China's 'New Three' / '新三样' (Part IV): A Second Life in the Circular Economy

In the previous articles, we deep dived into China’s “New Three” and the Battery and Photovoltaic Industries. But no matter whether we talk about energy storage, photovoltaic systems or Electric Vehicles, there is one key element that sustains all of these technologies: Batteries. Or more specifically, Lithium-ion Batteries (LIBs).

From their initial discovery in the 1970s through the awarding of the Nobel Prize in 2019, the use of lithium-ion batteries (LIBs) has increased exponentially. As the world has grown to love and depend on the power and convenience brought by LIBs, their manufacturing and disposal have increasingly become subjects of political and environmental concerns. World reserves of lithium, cobalt, and other metals are limited and unevenly distributed, while their mining is energy and labor intensive and creates considerable pollution. More than 70% of the world’s cobalt comes from Congo, with no other country producing more than 5%. China and Mozambique produce 70% of the world’s natural graphite, an important material for anodes. As a result, natural disasters, war, or resource allocation decisions may also change the availability of these materials.

Resource scarcity and supply are particularly important due to the short device lifetime, whether from design obsolescence, “upgrades” to newer smartphone models, or, quite often, the LIB nearing the end of its own life. By most accounts, most discarded LIBs eventually are landfilled or stockpiled, contaminating the land while wasting energy and non-renewable natural resources. With the explosive growth in EV numbers - by 2040, 58% of all cars sold worldwide are anticipated to be EVs - combined with the sheer sizes of their batteries (Tesla Model 3 Long Range’s battery contains 4416 cells and weighs 480 kg), significant LIB waste is and will be generated every year which, if not recycled and reused, will exert massive environmental impacts and accelerate the depletion of mineral reserves. Adding to the recycling difficulty, LIBs are complicated structures comprising one of five common cathodes, an anode, electrolyte, a separator, and current collectors along with packaging components. The International Energy Agency estimates that electric vehicles total amount of waste generated by 2040 could be as much as 8 million tons.

That poses the question, what are we to do with all these spent LIBs?

Repurpose, Reuse or Recycle

With the anticipated surge in battery demand, embracing the circular economy is critical for stakeholders across the value chain. However, selecting the best end-of-life solution requires careful consideration. Global demand for lithium-ion batteries is projected to grow 6x from 750 GWh in 2022 to over 4,500 GWh by 2030, primarily driven by battery electric vehicles (BEVs). By then, nearly half of all light vehicles sold will be electric, with commercial vehicles and stationary energy storage systems (ESS) also contributing to this demand. Producers must address the full lifecycle of batteries, including responsible disposal.

Not only that, a battery’s end-of-life depends on multiple factors, particularly its state of health (SoH), which can vary depending on its usage profile and design. Batteries have two lifetimes: cycle lifetime (the number of charge-discharge cycles) and calendar lifetime (age, regardless of usage). LFP cells tend to outlast NCM cells, while charging speed and temperature stress also accelerate wear. Consumer electronics typically last 500 cycles, EV batteries retain 70% capacity after 160,000 km, and ESS cells can last up to 20 years. Importantly, consumer tolerance for reduced SoH is a key factor in determining battery replacement or repurposing timelines.

So what options does that leave us with when considering End-Of-Life?

Three End-Of-Life Options

There are three options for a battery when it reaches the end of its lifespan:

1. Recycle the battery to recover valuable materials;
2. Extend the battery's lifetime by repurposing it for an alternative application;
3. Extend the battery's lifetime by reusing it for the same application after repairing, remanufacturing or refurbishing it;

Recycle, repurpose or reuse? Ultimately, there is no simple answer.

For consumers, repurposed batteries may offer cost and sustainability benefits, particularly if lifecycle emission pricing is introduced. But there are several elements to consider. The battery's design and chemistry must be suitable for the new application, while the batteries must be available in the right quantity to meet demand. Remaining SoH and charging cycles must also be sufficient for the new application.

Let’s look at each a bit more carefully and understand their pros and cons:

1. Recycling: Recycling aims to recover valuable raw materials like lithium, cobalt, nickel, and manganese from spent batteries. The process involves dismantling and extracting materials, which can be reused in the production of new batteries or other products. Recycling reduces the need for mining new materials, thus contributing to environmental sustainability and resource conservation;
2. Repurposing: Batteries that have reduced capacity but are still functional can be repurposed for less demanding applications, such as stationary energy storage systems. This process involves testing, reconfiguring, and adapting the batteries for new uses, effectively giving them a second life. Repurposing helps extend battery life and supports renewable energy by providing storage for solar or wind energy;
3. Disposal: When batteries are no longer fit for recycling or repurposing due to degradation or safety risks, they must be safely disposed of. Proper disposal ensures that hazardous materials within the batteries, such as heavy metals and toxic chemicals, do not leak into the environment. This option is typically a last resort when other options are not viable;

Both the purchase and repurposing cost of the used battery, as well as the cost per charging cycle, must be compared with new batteries specifically designed for the application. Vendors for repurposed batteries need to provide a sufficient warranty and ensure system safety.

For battery producers, recycling may offer greater benefits, depending on cell chemistry. The EU's extended producer responsibility – which came into force beginning of 2024 – means they are obligated to take back waste batteries. A producer may be able to recoup more by recycling valuable materials than by selling a battery for repurposing.

If OEMs or cell makers struggle to achieve minimum recycling content targets set by the EU for lithium, nickel and cobalt, and/or recycled materials are traded with a significant premium, then companies may focus on recycling even if a battery is still suitable for repurposing.

In the next chapters we will mainly focus on the recycling aspect since it is the most challenging one and even with repurposing, batteries will still require recycling at a later stage.

LIB Recycling Methods

Due to the complex structure and number of materials in LIBs, they must be subjected to a variety of processes prior to reuse/recycling. LIBs must be first classified and most often pretreated through discharge or inactivation, disassembly, and separation after which they can be subjected to direct recycling, pyrometallurgy, hydrometallurgy, or a combination of methods, as shown below:

• Direct methods, where the cathode material is removed for reuse or reconditioning, require disassembly of LIB to yield useful battery materials, while methods to renovate used batteries into new ones are also likely to require battery disassembly, since many of the failure mechanisms for LIB require replacement of battery components;
• Pyrometallurgy uses heating to convert metal oxides used in battery materials to metals or metal compounds. In reductive roasting (smelting), the battery materials (after pre-treatment) are heated under vacuum or inert atmosphere to convert the metal oxides to a mixed metal alloy containing (depending on the battery composition) cobalt, nickel, copper, iron, and slag containing lithium and aluminum. Pyrometallurgical methods require simpler pre-treatment methods (most often shredding or crushing) to prepare batteries for recycling and require fewer different methods to recycle LIB of differing compositions, shapes, and sizes. Lithium is recyclable by some pyrometallurgical methods, but the methods are most effective for particularly valuable metals such as cobalt;
• Hydrometallurgical methods use primarily aqueous solutions to extract and separate metals from LIBs. The pre-treated battery materials (with Al and Cu current collectors previously removed) are most often extracted with H2SO4 and H2O2, although HCl, HNO3, and organic acids including citric and oxalic acids are commonly used. Once metals have been extracted into solution, they are precipitated selectively as salts using pH variation or extracted using organic solvents containing extractants such as dialkyl phosphates or phosphinates;

In many cases, combinations of hydrometallurgical and pyrometallurgical methods are used to process lithium-ion batteries today.

From Trash to Treasure

To understand how recycling may be able to decrease the effects and costs of battery recycling, the materials used in batteries and their costs should be defined, and the cost of new materials and recycled materials compared. Mining and refining of virgin materials and recycling used materials for batteries exact environmental costs. As an example, 1 ton of virgin lithium requires 250 tons of ore or 750 tons of brine. While refining brine requires less energy than refining spodumene, it requires 18–24 months, yields lower grade lithium, and recovers less of the lithium present in brine than is recovered from ore. In addition, water use is a concern; 65% of the water in Chile (one of the major sources of lithium) is consumed by the mining industry.

Recycling also has environmental costs including transportation, preparation, and high energy use. Pyrometallurgical methods are implemented relatively simply, but incur environmental and significant energy costs for combustion and calcination of the batteries. While hydrometallurgical methods require less energy for processing than pyrometallurgical methods, many reagents are required and water must be purified afterward.

Given the costs of making batteries, recycling battery materials can make sense. If we use an example of 1,000,000 tons of batteries which could be recycled, 30,000 tons of aluminum, 70,000 tons of phosphorus, 90,000 tons of copper, 120,000 tons of cobalt, 150,000 tons of lithium, and 180,000 tons of iron could be recovered. These quantities can reduce the need to mine new materials and also allow countries to reduce their dependence on other countries for battery supplies. Not to mention the cost to mine them (or savings in recycling them).

Across the entire battery recycling value chain, from collection to metal recovery, revenues are expected to grow to more than USD 95 billion a year by 2040 globally, mainly driven by the price of the recovered metals, expected battery cell chemistry adoption, regionalization of supply chains. The value generated per ton of battery material could approach approximately USD 600 by as early as 2025. Going forward, value creation has potential to grow to similar levels to the primary metals industry (30% depending on price developments).

Battery recycling revenues are driven by the sales of recovered raw materials, which typically are composed of the raw materials price times the mass content per battery times the recovery rate for each metal in the battery. Today, automotive OEMs pay disposal companies to take scrap or end-of-life batteries, and ownership of the battery is entirely transferred. In the future, battery recyclers will likely shift to a tolling model in which the recycler charges a fee for the service of recycling the battery while the OEM maintains control over the recovered raw materials. Alternatively, OEMs may sell their battery scrap and spent batteries to recyclers for whom the value of raw materials is above the recycling cost plus margin.

In addition to the cost to procure the batteries to be recycled—the “feedstock”—there are more costs and operating decisions with significant impact on a recycler’s profitability:

• Collection and logistics: Transportation costs between collection point and processing plant including hazardous goods surcharge;
• Testing and disassembly: Labor and energy costs to test incoming batteries and disassemble modules before processing (some players plan to leapfrog this step by shredding the entire pack with no discharge, testing, and disassembly needed);
• Processing: Shredding, pyrometallurgical and hydrometallurgical processing, driven by reagents, labor, and energy;
• Capital expenditures for buildings and equipment;

A whole reverse supply chain will need to be set up to collect, test, and recycle batteries. And companies are pursuing a variety of business models to facilitate that.

An Outlook Of The Battery Recycling Ecosystem

Will we be reusing valuable materials to close production loops? Or will disparate policies make battery recycling next to impossible and financially prohibitive? Far from being a “wait and see” that requires public sector mandates, the private sector now has an opportunity to show up as responsible players in driving sustainable production practices and do what it does best: innovate in material development and scale technologies.

However, the materials used inside battery casings are both costly and finite. Metals used in the battery cathode such as cobalt, nickel, manganese and lithium can cost anywhere from USD 4 - 35 per kilogram. Without metal recovery, we could experience a supply deficit by the 2030s. While the barriers to recycling earth metals have historically included everything from inconsistent battery collection practices to concerns about explosion risks at recycling facilities to prohibitive processing costs, the reality is that advances in process and material innovation are steadily driving down recycling costs and improving lithium chemistries.

The value of recycling batteries extends beyond the cost of materials. For many countries, it’s also a matter of national security. China controls 90% of the EV battery material supply chain, so shoring up recycled materials and local supply chains can help entire countries withstand volatility. And make no mistake, demand for lithium-ion batteries is growing fast — and the pattern is not expected to change soon.

As we think about the value of recycling batteries, we should consider the costs of not doing so. Throwing away batteries wastes precious resources and expands the large carbon footprint created by continually processing virgin materials. In addition, there are both human and environmental costs to not recycling. For example, processing virgin ore to useful metals has an impact on water use, energy use and could impact the environment negatively. The overall virgin process has a higher carbon footprint than using recycled materials. In fact, when environmental and energy costs are taken into consideration, the cost of recycling is 10 times cheaper than manufacturing.

Battery Recycling Regulatory Environment

While the first lead-acid battery was recycled in 1912, today’s lithium-ion battery eclipses other battery chemistries. As the battery industry grows, governments across the globe are implementing regulations to ensure that battery recycling keeps pace with environmental and economic goals. These laws not only safeguard the environment from hazardous waste but also promote the recovery of valuable materials like lithium, cobalt, and nickel.

Below are examples of how different regions are shaping the regulatory landscape to support battery recycling.

• European Union

The EU Battery Directive (currently being updated) is one of the most advanced frameworks worldwide. It mandates that manufacturers take responsibility for the collection, recycling, and proper disposal of all batteries placed on the market, ensuring compliance with end-of-life management. It is a legislative initiative and part of the European Green Deal, a package of proposals by the European Commission to modernise the economy and transform climate, energy, transportation, environment and fiscal policies with the objective of reducing net greenhouse gas emissions by at least 55% compared to 1990 levels by 2030 and reaching climate neutrality by 2050.

The new EU Battery Regulation, expected to be implemented by 2025, sets specific targets for recycled content in new batteries: 12% for cobalt, 85% for lead, 4% for lithium, and 4% for nickel by 2030. Producers must also ensure that end-of-life batteries are safely collected and recycled, establishing a controlled recycling market.

One of the more well-known efforts is the Battery Passport in Europe. This global reporting framework governs the rules around measurement, auditing, and reporting of environmental, social and governance (ESG) parameters across the battery value chain.? It evolved from the Circular Economy Initiative Germany and had 11 consortium partners from industries across science, technology, and more. This three-year project started in 2022 and is expected to enter the first quarter of 2025.

• United States

In the U.S., regulations vary by state, with the Battery Act (1996) providing a federal foundation. The act primarily addresses the disposal of household and rechargeable batteries but doesn't cover large-format batteries used in electric vehicles (EVs) or energy storage systems. However, recent federal incentives, such as the Inflation Reduction Act (2022), provide tax credits for the use of recycled battery materials. The National Blueprint for Lithium Batteries (2021-2030) also highlights the strategic importance of battery recycling, aiming to reduce dependency on foreign critical materials and supporting a growing domestic recycling industry. Individual states like California are spearheading their own legislation, such as the California Battery Recycling Act, mandating producer responsibility and improving collection systems for recycling.

Another notable legislative body of work was the Inflation Reduction Act (IRA), passed into law in August 2022 in the United States. The purpose of the IRA was to attempt to de-risk investments into the battery supply chain, grow critical value-added areas, and reduce the reliance on foreign sources of critical minerals and battery processing.

The IRA took monumental steps forward in the United States’ approach to sustainable content by placing new guidelines regarding battery requirements over the next decade.? In contrast, the EU Battery Regulation will mandate comprehensive content requirements, including carbon footprint tracking, battery materials and composition reporting, circularity and resource efficiency information, and more to move toward a circular economy.

• China

China, being the largest producer and consumer of batteries, has implemented extensive regulations to manage battery waste. The 2018 Extended Producer Responsibility (EPR) law mandates that manufacturers are responsible for the collection and recycling of spent batteries. This law is complemented by government incentives aimed at promoting recycling technologies. Additionally, China's Circular Economy Promotion Law supports the recycling industry by providing subsidies to companies that process battery waste. The government’s active involvement has created advanced recycling facilities and encouraged partnerships between recyclers and battery manufacturers, making China a global leader in battery recycling.

• Japan

Japan has also developed a comprehensive framework for battery recycling through its Home Appliance Recycling Law and Small Rechargeable Battery Recycling Law. These laws enforce producer responsibility, ensuring that companies are accountable for collecting and recycling used batteries. In addition to mandatory recycling, Japan offers financial incentives to battery manufacturers and recyclers, encouraging technological advancements. The government's focus on reducing resource dependency has prompted significant research and development in recycling methods, especially for lithium-ion batteries used in electric vehicles.

• India

India, though still developing its battery recycling infrastructure, is making strides through its Battery Waste Management Rules (2020). These rules introduce producer responsibility for the collection and recycling of batteries, particularly targeting the growing use of lithium-ion batteries in EVs. India’s Ministry of Environment, Forest, and Climate Change is working on a comprehensive plan to establish nationwide recycling networks, supported by both public and private sectors, to ensure that end-of-life batteries are efficiently processed.

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A Closer Look at the EU Battery Regulation and Battery Passport

Beginning June 2023, the European Battery Regulation will be gradually replacing Directive 2006/66/EC. It will be implemented in all the member countries simultaneously for the common purpose of minimizing the harmful effects of batteries on the environment.

For the first time, the new requirements will cover the entire lithium battery life cycle (from extraction of the raw material to production, design, labelling, traceability, collection, recycling and reuse). Batteries will be divided into the following groups, depending on the application for which they are designed:

• Portable and sealed batteries weighing 5 kg or less;
• Portable batteries for general use, rechargeable and non-rechargeable;
• LMT (light means of transport) batteries, sealed and weighing 25 kg or less;
• SLI (start, light and ignition) batteries for automotive use;
• EV batteries, designed to provide power for traction of hybrid or electric vehicles;
• Industrial batteries and all other batteries weighing over 5 kg not for use on vehicles or light means of transport.

To ensure the European battery value chain is controlled and has increasingly less impact on the environment, the new European Battery Regulation sets a number of general provisions covering from the technical documentation on the battery, to a precise Environmental Footprint declaration for the accumulators, all the way to the battery recycling policy.

• Documentation: The European Battery Passport

Beginning May 2026, batteries above 2kWh placed in the Union market will be required to be electronically registered. This will be in the form of a Battery Passport carrying an identification QR Code and CE label that will ensure compliance with the safety and traceability requirements of the new European Battery Regulation.

Both the Battery Passport and its related QR Code will cease to exist when the battery is recycled, basically because these documents follow the life cycle of their related battery.

• BMS: The Battery’s Health Indicator

To enable the Battery Passport to draw updated information about the health of the batteries and the expected life of each accumulation system to which it is associated, the new proposed European Battery Regulation states that, since May 2024, every battery must be equipped with a BMS (Battery Management System). In addition to performing cell balancing, which increases the battery’s lifespan, a BMS can estimate the battery’s State of Charge (SOC) and State of Health (SOH) from the battery’s voltage and current values.

It also states that the information provided by the BMS must be accessible to the natural or juridical person that legally purchased the battery or to third parties.

• Carbon Footprint: The Battery’s Environmental Impact

In order to assess the carbon footprint of batteries, calculated through the product’s LCA (Life Cycle Assessment), and identify the potential for improvement, the EU Battery Regulation introduced a number of rules and methods for quantifying the Carbon Footprint, the parameter used to estimate the total direct and indirect greenhouse gas emissions generated across the entire battery value chain. It begins with the origin of the raw materials and their extraction, takes into account their transport and processing, and also maps out the global impact of post-production activities (distribution, usage stages, repair, replacement, and possible disposal or reuse and recovery in other production processes, when the battery reaches the end of its service life).

All parties involved along the supply chain all the way to the battery manufacturer’s quality system are going to be called upon to calculate the product’s carbon footprint, which will be assessed together with an independent body that will certify the accuracy of the information.

• Recycling and Recovery of End-of-Life Batteries

The European Battery Regulation has also set out end-of-life requirements, including targets and obligations regarding material and waste battery recovery by manufacturers. To indicate the provisions on their recycling, batteries will be required to carry the crossed-out waste bin symbol from May 2025. This points out that they may not be discarded as unsorted municipal waste but, instead, must be collected separately as WEEE (waste electrical and electronic equipment) by specialized centers.

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Moreover, to compensate for the mineral shortage by partly reducing supplies from mineral deposits in favor of secondary sources and avoid as a consequence the carbon dioxide emissions that would result from their transport, the regulation sets the required minimum percentage amount of minerals coming from recycling that batteries in several categories must contain. As soon as May 2028, industrial, electric vehicle and automotive batteries must come with documentation reporting the amount of elements from secondary raw materials.

The German Batteries Act (Batteriegesetz, BattG)

The German Batteries Act (Batteriegesetz, BattG) transposes the European Batteries Directive of 2006 on the marketing, return and sustainable disposal of batteries and accumulators into German law. Each EU country has its own batteries legislation, and the BattG is the German law that replaced the previous Battery Regulation (Batterieverordnung, BattV) in 2009. It was extensively revised in 2021.

The main change is the introduction of an obligation for manufacturers and retailers to register: Since 1 January 2021, anyone wishing to place batteries on the German market must register with stiftung elektro-altger?te register (stiftung ear). This registration requirement replaces the previous obligation to report market participation to the German Federal Environmental Agency (Umweltbundesamt, UBA), and it applies to:

• Anyone who commercially places batteries on the German market;
• This could be a battery manufacturer, a trader importing batteries, or a company shipping batteries to Germany from abroad;
• A distributor or an intermediary of batteries is also considered to be a manufacturer within the meaning of the Batteries Act, if the original initial distributor or its authorised representative has not (properly) registered;

In principle, as an initial distributor, manufacturers must ensure that all types of batteries are taken back and properly disposed of. This includes non-rechargeable (primary) batteries, rechargeable (secondary) batteries (or accumulators), irrespective of whether or not they are device-integrated – unless an exemption applies. Here are the three main types to consider:

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Obligations applicable to Portable Batteries?

• Registering with ‘Stiftung Ear’: Manufacturers, importers and – in some cases – foreign suppliers are obliged to register with the stiftung ear battery register before offering batteries or accumulators for sale in Germany, or placing them on the German market. stiftung ear provides them with the registration number required for distribution and registration with a take-back scheme;
• Joining a take-back scheme for portable batteries: All portable batteries must be taken back through a national take-back scheme.
• Reporting Obligation: Producers are obliged to regularly report the number of batteries and accumulators placed on the market in Germany. The report on the number of portable batteries placed on the market must be submitted to both stiftung ear and the take-back scheme in question;
• Labeling Obligation: Batteries and accumulators must be properly labelled. Producers and distributors are obliged to provide mandatory information to end users. Batteries containing hazardous substances are subject to special labelling requirements, or a ban if certain thresholds are exceeded.
• Obligation to Provide Information: The German Batteries Act provides for different information obligations for each of the parties involved:

o?? Distributors of portable batteries, for example, must inform consumers that the batteries can be returned to a retailer free of charge. They must also inform final consumers of their obligation to return used batteries.

o?? Producers are also obliged to provide information on waste prevention in relation to used batteries and accumulators. They must explain the possible effects of the substances contained in batteries and accumulators on people and the environment.

o?? Take-back schemes are obliged to inform end users about how to properly dispose of used portable batteries, and to explain the reasoning behind the separate collection of portable batteries. These schemes meet this obligation by informing about the proper disposal of used batteries and accumulators via the website www.batterie-zurueck.de

With regulatory frameworks solidifying across key regions, and the European Union and Germany leading the standards, the battery recycling industry is on the brink of tremendous growth. The convergence of government mandates, technological advancements, and increasing battery demand has created a fertile ground for market expansion. In the next chapter, we will dive into the battery recycling market potential, exploring the economic opportunities it presents, the innovations reshaping the recycling process, and the emerging players leading this industry. This presents a unique chance for businesses to leverage both sustainability trends and regulatory requirements for long-term profitability.

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Battery Recycling Market

The battery recycling market is set to see substantial growth post-2030, primarily fueled by the light EV battery market transitioning from reuse to recycling.

In absolute terms, the Battery Recycling Market size was worth USD 23 billion in 2023 and is predicted to reach a valuation of USD 42 billion by 2031 at a CAGR of around 7.94%.

The Asia Pacific region dominated the battery recycling market due to numerous measures taken by countries like China, Japan, and India to increase the use of electric vehicles (EVs). The push to lower carbon emissions has led to growth in the EV and renewable energy markets, resulting in increased demand for storing generated electricity in various types of batteries, and therefore, a need for recycling used batteries. Asia Pacific also dominated the market in terms of revenue.

In 2023, more than 8.5 million EVs were sold in the region, and China was the largest battery recycling country in the Asia Pacific, as well as globally. China has a battery recycling capacity of more than 500,000 metric tons, accounting for over 70% of Asia Pacific's recycling capacity. The dominant factors in the region's leadership of the battery recycling market are its growing population and rising demand for EVs and electricity storage.

In China, Europe, and the United States, which are all undergoing a large EV transition, most of the battery material suitable for recycling still comes from consumer electronics cells, such as those in laptops and other household items, and cell manufacturing scrap generated from faulty batteries that don’t pass quality control.

With cell manufacturing scrap being as high as 30% when a new battery factory launches, a significant source of volume for recycling evolves in markets where EV battery manufacturing is kicking into high gear. In markets where EV adoption has been pervasive for some time, such as China, end-of-life EV batteries represent a greater volume. Yet, globally, production scrap will likely remain the primary source of battery materials for recycling until 2030, when end-of-life EV battery volumes will have grown to the point of overtaking.

Factors Driving Battery Recycling

• Technological progress as processes scale and mature is enabling higher recovery rates, lowering greenhouse-gas footprints, and improving economics. In addition, research and innovation project grants from governments are promoting recycling technology advancement – e.g. EU’s European Battery Alliance and the United States’ National Science Foundation Phase II Small Business Innovation Research grants;
• Supply-chain stability considerations are being prioritized by various automotive OEMs and cell producers who are looking to secure local (recycled) raw material volumes at stable prices. For instance, VW has entered into a partnership with Redwood Materials in the US, and GM with Li-Cycle and Cirba Solutions;
• Decarbonization and ethical supply-chain targets set by automotive OEMs lead to a preference for recycled battery materials over newly mined battery materials, given the former is characterized by about four times lower carbon emissions, resulting in a more than 25% lower carbon-emissions footprint per kilowatt-hour (kWh) of battery cell capacity produced. Furthermore, sourcing from recyclers domestically avoids creating primary demand for raw materials sourced from conflict regions or extracted using child labor, or both;
• Regulatory incentives are creating conducive conditions for local recycling, such as the US Inflation Reduction Act 2022 that allows recycled battery materials (for example, lithium, cobalt, and nickel) to qualify for significant tax credits available through the domestic materials clause, even if those materials were not originally mined in the United States or in countries with which the United States has free-trade agreements;
• Regulatory pressure is further encouraging organizations to recycle. The EU, for example, has instituted its End-of-Life Vehicles Directive that mandates automotive OEMs to take back vehicle owners’ end-of-life batteries. The EU’s Fit for 55 package has further promoted OEM interest in recycling by requiring the publication of battery carbon footprints, as well as by setting collection and recycling targets including minimum recycled content requirements for newly built batteries;

Overview of Battery Recycling in Europe

Resource availability and environmental impact play a key role in lithium-ion battery (LIB) production. To minimize environmental impacts (such as carbon footprint) and reduce dependency on imported raw materials, recycling of LIB plays a central role for Europe. The recycling technologies used have steadily evolved in recent years, and in perspective allow overall recovery rates of more than 90%.

With the rapidly growing sales of electric cars, electrically powered trucks, stationary storage as well as batteries in numerous other applications, a strongly increasing demand for the recycling of LIB can be expected in the foreseeable future. While so far the majority of LIB recycling capacity is located in East Asia, especially in China, capacity for LIB recycling is currently also being built in Europe.

The particularly high number of recycling sites in Central Europe is striking. This is often due to proximity to battery material producers, battery cell manufacturers or automotive manufacturers. In the coming years, however, countries such as Spain and the UK will also increase their capacities and thus diversify the project situation in Europe.

?The recycling sites can be divided into "spokes" and "hubs" according to recycling depth - i.e. depending on what the input and output materials of the recycling process are (designations adapted from Li-Cycle). Spokes are capable of performing the first steps of battery recycling. In this process, spent batteries are discharged, disassembled and mechanically processed into the so-called ‘black mass’. This includes the cathode and anode active materials, which contain most of the valuable metals.

Hubs can also perform the second stage of battery recycling. Here, the black mass is refined using (electro)chemical hydrometallurgical processes or a polymetallurgical approach, allowing valuable materials such as cobalt, nickel and lithium to be recovered. In Europe, just under half of the sites are hubs with the capability to recover battery raw materials.

Spokes are located decentrally for optimal logistics, while hubs can be established centrally for black mass processing. This is partly due to the fact that the transport of lithium-ion batteries to Spokes is classified as a dangerous goods transport. As a result, the arrangements for transport are more complex and cost-intensive than for black mass.

In the EU, with the announced new plants and expansions alone, capacities are expected to reach 400,000 t/a in 2025 (4x increase compared to 2020). A comparison of the planned recycling capacities with the projected return volumes of recycled batteries and production rejects indicates that the planned capacities will exceed demand in the coming years.

The high market dynamics in the European region are driven, among other things, by the establishment of battery cell production sites: This is because, particularly during the ramp-up phase, but also during ongoing operations, relevant quantities of production scrap are generated that have to be recycled. For example, the high density of recycling facilities in the eastern German region can be explained by the battery cell production facilities of Tesla, Microvast and Farasis. In addition, SungEel HighTech is installing its new recycling plant to recycle production rejects not far from LG Chem's cell manufacturing facility in Wroclaw, Poland.

When analyzing the origins of the plant operators, the large number of European companies stands out. In recent years, they have been able to hold their own against foreign competition with new sites and plant expansions. Currently, around 30 % of the capacity in Europe is processed by Asian and American recyclers. SungEel from South Korea and the American Ecobat operate the largest plants.

Overall, however, the current size ratios are expected to remain, as Asian companies are also looking to increase capacity in the coming years through expansions (SungEel in Germany, Poland, and Hungary) and new builds (EcoNiLi entering in Spain).

The LIB recycling plants identified are operated by many different companies. Among them are larger corporations such as Erlos (a spin-off of WP Holding) and BASF, as well as joint ventures such as Primobius GmbH (between Neometals Ltd. and SMS Group GmbH). Some companies are already active in the battery industry or are established recyclers of lithium-ion batteries (e.g., Stena Recycling, Accurec, Redux and TES). In addition, OEMs such as Mercedes-Benz and Volkswagen have also established initial sites in Kuppenheim and Salzgitter. Furthermore, Renault with Veolia, Honda with Snam, Audi with Umicore and Volvo with Stena Recycling are also participating in LIB recycling through joint ventures and partnerships, although most of these are still pilot projects. In addition, leading cell manufacturers and material producers such as Northvolt and Umicore have entered the competition for battery recycling in Europe.

There are also start-ups in the corporate landscape. However, these are currently responsible for a negligible share of recycling capacity. Nevertheless, several companies such as Cylib or Tozero Recycling have been founded in recent years and have brought new processes and procedures to the market. For example, the lack of a network to other players in the value chain (e.g., collection, logistics, battery production) proves to be a barrier to market entry. Established players have an advantage here, e.g., through existing contracts with cell manufacturers for the acceptance of production rejects or established processes in logistics.

Conclusions and Recommendations for Success in LIB Recycling Markets

While the battery recycling market is growing fast, it’s still far from maturity, and market leadership is not yet consolidated. The European market alone has seen over 40 battery recycling related announcements. A similar pattern is emerging in the United States. Even in China, where the recycling market is more mature due to the larger availability of end-of-life batteries and production scrap, top players only control up to 15% of the market.

Here are three key levers that battery recyclers could adopt to keep or gain an edge in the battery-recycling market:

1. Secure sufficient access to feedstock: Battery recyclers need to secure large-enough volume to generate meaningful short-term scale with the potential for growth in the longer term. This can take the form of contracts with battery-cell producers for production scrap, as well as contracts with OEMs for future volumes of end-of-life battery packs;
2. Build partnerships to stretch along the recycling value chain: Battery recyclers that are not already vertically integrated could explore building cross-value-chain ecosystems so that they are able to offer more attractive, end-to-end solutions to automotive OEMs;
3. Invest in technological performance, and keep a pulse on battery design trends: OEMs are making their recycling selection based on demonstrated material recovery rates, product quality, and process efficiency, therefore investing in the technological pathways that can provide superior performance will be essential. That said, EV batteries are far from the point of standardization, so technology investments should be calibrated by close engagement with the R&D teams of the OEMs with which the recycler is collaborating or looking to collaborate. Exchanging information about planned changes to battery chemistry and pack design that OEMs may be considering, and about the resource intensity of the various steps of the recycling process, for instance, could pave the way for technical and design decisions that make it simpler, and even more profitable, for batteries to be recycled. “Design for sustainability” requires effort to coordinate across the value chain and develop a refined understanding of processes outside of the recycler’s direct scope, but can strengthen partnerships and supply chains significantly;

As the battery market continues to expand, recycling trends and sustainability initiatives will become critical for ensuring long-term success. Companies must remain vigilant, seizing the opportunities presented by evolving regulations and market demands. Investing in recycling technology, forming strategic partnerships, and staying informed about industry shifts will not only mitigate environmental impacts but also create new business prospects.

Now is the time for stakeholders to act, aligning their operations with circular economy principles to unlock sustainable growth, protect resources, and drive profitability in the rapidly evolving battery landscape.

#China #ChinaNewThree #NewThree #新三样 #XinSanYang #SolarPower #Photovoltaic #SolarPanels #SolarCells #ElectricVehicles #EV #NewEnergyVehicles #NEV #LithiumBatteries #Lithium-ion #Li-ion #Battery #EnergyStorageSystems #ESS #RMBMoreira

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