4 ways policymakers can bridge the battery industry's cooperation gap
Critical minerals like lithium, used in the lithium-ion battery of the electric vehicle, are fundamental to the energy transition. Image: REUTERS/Claudia Morales
- The global battery industry for electric vehicles and energy storage needs to grow 17-fold by 2030.
- In a sector increasingly marred by geostrategic competition, siloed policymaking risks increasing costs along the value chain, slowing electric vehicle adoption.
- The Global Battery Alliance is working to convene stakeholders to facilitate collaboration and collective action across the value chain.
To meet COP28 targets of tripling renewable energy capacity by 2030, we need the global battery industry for electric vehicles and energy storage to grow 17-fold by 2030. In that effort, we need more international cooperation to address the supply, financing and sustainability gaps in critical battery minerals.
The pace and scale of battery growth is unprecedented, and several gaps need to be urgently addressed. First, the supply gap for critical battery minerals like cobalt, copper, graphite, lithium, nickel and others needs to be closed. Second, the gap to finance the ramp-up of production, recycling and diversification of these supply chains needs to be bridged. Third, the social, environmental and governance (ESG) impacts along the value chain must be managed to avoid creation of a sustainability gap.
The Global Battery Alliance was created at the World Economic Forum in 2017 to do exactly that: bring together the various stakeholders committed to developing a sustainable, circular and responsible battery value chain by 2030. However, today, in a sector increasingly marred by geostrategic competition, we are seeing another gap widen quickly — a cooperation gap. Siloed policymaking risks increasing costs along the value chain, slowing electric vehicle adoption and ultimately impeding sustainable scaling of the battery industry.
4 ways to close the battery cooperation gap
To address this cooperation gap, the Global Battery Alliance consulted with the wider battery ecosystem on recommendations for priority actions for policymakers, identifying opportunities for cooperation and consensus across four key areas:
1. Improve transparency, trust and joint responsibility for sustainability of batteries through harmonized approaches to ESG performance, due diligence and traceability.
The proliferation of due diligence regulations and voluntary standards, driven by policy and markets in consumer jurisdictions is top of mind of stakeholders. It reflects the growing importance of sustainability, but navigating this landscape is proving challenging for companies, their supply chains and users of resulting information. The EU’s spearheading Batteries Regulation and evolving frameworks in US, China, Japan and others present an opportunity to harmonize approaches to traceability and ESG performance through common methodologies for ESG and due diligence reporting, data collection and verification of the supply chain.
In this context, policymakers in mineral-producing and midstream countries must have a stronger voice in shaping ESG and due diligence standards. Supporting responsible sourcing of critical minerals from artisanal and small-scale into global battery value chains can spread the socio-economic benefits of the energy transition and open new sources of supply of critical minerals, alongside large-scale mining.
2. Urgently adapt and create global regulatory frameworks for circular critical minerals value chains and reducing the material footprint of batteries.
Stakeholders stress the urgency of tackling the harmonization of rules of safe collection, storage, transportation and trade of end-of-life batteries head-on before EV batteries reach end of life at scale.
Policymakers need to adapt existing or develop new regulations and standards to advance circularity, secondary supply and resource-efficient battery use and design. They can harmonize regulations and standards to facilitate trade and transparent pricing of secondary materials, for example by developing a taxonomy for black mass. At the same time, they create economic opportunities around the end-of-life. But to achieve a step-change on sustainable battery value chains, policymakers must also facilitate greater consensus on measures to improve material efficiency of batteries via innovation on battery chemistries, “rightsizing” of batteries and behavioural incentives.
3. Channel financing to sustainable scaling of critical battery minerals value chains, especially to diversifying refining and processing capacity, via innovative and coordinated action.
A clear priority is the need to channel financing to refining and processing of minerals, where supply chains are most concentrated. Mineral producing countries can benefit from the opportunity of increasing demand by cooperating regionally to pool resources and overcome competition for investment in refining capacity.
Policymakers in consumer and producer countries can use strategic partnerships to share expectations for and build capacity on sustainable practices. Policymakers and public finance institutions can create incentives for sourcing the most sustainable minerals via “green premiums”. They can amplify the demand signal by educating end consumers via sustainability ratings for EVs, based on credible information, such as the GBA Battery Passport ESG score which seeks to establish a marketplace for sustainable products by independently benchmarking and validating sustainability performance.
4. Adopt the social and environmental license to operate as a principle underpinning critical minerals projects and build capacity of policymakers and investors in new mining jurisdictions.
It is urgent to ensure that new mining and investor nations and industry actors, such as Original Equipment Manufacturers with direct stakes, also implement high ESG standards, supported by effective regulation and capacity building. Stakeholder consultation, including the principles of free, prior and informed consent to obtain acceptance for mining and refining, is critical especially when engaging with Indigenous peoples. Preventing, mitigating and remedying risks of child or forced labour, poor working conditions and for providing grievance and compensation where necessary, are high on the agenda.
Policymakers can mitigate environmental impacts by adopting no net loss to the environment as minimum criteria for projects and by striving toward nature positive outcomes. A key focus for policymakers across jurisdictions is to effectively reduce the battery carbon footprint. Last but not least, addressing governance challenges such as corruption risks in permitting and licensing processes is top of investors’, international institutions’ and non-governmental organizations’ agendas, and warrants more attention across the value chain.
What’s next?
The Global Battery Alliance convenes a Critical Minerals Advisory Group to leverage these insights for dialogue with policy makers and evolve these recommendations into concrete action. In parallel, the Global Battery Alliance’s flagship initiative, the Battery Passport, will continue establishing globally harmonized sustainability performance expectations including continued piloting to establish a first version of the ESG score. In this way we will continue demonstrating that harmonization, collaboration and interoperability are not only desirable but also achievable.
For more information: https://www.globalbattery.org/publications/
Kaisa Toroskainen, GBA programme manager contributed to this piece. Levin Sources conducted supporting research.
Don't miss any update on this topic
Create a free account and access your personalized content collection with our latest publications and analyses.
License and Republishing
World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.
The views expressed in this article are those of the author alone and not the World Economic Forum.
The Agenda Weekly
A weekly update of the most important issues driving the global agenda
You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.
More on Energy TransitionSee all
Amy Brachio
December 13, 2024