental and integrity risks. The massive expansion of raw material demand, with a near-term focus on cobalt but also on nickel and lithium, will cause the value chain to face social, environmental and integrity risks, involving child labor and potentially forms of forced labor in the cobalt supply chain, unsafe working conditions, local air, water and soil pollution, biodiversity loss and corruption.
The viability of battery-enabled applications is uncertain. Uncertainty regarding infrastructure, technology and consumer preferences poses a significant business risk to the value chain. Automotive OEMs and suppliers have invested more than $100 billion in EVs over the past three years, yet profitability is not yet guaranteed, requiring the rapid introduction of coherent infrastructure and ecosystem. Without it, critical investments in the battery value chain will remain on the sidelines.
We need to develop a sustainable, circular and low carbon value chain for batteries to contribute to the implementation of the 2015 Paris Climate Agreement and to reach the UN Sustainable Development Goals. But this task can only be achieved by effective cooperation between businesses, international organizations, governments and civil society.—Martin Brudermüller, Chairman of the Board of Executive Directors of BASF and Co-Chair of the Global Battery Alliance
Second, it would necessitate a huge expansion in mining: annual extraction of minerals by 2030 would weigh more than 300 Great Pyramids of Giza. Some 120 additional battery state-of-the-art factories would also need to be operational to meet required demand.
Most importantly, a structural shift would be required to make batteries sustainable from an environmental and human perspective. This includes making sure the entire value chain is “circular”, whereby batteries are reused, repurposed or recycled at the end of their life cycle or simply used more efficiently.
For example, integrating battery-powered vehicles into the electricity grid at scale could cover 65% of demand for stationary battery storage and enable a higher renewable energy share in power grids globally, the report finds.
Moreover, in 2030 recycling could provide 13% of global demand for cobalt, 5% of nickel and 9% of lithium. These shares are expected to grow as the volume of batteries reaching their end of life surge after 2030.
Furthermore, sustainable business operations must be enabled by boosting the share of renewable energy in the value chain. Finally, a more responsible value chain can be created through better business performance on established sustainability norms backed by traceability systems and effective local interventions to protect human rights, reduce and eliminate child or forced labour and boost local economic value creation. To this end, the Global Battery Alliance will publish and begin implementing in 2019 a roadmap of actions to reduce and eradicate child labor over the coming decade.
The potential for batteries to significantly reduce the world’s carbon footprint, create jobs, improve energy access and working conditions for those working in the industry will not be realized if the value chain develops along its current trajectory, the report finds.
While the battery value chain is expected to grow annually by 25% over the next decade, this level of growth will not be sufficient to help meet the Paris Agreement goals. Without focusing on waste and workers, such uncoordinated growth could even place more environmental and societal strain on our world.
To avoid such an outcome, the Global Battery Alliance calls on all stakeholders to adhere to 10 recommendations aimed at building a circular, sustainable and responsible value chain. The GBA plans to engage all stakeholders to develop an implementation strategy to realize this opportunity.
Analytical support for the report was provided by McKinsey & Company, with additional work carried out on circular economy dimensions by SYSTEMIQ.