WEBVTT - Mind the EV Battery Recycling Gap 0:00:00.320 --> 0:00:03.480 This is Dana Perkins and you're listening to Switched on 0:00:03.640 --> 0:00:06.360 the B and EF podcast. So, electric vehicle sales are 0:00:06.400 --> 0:00:09.360 growing all over the world, and while electric vehicles cut 0:00:09.360 --> 0:00:13.240 tailpipe emissions, there is a further opportunity to reduce the 0:00:13.280 --> 0:00:17.160 emissions associated with the embodied carbon found in the creation 0:00:17.280 --> 0:00:20.159 of the batteries themselves. So that leads us to the 0:00:20.239 --> 0:00:23.560 three point seven million metric tons of end of life 0:00:23.640 --> 0:00:27.639 batteries that could become available for recycling in twenty thirty five. 0:00:27.920 --> 0:00:30.880 That's enough to supply ten to eighteen percent of the 0:00:30.960 --> 0:00:34.559 key metals used for battery manufacturing. But just how well 0:00:34.680 --> 0:00:38.920 established are the existing battery recycling facilities and the policies 0:00:38.920 --> 0:00:42.040 that incentivize the recycling to actually take place. And how 0:00:42.040 --> 0:00:45.279 can we ensure that the recycling of components becomes an 0:00:45.400 --> 0:00:49.360 essential part of battery manufacturing, especially considering it has the 0:00:49.360 --> 0:00:54.320 potential to dramatically reduce the emissions associated with the batteries themselves. 0:00:54.520 --> 0:00:57.280 So to tell us more about battery recycling, I'm joined 0:00:57.280 --> 0:01:01.200 by Andy Leach. He's an associate from BNAFS Energy Storage Team. 0:01:01.560 --> 0:01:04.320 Andy reveals some of his key findings from a recent 0:01:04.400 --> 0:01:09.160 report titled Lithium ion Battery Recycling Market Outlook twenty twenty four, 0:01:09.360 --> 0:01:12.360 and he talks about the evolution of battery chemistries which 0:01:12.400 --> 0:01:15.759 will impact the longer term availability of metals and how 0:01:15.760 --> 0:01:18.800 they can be reclaimed in the recycling process, and why 0:01:18.840 --> 0:01:22.240 production scrap is actually one of the most important feedstocks 0:01:22.400 --> 0:01:25.840 for this space at the moment. To access this report, 0:01:25.959 --> 0:01:28.640 b and EF subscribers can find it on benf dot 0:01:28.680 --> 0:01:31.560 com or at BNOF on the Bloomberg terminal. Subscribe to 0:01:31.600 --> 0:01:33.520 the show for updates, or give us a review to 0:01:33.520 --> 0:01:35.720 share us with others. But right now, let's jump into 0:01:35.760 --> 0:01:48.160 our conversation with Andy. Andy, thank you for joining us 0:01:48.160 --> 0:01:49.279 on Switched on again today. 0:01:49.440 --> 0:01:50.920 Thank you very much for having me, Diana. 0:01:51.200 --> 0:01:54.440 We are here to talk about battery recycling, and, as 0:01:54.480 --> 0:01:56.480 I like to do at the beginning of pretty much 0:01:56.560 --> 0:02:00.280 every show these days, where we're getting into a technical process, 0:02:00.480 --> 0:02:04.360 explain what battery recycling is and how it's done. 0:02:04.520 --> 0:02:07.400 Sure, so, battery recycling is taking batteries which have been 0:02:07.680 --> 0:02:11.079 in electric vehicles and quid scale energy storage projects. These 0:02:11.120 --> 0:02:13.560 batteries can be dismantled, and they can be dismantled in 0:02:13.600 --> 0:02:15.480 a couple of different ways. So they can be taken 0:02:15.520 --> 0:02:18.560 apart and tested potentially for a second life, or they 0:02:18.560 --> 0:02:21.120 can be shredded before this point, or if they don't 0:02:21.160 --> 0:02:22.760 have any sort of use as a second life, they 0:02:22.760 --> 0:02:25.640 can be shredded after this point. Then the material that 0:02:25.680 --> 0:02:27.880 produced from this is called black mass. So this is 0:02:27.880 --> 0:02:31.519 a mixture of all different materials. This has lithium, nickel, 0:02:31.600 --> 0:02:34.200 cobalt depending on the battery chemistry, as well as other 0:02:34.240 --> 0:02:36.840 things like aluminium and copper. And then this black mass 0:02:36.880 --> 0:02:40.000 is processed in similar ways that sort of primary or 0:02:40.080 --> 0:02:43.160 virgin material will be processed to become the commodity salts 0:02:43.240 --> 0:02:45.960 or maybe even precursor materials to make new batteries. 0:02:46.240 --> 0:02:48.280 We're going to spend most of our time talking about 0:02:48.280 --> 0:02:50.720 the recycling end of things, but when you talk about 0:02:50.840 --> 0:02:52.800 second life, I want to know how much of the 0:02:52.840 --> 0:02:56.720 market is actually reused before it becomes recycling. When we're 0:02:56.720 --> 0:02:59.200 talking about vehicles specifically. 0:02:58.840 --> 0:03:01.720 So the second life market is much smaller because if 0:03:01.720 --> 0:03:04.040 a battery has had a full first life, the chances 0:03:04.080 --> 0:03:07.239 of its having sort of usable value and usable capacity 0:03:07.280 --> 0:03:09.800 for a second life is smaller. However, there are some 0:03:09.880 --> 0:03:12.400 exceptions to this, and one of those exceptions can be 0:03:12.440 --> 0:03:15.320 if a car company recalls some cars early because of 0:03:15.360 --> 0:03:17.400 a fault to do with battery packs, but maybe some 0:03:17.480 --> 0:03:19.400 of the cells in the battery packs are still good, 0:03:19.680 --> 0:03:22.040 this can mean that these percentages can be a bit higher. 0:03:22.080 --> 0:03:24.240 A notable example would be a couple of years ago 0:03:24.280 --> 0:03:26.560 GM recalling some of the Chevy Bolts. Some of these 0:03:26.639 --> 0:03:28.520 cars were recalled after any one or two years on 0:03:28.520 --> 0:03:30.280 the road. Now it's very likely that a lot of 0:03:30.280 --> 0:03:32.760 those cells will still have usable life in them. But yeah, 0:03:32.880 --> 0:03:35.520 it's not unheard or for car batteries to come back 0:03:35.520 --> 0:03:38.120 and go back into cars, but also going into energy 0:03:38.120 --> 0:03:41.040 storage projects as a very very sort of viable second 0:03:41.040 --> 0:03:41.680 life for sure. 0:03:42.040 --> 0:03:45.200 One of the reasons that battery recycling is so exciting 0:03:45.440 --> 0:03:48.960 is that it really reduces the emissions of those vehicles 0:03:48.960 --> 0:03:51.560 that actually have a recycled battery in it. There are 0:03:51.600 --> 0:03:54.000 so few things in the world that I think wouldn't 0:03:54.040 --> 0:03:57.200 benefit from recycling in terms of emissions. When you actually 0:03:57.240 --> 0:03:59.920 think about getting virgin materials out of the ground the 0:04:00.160 --> 0:04:03.880 muddles versus taking something that is already extracted and then 0:04:04.000 --> 0:04:06.760 converting it into something else. So when we think about 0:04:06.800 --> 0:04:09.040 how much of this is actually going to be happening 0:04:09.080 --> 0:04:12.520 in the future and potentially a decline in electric vehicle 0:04:12.520 --> 0:04:15.400 emissions overall. When we think of imbodied emissions in their 0:04:15.440 --> 0:04:18.600 second life, how big is the market going to be 0:04:18.640 --> 0:04:21.320 from battery recycling, Like how many batteries are going to 0:04:21.320 --> 0:04:23.159 be coming in? You know what do we see coming 0:04:23.200 --> 0:04:23.920 down the pipe? 0:04:24.279 --> 0:04:28.000 So for sure, if you're recycling a battery, the emissions 0:04:28.040 --> 0:04:30.960 associated with this are likely to be lower. So for 0:04:31.000 --> 0:04:34.800 a very obvious example is supply chain length. Right, So 0:04:35.160 --> 0:04:37.640 virgin materials and mines, they are where they are and 0:04:37.640 --> 0:04:39.880 we can't move them too much. If there's a lot 0:04:39.920 --> 0:04:41.640 of one material in one place, then you need to 0:04:41.640 --> 0:04:43.200 ship this around the world to get it to where 0:04:43.240 --> 0:04:45.240 it needs to be. Now, if you're producing an electric 0:04:45.320 --> 0:04:47.760 vehicle in Europe or North America and you can recycle 0:04:47.839 --> 0:04:50.120 batteries from those vehicles at their end of life in 0:04:50.160 --> 0:04:53.880 those regions, you can significantly reduce the supply chain and 0:04:53.920 --> 0:04:56.720 the sort of logistics there, which has an emissions benefit. 0:04:56.800 --> 0:04:58.960 Now you also have a benefit that you don't need 0:04:59.000 --> 0:05:01.040 to be digging this stuff out to the ground and 0:05:01.120 --> 0:05:04.520 moving a battery from an electric vehicle and shredding it 0:05:04.520 --> 0:05:06.920 has a lower CO two footprint than digging this out 0:05:06.960 --> 0:05:10.120 the ground and moving it around continents, and some some 0:05:10.240 --> 0:05:13.479 battery metals move around the world significant distances before getting 0:05:13.520 --> 0:05:14.200 into batteries. 0:05:14.520 --> 0:05:16.640 Can you give us an idea of the volume batteries 0:05:16.640 --> 0:05:19.080 that are actually going to be recycled in the future 0:05:19.160 --> 0:05:22.120 and essentially how many vehicles are, how big we see 0:05:22.120 --> 0:05:25.599 the electric vehicle space growing to in the near and 0:05:25.680 --> 0:05:26.520 medium term. 0:05:26.640 --> 0:05:28.719 Yeah, in the analysis that we did in this most 0:05:28.720 --> 0:05:31.920 recent report, we see approximately seven hundred and sixty seven 0:05:32.000 --> 0:05:35.200 gig or towers of battery materials available to recycle by 0:05:35.279 --> 0:05:38.120 twenty thirty five. Now in the report, we dig down 0:05:38.160 --> 0:05:41.359 and we compare this to the ratio of new demand 0:05:41.400 --> 0:05:44.760 for these materials. It varies by metals. So between lithium, nickel, 0:05:44.760 --> 0:05:47.040 and cobalt, the ones that we dug into, nickel and 0:05:47.120 --> 0:05:50.120 cobalt can be getting up towards eighteen percent of supply 0:05:50.240 --> 0:05:53.599 of these metals can be produced by recycling used batteries, 0:05:53.640 --> 0:05:55.400 and with lithium it's a little lower due to the 0:05:55.400 --> 0:05:58.160 different chemistries of different batteries that are used, and this 0:05:58.240 --> 0:06:00.839 is more around just below ten percent eight nine percent. 0:06:00.800 --> 0:06:04.400 And different battery chemistries are used for different purposes. What 0:06:04.480 --> 0:06:07.920 impact does the way the battery is used have on 0:06:08.160 --> 0:06:12.120 its life cycle and how often they will end up 0:06:12.279 --> 0:06:15.800 being recycled or does it really come down to the 0:06:15.839 --> 0:06:19.080 battery chemistry and what it is that the battery is 0:06:19.120 --> 0:06:22.200 made of before it then makes its eventual way to 0:06:22.560 --> 0:06:23.600 being recycled. 0:06:23.920 --> 0:06:25.880 Yeah, so there's two key factors as to how long 0:06:25.920 --> 0:06:28.679 it will take battery from going into use to coming 0:06:28.680 --> 0:06:30.640 to its end of life. So it's the use case, 0:06:31.000 --> 0:06:33.320 so how much you're using it, how many times you're 0:06:33.400 --> 0:06:35.880 charging and discharging it, And then it's the battery chemistry. 0:06:35.960 --> 0:06:39.360 For example, we would expect batteries in ebuses and commercial 0:06:39.440 --> 0:06:42.280 vehicles where these vehicles are maybe being used every single day, 0:06:42.360 --> 0:06:44.200 multiple times a day, to come to their end of 0:06:44.240 --> 0:06:46.680 life sooner than maybe in a passenger car where someone 0:06:46.760 --> 0:06:48.560 may use the car maybe only once a day, or 0:06:48.600 --> 0:06:50.680 maybe even less than once a day. The lifetime would 0:06:50.720 --> 0:06:53.400 be much longer. Here within the battery chemistries, the two 0:06:53.440 --> 0:06:56.520 sort of main groups of battery chemistries within litiumine batteries 0:06:56.560 --> 0:06:59.919 are going into cars and stationary storage projects LFP batteries 0:07:00.080 --> 0:07:02.760 Lithium I and phosphate batteries. These batteries don't contain any 0:07:02.839 --> 0:07:05.240 nickel and cobalt and therefore a slightly cheaper and they 0:07:05.279 --> 0:07:08.320 have a lower energy density, so their range in vehicles 0:07:08.360 --> 0:07:10.680 will be lower and compared to the nickel based chemistries, 0:07:10.720 --> 0:07:12.360 but they have a longer life cycle. They can have 0:07:12.400 --> 0:07:14.920 life cycles of six or eight thousand cycles or maybe 0:07:14.920 --> 0:07:17.360 even more. And if you're cycling your battery once a day, 0:07:17.480 --> 0:07:20.200 six or eight thousand cycles is getting close to twenty years. 0:07:20.240 --> 0:07:22.480 So maybe other factors come in there as well. And 0:07:22.520 --> 0:07:24.520 then so the nickel and cobalt based batteries they can 0:07:24.560 --> 0:07:27.120 be cycled maybe two to three thousand times, maybe slightly 0:07:27.120 --> 0:07:29.360 more for some high performance batteries, so this is about 0:07:29.360 --> 0:07:32.440 half that of the LFP or lithium im phosphate batteries. 0:07:32.480 --> 0:07:35.320 So the nmcs and the ncas using sort of higher range, 0:07:35.360 --> 0:07:37.840 higher performance cars, and so these batteries have a slightly 0:07:37.880 --> 0:07:40.640 shorter life cycle. And then again if you're using them 0:07:40.680 --> 0:07:42.840 in an application, maybe in a truck or a bus 0:07:42.920 --> 0:07:45.600 where you're driving around constantly all day every day, this 0:07:45.680 --> 0:07:47.600 can shorten it. So we have a few different assumptions 0:07:47.640 --> 0:07:50.520 in our analysis. Trucks and buses have some of the 0:07:50.560 --> 0:07:53.040 shortest assumed lifetimes around six to eight years. 0:07:53.360 --> 0:07:55.320 The companies that are taking this black mass though, and 0:07:55.360 --> 0:07:57.320 turning it into these new sets of batteries, are they 0:07:57.360 --> 0:08:01.560 the same companies that are actually manufactured the initial batteries 0:08:01.720 --> 0:08:04.800 or are they completely different companies that specialize in recycling. 0:08:05.200 --> 0:08:07.840 So there's a range. There really is a range. There's 0:08:07.840 --> 0:08:10.320 some companies that will take batteries, maybe test them as 0:08:10.360 --> 0:08:12.400 I said, or maybe just shred them straight away and 0:08:12.440 --> 0:08:14.960 produce black mass and that's the whole business. There's some 0:08:15.000 --> 0:08:17.520 companies that will take that black mass, process it into 0:08:17.560 --> 0:08:20.960 commodity metals or maybe precursor materials for other people to 0:08:21.000 --> 0:08:23.520 make the specialist chemicals. And then there's some companies that 0:08:23.560 --> 0:08:26.520 take this whole supply chain. They take batteries, they shred them, 0:08:26.560 --> 0:08:28.760 they turn them into the precursor materials, and then they 0:08:28.800 --> 0:08:31.160 produce cathod at the end, which they can sell to 0:08:31.200 --> 0:08:34.520 somebody making batteries. So there's a range of different business models. 0:08:34.640 --> 0:08:36.880 Some parts of the supply chain, or some parts of 0:08:36.880 --> 0:08:39.880 this processor may be more technical than others. Just shredding 0:08:39.920 --> 0:08:43.199 batteries is potentially maybe easier than producing cathode material, which 0:08:43.240 --> 0:08:46.760 maybe needs to go through qualification processes with battery manufacturers 0:08:46.760 --> 0:08:48.480 and OEMs at the end of this as well. 0:08:48.760 --> 0:08:51.000 So when we think about the parts of the world 0:08:51.040 --> 0:08:53.320 where this is really taking off, I'm thinking about the 0:08:53.320 --> 0:08:56.959 fact that electric vehicles have actually had higher rates of 0:08:57.000 --> 0:09:00.959 adoption in some regions over others. The US, it's started 0:09:01.000 --> 0:09:03.440 to get traction, But really China has been one of 0:09:03.480 --> 0:09:07.320 the earliest adapters of electric vehicles at scale. And what 0:09:07.360 --> 0:09:09.280 I want to know is then on the recycling end 0:09:09.280 --> 0:09:12.160 of things, as the batteries have started to get to 0:09:12.200 --> 0:09:14.679 the end of their useful life, is China then also 0:09:15.000 --> 0:09:18.200 leading the way in terms of battery recycling or is 0:09:18.240 --> 0:09:20.240 it other parts of the world that have decided to 0:09:20.360 --> 0:09:23.360 look at this as an opportunity and perhaps those batteries 0:09:23.360 --> 0:09:24.280 are being shipped to them. 0:09:24.600 --> 0:09:27.920 No, you're completely right. China is leading the way that 0:09:28.640 --> 0:09:32.400 their policy is leading and mandating things which Europe have 0:09:32.480 --> 0:09:34.840 been catching up with. As you mentioned, they also had 0:09:35.000 --> 0:09:38.959 much larger electric vehicle update sooner than Europe and North America, 0:09:39.040 --> 0:09:41.319 the three key regions that we looked at in this analysis. 0:09:41.360 --> 0:09:43.880 So yeah, the volumes in China are higher both on 0:09:44.080 --> 0:09:46.800 new batteries being made but also batteries coming to their 0:09:46.880 --> 0:09:49.760 end of life. The capacity for recycling batteries is larger 0:09:49.800 --> 0:09:50.600 in China as well. 0:09:50.800 --> 0:09:53.080 When I think about the companies that are actually looking 0:09:53.120 --> 0:09:55.800 to recycle these batteries, there are two things that they're 0:09:56.040 --> 0:09:58.640 more than likely thinking about, which is how easy is 0:09:58.640 --> 0:10:01.359 it going to be to get all of that important 0:10:01.480 --> 0:10:03.760 battery metal and then turn it into something else? And 0:10:03.760 --> 0:10:07.040 then also how expensive is it as a virgin material? 0:10:07.200 --> 0:10:09.920 So can you just talk a little bit about what 0:10:10.120 --> 0:10:13.160 are the metals a in a battery? But be that 0:10:13.240 --> 0:10:17.240 these recyclers are most keen to get their hands on 0:10:17.360 --> 0:10:18.240 in this process. 0:10:18.600 --> 0:10:21.240 So the metals that there's three key metals that are 0:10:21.240 --> 0:10:23.880 most most sought after by the recycling companies, and that 0:10:24.040 --> 0:10:27.160 is lithium, cobolt, and nickel. It's due to what you're 0:10:27.200 --> 0:10:30.040 mentioning here the cost of these materials. They are key 0:10:30.160 --> 0:10:33.840 drivers into battery prices. And lithium, for example, recently, we 0:10:33.880 --> 0:10:36.400 saw very high prices a year or two ago and 0:10:36.440 --> 0:10:37.920 this has come down a bit. So this is not 0:10:37.960 --> 0:10:40.280 a great sign of your producing this material. But nickel 0:10:40.320 --> 0:10:42.480 and cobalt that prices are, yeah, they're still some of 0:10:42.480 --> 0:10:45.400 the more expensive materials going into batteries. And these are 0:10:45.440 --> 0:10:47.840 the three key things that There are other metals in batteries, 0:10:47.880 --> 0:10:50.880 as I mentioned earlier, there's copper, there's aluminium, there's iron 0:10:50.920 --> 0:10:53.360 as well, but the ones that most battery recycling companies 0:10:53.360 --> 0:10:56.439 are focusing on are lithium, cobolt, and nickel. And how 0:10:56.480 --> 0:10:59.160 much of the new demand that the recycled material can 0:10:59.400 --> 0:11:02.760 supply is very much due to changing battery chemistries. So 0:11:02.840 --> 0:11:05.800 we've seen recently LFP, lithium I and phosphate which doesn't 0:11:05.840 --> 0:11:08.959 contain nickel and cobalt become more popular, starting in China 0:11:09.000 --> 0:11:10.839 but also around the rest of the world. And this 0:11:11.040 --> 0:11:13.640 is meant that more nickel and cobalt supply can be 0:11:13.679 --> 0:11:16.880 met with recycled material relative to lithium because apart from 0:11:16.920 --> 0:11:19.160 sodium ion, which is a small and grown segment of 0:11:19.200 --> 0:11:21.840 the market, all of the batteries contain lithium that we're 0:11:21.840 --> 0:11:25.520 talking about here for electric vehicles and good scale projects. Therefore, 0:11:25.559 --> 0:11:28.840 this is very much a very key focus for recycling companies. 0:11:29.280 --> 0:11:31.280 So let's talk a little bit about the economics and 0:11:31.320 --> 0:11:35.679 battery recycling, because the companies need to be incentivized either 0:11:36.080 --> 0:11:39.480 by being able to make the batteries more cheaply or 0:11:39.679 --> 0:11:43.200 policy incentives So in this circumstance, what is it. Is 0:11:43.200 --> 0:11:45.319 it policy or is it economics that are driving these 0:11:45.320 --> 0:11:47.720 companies to really grow in this market. 0:11:47.920 --> 0:11:50.160 I think it depends in which region that we're looking at. 0:11:50.240 --> 0:11:53.199 In China, for example, there has been policy since twenty 0:11:53.360 --> 0:11:56.760 eighteen and there are mandates around collecting batteries at their 0:11:56.840 --> 0:11:59.280 end of life and once you collect that battery, how 0:11:59.360 --> 0:12:02.120 much of them materials inside that you recover when you 0:12:02.200 --> 0:12:04.560 recycle it. And this is very much driving the industry 0:12:04.720 --> 0:12:06.440 in China, and as I said, there is a lot 0:12:06.480 --> 0:12:08.720 of capacity there, but there's also a lot of material 0:12:08.760 --> 0:12:12.160 to recycle. Europe has a similar approach. Unfortunately, the incentives 0:12:12.160 --> 0:12:15.079 are coming slightly later, although because the electric vehicle market 0:12:15.080 --> 0:12:17.280 took off slightly later, and maybe this lines up quite 0:12:17.320 --> 0:12:19.400 well here. But yeah, starting in twenty twenty seven and 0:12:19.400 --> 0:12:22.760 twenty twenty eight, there are collection efficiency targets and recovery 0:12:22.840 --> 0:12:24.719 rate targets for sort of collecting the batteries at the 0:12:24.800 --> 0:12:26.360 end of life when they've been in a vehicle and 0:12:26.360 --> 0:12:29.320 then recycling those materials and getting them back out. In 0:12:29.360 --> 0:12:31.520 the US, which is the third region that we looked into, 0:12:31.559 --> 0:12:34.040 there are some benefits via the inflation Reduction Act for 0:12:34.080 --> 0:12:37.480 recycling material although not as significant as the benefits offered 0:12:37.480 --> 0:12:40.440 to producing new batteries and battery packs in the region. 0:12:40.800 --> 0:12:43.280 So, Andy, how does that actually work in practice? What 0:12:43.600 --> 0:12:47.280 part of the battery value chain does the policy target? 0:12:47.800 --> 0:12:51.200 So this is a really good question because the answer 0:12:51.240 --> 0:12:54.440 isn't straightforward. We don't really know at the minute, particularly 0:12:54.440 --> 0:12:56.480 with the policy in the EU. I've had a lot 0:12:56.520 --> 0:12:59.440 of questions from people that I've been working with and 0:12:59.480 --> 0:13:01.559 clients well around is it going to be on the 0:13:01.559 --> 0:13:03.560 battery manufacturer to do this? Is it going to be 0:13:03.559 --> 0:13:06.160 on the car company to do this? The E policy 0:13:06.240 --> 0:13:08.120 isn't clear on this, and we need to wait for 0:13:08.160 --> 0:13:11.240 policy to come. It's likely that it will be related 0:13:11.280 --> 0:13:14.360 to the car company. It makes more sense because they're 0:13:14.360 --> 0:13:17.319 closer to the consumer. However, they need to get the 0:13:17.400 --> 0:13:20.400 vehicle back from the customers who then own it, so 0:13:20.559 --> 0:13:22.560 the process here is not straightforward. 0:13:22.800 --> 0:13:25.520 I know they're using blockchain for some of the virgin 0:13:25.640 --> 0:13:28.000 materials that are being mined. Are they using any sort 0:13:28.040 --> 0:13:30.960 of solutions like that to actually track these batteries to 0:13:31.000 --> 0:13:33.000 make sure that they're getting them back and they are 0:13:33.240 --> 0:13:34.040 being recycled. 0:13:34.400 --> 0:13:37.360 So, again, this is a regional question. I'll start with 0:13:37.400 --> 0:13:40.600 the US because it's straightforward that they're not doing it. No. 0:13:41.360 --> 0:13:45.640 In China, there are requirements to trace and report batteries 0:13:45.760 --> 0:13:48.920 through the sort of manufacture, through their lifetime and seeing 0:13:48.920 --> 0:13:50.680 where they end up at their end of life. And 0:13:50.720 --> 0:13:53.080 then this is something that the EU is planning to 0:13:53.080 --> 0:13:55.960 do but isn't enforced yet. So in twenty twenty six 0:13:56.000 --> 0:13:57.800 this will be required in the EU as. 0:13:57.640 --> 0:14:00.520 Well in every market. For it to be viable on 0:14:00.559 --> 0:14:02.840 its own, from an economic standpoint, you need a bit 0:14:02.840 --> 0:14:05.960 of a supply and demand balance, and in this industry 0:14:06.040 --> 0:14:08.840 there is a bit of an imbalance when we think 0:14:08.920 --> 0:14:13.160 about the number of recycling facilities, in particular in China 0:14:13.200 --> 0:14:17.160 that are scheduled to be built, and with the forecast 0:14:17.240 --> 0:14:19.760 that you've done when looking at this report, are there 0:14:19.840 --> 0:14:23.040 going to be enough batteries to be recycled in order 0:14:23.120 --> 0:14:25.520 to meet this demand? And why or why not? 0:14:26.200 --> 0:14:29.800 There is a bit of an imbalance here. The material 0:14:29.840 --> 0:14:34.400 available to recycle from ESS and EV batteries is significantly 0:14:34.440 --> 0:14:37.800 lower than the capacity that's being built, particularly in the 0:14:37.840 --> 0:14:40.600 Asia Pacific region which is largely dominated by China. But 0:14:40.680 --> 0:14:43.200 also that there is capacity being built in Europe and 0:14:43.280 --> 0:14:45.840 North America. One of the reactions to this that we've 0:14:45.880 --> 0:14:49.720 seen is companies who have recycling facilities also looking to 0:14:49.760 --> 0:14:52.760 process primary material as well. Because some of the processes 0:14:52.760 --> 0:14:56.280 are quite similar, it's possible to process both primary and 0:14:56.400 --> 0:14:59.800 recycled material in some of the same facilities and some companies. 0:14:59.840 --> 0:15:01.760 So so if you're a company going as far as 0:15:01.800 --> 0:15:05.200 making precursor materials to make cathodes from, for example, and 0:15:05.240 --> 0:15:08.720 your recycling material which was maybe NMC sixty two to two, 0:15:08.920 --> 0:15:11.200 which was very popular a few years back, so six 0:15:11.360 --> 0:15:13.760 to two being the ratio of the metals, so sixty 0:15:13.760 --> 0:15:17.360 percent nickel, twenty percent cobalt, twenty percent manganese in the 0:15:17.360 --> 0:15:20.240 cathode there and customers now want NMC eight one to one, 0:15:20.240 --> 0:15:23.280 so eighty percent nickel, ten percent manganese, ten percent cobalt. 0:15:23.320 --> 0:15:26.560 The recycling companies are actually using primary material to add 0:15:26.640 --> 0:15:28.600 nickel to this ratio to make sure that they can 0:15:28.640 --> 0:15:30.680 give the customers what they want. So even in some 0:15:30.840 --> 0:15:34.240 inverted commas ideal scenarios, primary material is being added to 0:15:34.240 --> 0:15:36.440 the recycling mix. But that's also not to say that 0:15:36.480 --> 0:15:38.640 if there is too much capacity in the recycling world 0:15:38.640 --> 0:15:40.680 that some of this couldn't be used to process primary 0:15:40.680 --> 0:15:41.440 material as well. 0:15:41.640 --> 0:15:44.600 And also, what's the degree of overlap with consumer electronics 0:15:44.600 --> 0:15:46.280 which also rely on batteries. 0:15:46.640 --> 0:15:49.640 This is a really good question. So consumer electronics batteries 0:15:49.720 --> 0:15:52.880 are potentially harder to collect because there are many smaller batteries, 0:15:52.920 --> 0:15:55.280 but companies are also looking to process these as well. 0:15:55.280 --> 0:15:57.760 The analysis that we did in this report focuses on 0:15:58.000 --> 0:16:00.480 electric vehicle and energy storage projects, so that's not to 0:16:00.480 --> 0:16:03.280 say that consumer electronics batteries could also end up in 0:16:03.320 --> 0:16:06.240 the mix. However, there are lots of smaller batteries which 0:16:06.240 --> 0:16:07.960 are spread out more in the world. As it were, 0:16:08.120 --> 0:16:11.360 collecting one phone will give you a significantly smaller battery 0:16:11.440 --> 0:16:13.840 to recycle than collecting one car or even one grid 0:16:13.840 --> 0:16:17.040 scale energy storage project. And also the demand of electric 0:16:17.160 --> 0:16:19.720 vehicles and energy storage projects in the future will be 0:16:19.760 --> 0:16:22.320 significantly higher in the near term and then maybe in 0:16:22.360 --> 0:16:25.640 the near future. The consumer electronics market was a bigger 0:16:25.680 --> 0:16:28.160 percentage of global demand of batteries, but that's likely to 0:16:28.200 --> 0:16:29.800 be dwarfed in the very near future. 0:16:30.240 --> 0:16:33.680 So no manufacturing process is fully zero waste. I'm even 0:16:33.720 --> 0:16:35.920 thinking of right now in my mind, like when you're 0:16:35.920 --> 0:16:38.720 baking a apple pie, and you've got all of this 0:16:38.880 --> 0:16:41.360 kind of extra dough around the edge, and then you know, 0:16:41.400 --> 0:16:43.320 if you're my grandmother, you're going to turn it into 0:16:43.360 --> 0:16:45.280 something else and you're going to cover it with cinnamon sugar. 0:16:45.320 --> 0:16:49.160 But the reality is there's going to be some leftover 0:16:49.280 --> 0:16:53.800 materials and metals when it comes to battery manufacturing and 0:16:53.840 --> 0:16:56.360 then the process that goes into it. What happens to 0:16:56.400 --> 0:16:59.520 all of that leftover stuff, which I believe is referred 0:16:59.520 --> 0:17:01.000 to as reduction scrap. 0:17:01.480 --> 0:17:03.440 This is a really great question, and you're right. We 0:17:03.720 --> 0:17:05.800 refer to it in the research as production scrap, and 0:17:05.960 --> 0:17:08.520 this is just sort of one segment that we refer to. 0:17:08.600 --> 0:17:10.960 But actually within this there's loads of different things that 0:17:11.000 --> 0:17:13.679 this can mean. This can mean powders that sort of, 0:17:13.680 --> 0:17:16.240 as you say, maybe they don't make it into the 0:17:16.280 --> 0:17:18.879 apple pie as it were. This can be slurries that 0:17:18.920 --> 0:17:21.760 get left behind on equipment as well. This can be 0:17:21.880 --> 0:17:24.639 cathos which are then coated. But the offcuts of this, 0:17:24.640 --> 0:17:27.679 This can be batteries that get fully made but they 0:17:27.680 --> 0:17:30.080 don't pass the quality controls. So this can come in 0:17:30.119 --> 0:17:32.840 a number of different flavors, and in the near term 0:17:33.080 --> 0:17:35.200 we expect this to be a very significant share. I 0:17:35.240 --> 0:17:38.480 think in twenty twenty four, eighty percent of material available 0:17:38.480 --> 0:17:40.440 to a cycle is to come under this umbrella of 0:17:40.520 --> 0:17:43.400 production scrap due to the very rapid growth that we've 0:17:43.440 --> 0:17:46.360 seen over the past few years of battery demand, and 0:17:46.400 --> 0:17:49.120 that the longer lifetimes that we're seeing. The last time 0:17:49.119 --> 0:17:51.600 we did this analysis, the average lifetime of batteries was 0:17:51.640 --> 0:17:54.119 about two years less when you extend the lifetime of 0:17:54.160 --> 0:17:56.000 batteries in use, and then you have to go back 0:17:56.040 --> 0:17:58.520 another couple of years on that demand curve. So in 0:17:58.560 --> 0:18:01.080 twenty twenty four, if you're saying a ten year lifetime 0:18:01.160 --> 0:18:03.800 for a passenger EV, you're going back to twenty fourteen, 0:18:03.840 --> 0:18:05.840 and there weren't a lot of passenger evs on the 0:18:05.880 --> 0:18:08.159 road in twenty fourteen. Now, if you compare that to 0:18:08.359 --> 0:18:11.000 production scrap for new material, and in this work we 0:18:11.040 --> 0:18:14.000 assumed a ten percent rate of scrap coming off factories, 0:18:14.080 --> 0:18:16.119 this goes down to lower percentages, and we sort of 0:18:16.119 --> 0:18:18.600 split that out by regions, So regions like China where 0:18:18.600 --> 0:18:21.600 there's a more mature battery manufacturing industry getting down to 0:18:21.880 --> 0:18:24.800 lower percentages sooner. But even with a scrap rate of 0:18:24.880 --> 0:18:27.840 ten percent, which tapers off. Eighty percent of current material 0:18:27.840 --> 0:18:30.400 available to recycle is material that never made it into 0:18:30.440 --> 0:18:31.920 a functioning battery in the first place. 0:18:32.320 --> 0:18:35.080 So when we're talking about a potential supply and demand 0:18:35.080 --> 0:18:37.840 imbalance in the future when it comes to battery recycling, 0:18:37.880 --> 0:18:41.080 we need to be thinking more broadly about more than 0:18:41.280 --> 0:18:43.200 just the batteries that are at the end of life, 0:18:43.200 --> 0:18:45.480