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27/02/2024
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Implementing ‘Battery Passports’ for Environmental Sustainability, Decarbonization, and Mining Labor Rights Assurance

With battery production taking off, concerns are focussed on environmental sustainability, carbon footprint and labour rights where the raw materials are mined. Benedikt Sobotka, Co-Chair at the Global Battery Alliance and Robin Zeng, CEO at Chinese manufacturer Contemporary Amperex Technology, writing for WEF, describe the concept of the digital “battery passport” where compliance with the rules is certified and monitored throughout the life cycle of each battery, pioneered by the Global Battery Alliance and supported by its members. It’s complex because value chains are intricate webs of interdependencies, span numerous countries and involve multiple stakeholders.

The list of critical raw minerals are headed by cobalt, copper and lithium. Growth is rapid: the entire lithium-ion battery chain is set to grow by over 30% annually, reaching a value of over $400bn by 2030. Success requires the backing of governments (setting, monitoring and enforcing the rules), industry (implementation, and demanding their suppliers and partners comply), and civil society (advocacy), explain the authors. Pilots were launched at the beginning of this year, and the EU has made a battery passport a mandatory requirement from early 2027.

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Rapidly rising electric car sales

The global battery industry is undergoing a significant transformation, driven by increasing demand for batteries and electric vehicles (EVs).

We are already witnessing a booming demand for EVs across consumer markets. In fact, forecasts suggest that no less than 18% of all car sales could be electric this year – up from 13% in 2022, and more than double their 9% penetration in 2021.

This means that EVs could account for almost one in every five cars sold globally in 2023, after worldwide sales passed the 10 million mark last year.

Whilst this is a welcome shift towards clean transport, and clearly points to rising public support for e-mobility, it also underscores the urgency of establishing more sustainable, transparent and robust battery value chains.

Responsibly sourcing the key minerals

The critical imperative for all of us, as an industry and as a society, is to understand the importance of responsibly sourcing the key minerals that will power the mass EV transition to, as well as ensuring their responsible use throughout the value chain.

Initiatives like the Global Battery Alliance’s (GBA) battery passport can and must play a role in shaping the future of sustainable battery use.

Complexity of battery value chains

Battery value chains are intricate webs of interdependencies, spanning numerous countries and involving multiple stakeholders.

The process of mining and refining raw materials, manufacturing cell components and cells, producing battery packs, and assembling the EV means that the materials in each battery have often travelled thousands of miles – from Australia to China to the US – before finding their place in an EV. And after their vehicle lifecycle ends, the same battery and materials find their way to second-tier uses.

A report by McKinsey and the GBA – an alliance which brings together more than 140 industry majors, financial institutions, NGOs, governments, and academics, based on the idea of developing and assuring a sustainable global battery value chain – predicts that the entire lithium-ion battery chain could grow by over 30% annually from 2022 to 2030, reaching a value of over $400 billion by 2030.

This demonstrates the scale of growth and the need to address the challenges posed by the complexity of battery value chains.

Critical raw minerals like cobalt, copper and lithium continue to play a crucial role in the battery market. Demand for cobalt and copper is projected to remain strong, particularly for medium and premium class vehicles.

Cobalt-based battery chemistries typically provide the best performance quality, driving up demand. However, cobalt’s production is often associated with issues such as child labour – particularly in the Democratic Republic of Congo (DRC), which supplies about 70% of the world’s cobalt and almost all battery-grade cobalt, with an estimated 40,000 children working in its artisanal mines.

Responsible sourcing of battery materials

As a battery material supplier and manufacturer respectively, Eurasian Resources Group (ERG) and Contemporary Amperex Technology Co. Limited (CATL) are acutely aware of the need for responsible sourcing and manufacturing, and ensuring higher socio-environmental standards in the production of batteries and their component materials.

For example, ERG’s Metalkol production facility in the DRC is making headway in this respect. With a ground-breaking production process, the facility reprocesses copper and cobalt from historical tailings waste and has a significantly lower carbon footprint than many others. This approach not only reduces carbon emissions but helps address the consequences of historical mining operations in the region.

Similarly, CATL has created CREDIT, the first audit toolkit in the industry for the lithium-ion battery supply chain, based on multiple frameworks and the actual situation of the industry chain. As a big data-based comprehensive evaluation, CREDIT is able to calculate indexes about the sustainability performance of enterprises across the supply chain, thus helping them explore paths towards sustainability.

However, to establish sustainable battery value chains, robust mechanisms are also needed to track batteries’ environmental, social and governance (ESG) compliance and material provenance.

Battery passports

This is where the GBA’s battery passport can play an essential role. The passport creates a digital twin of a physical battery, containing comprehensive information about mineral provenance, manufacturing history and its sustainability performance over the lifecycle. This encompasses factors such as the battery carbon footprint and child labour and human rights performance, in line with rulebooks published by the GBA.

The world’s first battery passport pilots were unveiled by the GBA at the World Economic Forum’s Annual Meeting in January, and include example data from Tesla, Audi and their value chain partners such us CATL.

The passport will allow manufacturers, regulators and consumers to verify that batteries meet ESG criteria and promote circular economy principles. By leveraging digital technology and multi-stakeholder collaboration, the battery passport can therefore change the way we trade batteries and create a future where sustainability is at the core of the industry.

Recognising the significance of passports, the European Union has already made a battery passport a mandatory requirement from early 2027. Beyond the EU, other regions are also acknowledging the importance of transparency and battery passports, for example in China and the United States.

Multi-stakeholder consensus needed for success

The successful implementation of battery passports and establishment of sustainable battery value chains require collaborative efforts from all stakeholders. For this reason, the GBA comprises stakeholders from across government, academia, civil society and all stages of industry.

Through multi-stakeholder consensus building processes, the GBA systematically integrates expectations from all stakeholders as they relate to key sustainability performance indicators for batteries, building on regulatory requirements, existing standards and bridging the gap to the GBA vision for sustainable, responsible and circular battery value chains.

Following the publication and piloting of the initial indicators related to the battery carbon footprint, child labour and human rights performance in 2022, the GBA is further developing the sustainability indicator framework.

Leveraging its unique convening power, the GBA is actively advocating for globally harmonised sustainability indicators to achieve comparable benchmarks and foster more sustainable value chains globally and is inviting all interested entities to join these efforts.

Firstly, governments play a crucial role in setting regulations and standards that incentivise responsible sourcing and sustainable practices. They can provide financial support, create favourable policy frameworks, and enforce compliance with environmental and social standards.

Crucially, industry players must commit to transparent supply chains, mitigating negative environmental and social impacts, reducing their carbon footprint and prioritising the well-being of workers and communities.

This includes demanding their partners also agree to abide by responsible sourcing terms as a condition of doing business together. It is essential that companies engage in responsible mineral production and sourcing, invest in technologies that improve energy efficiency and carbon footprint in battery manufacturing, and promote recycling and second-life applications for batteries. In doing so, industry leaders can set an example for others to follow and contribute to the overall transformation of the battery industry.

Civil society organisations can advocate for responsible sourcing and sustainability standards, raise awareness of the environmental and social impacts of battery production, and support initiatives that promote transparency and accountability.

Collaboration key to driving battery sustainability

The World Economic Forum’s Annual Meeting of the New Champions is precisely the sort of cross-sector, cross-organisation, cross-geography collaborative forum to achieve widespread recognition of the complex problems presented by securing sustainability in supply chains, and it is also a place where true solutions can be found.

By making informed choices and demanding sustainable batteries, industry leaders and consumers alike can influence market demand and push companies to prioritise sustainability. Academic and research institutions can also contribute by developing innovative solutions and technologies that improve the value chain.

Collaboration is what will lead to breakthroughs in battery material production and sourcing, recycling methods and manufacturing processes. The battery industry’s projected growth presents an opportunity and a responsibility to shape a future where ESG considerations are prioritised.

Responsible production sourcing, transparent supply chains and the adoption of tools like the battery passport must be prioritised to create a future where batteries not only power our vehicles, but contribute to a greener and fairer world.

 

Source: energy post

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