Circular economy: the future of batteries
By Mike Nugent, Chief Revenue Officer, Hitachi ZeroCarbon.
Batteries are central to the energy transition. Electric vehicles, powered by batteries, are necessary to decarbonise transport, while battery storage solves intermittency challenges as we shift to a renewable powered grid. We are reliant on this technology to reach net zero.
However, the first-life application of EV batteries is currently estimated to be around 12-15 years, and estimates point to 150,000 tonnes of battery packs that will require processing by 2035. To avoid the risk of further damage to the planet, we need to develop a circular economy for batteries.
A circular economy moves beyond the linear model of ‘take, make, dispose’ to create a closed-loop system where materials are continually reused, refurbished and recycled. For EV batteries in particular, this means extending their life, ensuring they are repurposed in secondary applications, and eventually recycled and reused for similar applications.
Why is this necessary?
Batteries are critical for us to achieve net zero. Electric cars emit over three times less CO2 than equivalent petrol cars, they improve energy efficiency, reduce dependence on fossil fuels and dramatically increase air quality. However, their ecological impact should not be ignored.
One ton of lithium requires 500,000 litres of water, and producing a battery weighing 500kg can emit 70% more CO2 than producing a conventional car. Moreover, many lithium and cobalt reserves are found in countries with weak labour standards, often resulting in rampant human rights violations. So, whilst the overall positives outweigh the negatives, it is imperative to minimise the extraction of raw materials and maximise the value from each battery pack. A circular economy approach unlocks the true potential of batteries for our planet and people.
What does a circular battery market look like?
There are several aspects to managing and ensuring the delivery of a circular battery market:
- Maximising First life application:
- Extending battery life in its first life application – in a car, van, truck or bus
- Incentivising asset owners and operators to manage batteries correctly
- Developing new second life battery–use applications
- Battery recycling
We cover each of these in more detail below:
Battery life optimisation. Prolonging the lifespan of batteries is essential for a circular model. By designing batteries for durability and managing their use through advanced analytics, we can keep batteries in use for longer. For EV batteries, this involves using software systems which deploy charging protocols that prevent premature degradation and protect battery performance. This reduces the need for frequent replacements, minimises operating costs, and preserves the value of batteries for re-sale and use in secondary applications.
Provide commercial incentives to protect the battery in its first-life application. Leasing batteries through a financed lease or Battery as a Service model enables businesses to reduce the upfront cost barriers to electrification and meet their decarbonisation goals faster. In this approach, battery providers also have a vested interest in maintaining their batteries to ensure they perform optimally over a longer period. The resultant focus on proper maintenance and management can extend the useful life of batteries and prevent replacements – further supporting circularity in the industry.
Second life applications. Used EV batteries often retain up to two thirds of their original storage capacity. Repurposing them in secondary applications such as energy storage and emergency power backup for the grid maximises their utility and strengthens energy security. With recent findings that EV batteries alone, largely at their end-of-vehicle life, could provide short-term grid storage demand by 2030, repurposing them must be an industry priority. This also provides businesses with large vehicle fleets a financial incentive to electrify, as they can sell used batteries to unlock additional revenue.
Battery recycling. Currently, only 5% of batteries are recycled. Advancing recycling technology to recover valuable materials like lithium, cobalt and nickel from used batteries would reduce reliance on mining and minimise a potential battery waste crisis. Recycling could meet an estimated 10% of EV battery critical mineral requirements by 2035, and countries including China and Germany have already begun growing their battery recycling capabilities. With EU regulations mandating a minimum level of recycled content in batteries sold within its borders by 2031, battery recycling is becoming a non-negotiable.
While challenges such as limited recycling scalability and a lack of battery standardisation persist today, we cannot afford to overlook the benefits tied to a circular battery market.
A circular economy approach challenges us to rethink how we design, use and dispose of batteries to maximise their environmental and economic value. As we move towards net zero, and our dependence on battery technology grows, embracing circularity will be crucial to achieve a truly sustainable future.
Hitachi ZeroCarbon supports a circular economy for batteries by protecting battery performance, extending battery life and enhancing residual value through advanced data analytics and smart charging services for electric fleets.
