An important component in the transition to a low-carbon economy.
Batteries are assemblies of electrochemical cells that are interconnected to be discharged by supplying an electrical current or charged as an electrical current passes between the cathodes and anodes in the cells through the electrolyte that surrounds them.
Rechargeable batteries are used in industrial and electrical applications in a wide variety of functions worldwide. Smaller batteries are extensively used for information and communications technology and consumer electronics applications. The global effort to curb greenhouse gas emissions has stimulated a trend towards the electrification of energy systems and advanced the development of batteries for energy storage and delivery in transport and electrical distribution systems. Use of batteries for electric mobility is expected to grow fourteen-fold by 2030. Further, recent research shows how the electric vehicle (EV) market continues to require larger batteries as consumer preferences favour larger EVs and predicts that demand for critical raw materials that are essential particularly in EV batteries is expected to more than triple by the end of the decade. At the same time, disruptive innovation in EV battery development has been a mainstay of the sector in recent years. Rapid substitution of materials for greater efficiency and constant design optimisation result in significant uncertainty over the specific materials that will be in demand for batteries in the short-term future.
Nonetheless, lithium, nickel, and cobalt are key constituent materials for lithium-ion batteries. Significant ESG risks are associated with extraction of these materials in the Democratic Republic of the Congo, Indonesia, and the Philippines. Further, market concentration for the lithium-ion battery supply chain is notable. Whereas the push to secure supplies of critical minerals has encouraged major EV manufacturers to invest upstream in extraction, refining capacity for constituent materials remains considerably concentrated in China. Approximately 75% of cobalt refining was carried out in China in 2022 and some two-thirds of lithium processing also takes place in China.
Finally, the management of lithium-ion batteries at end-of-life is also associated with ESG issues. Some recycling plants have been established in China, South Korea, and Belgium but the processes are still being optimised.
The use of lead batteries (automotive and back-up power supplies) has been established for more than 100 years. Recycling systems are well established, but these systems are informal in many parts of the world with significant ESG risks. Further, mining and processing lead requires effective environmental and safety systems to be deployed.
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