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The state of the lithium-ion battery recycling market
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The state of the lithium-ion battery recycling market

A conversation with battery analyst Yayoi Sekine of BNEF.
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In this episode, Yayoi Sekine, energy analyst and expert on lithium-ion battery recycling, discusses the huge growth expected in the battery-recycling market and the companies and technologies poised to meet that demand.

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David Roberts

The coming decade is going to see a rapid rise in demand for electric vehicles and the batteries they contain. Currently, the materials that compose those batteries are mined and processed in countries with problematic environmental and labor standards.

One part of crafting a more humane and secure battery supply chain is working to reduce demand for virgin materials by recycling the materials already in use. That means recycling the lithium-ion batteries found in vehicles — lots of them.

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Since we are on the very front end of a rapid S-curve rise in demand for EVs, a comparatively small number of such lithium-ion batteries need recycling today. But that will change, soon, as early EVs tax their original batteries.

Yayoi Sekine
Yayoi Sekine

To get a grasp on the current state of play in the battery-recycling market, I contacted Yayoi Sekine, an analyst who works as head of energy storage at Bloomberg NEF. We talked about current demand for battery recycling, the companies meeting that demand, the technologies used to recycle batteries today, and the coming growth in the industry.

Alright, then, with no further ado, Yayoi Sekine. Welcome to Volts. Thank you so much for coming.

Yayoi Sekine

Thank you for having me on this show.

David Roberts

And I'll try to get you out of here in time to see your World Cup game.

Yayoi Sekine

Thank you.

David Roberts

Okay, so we're going to talk all about battery recycling here today. I have so many questions about this, but let's just start at the beginning and get a sense of sort of the context and why we need to be talking about this. So I think, you know, Volts listeners know that EVs are coming on strong. They're about to head up the steep part of the S-curve. But there's a little bit of a delay, like when you talk about recycling solar panels. You know, solar panels last 20 to 40 years, so it's not when they start selling big that you have your problem. It's a little bit of a delay.

So I guess what I'm wondering is where we on that S-curve and when are we going to get hit with a wave of batteries as opposed to the sort of relative trickle we have now?

Yayoi Sekine

Trickle is an interesting word for an industry, but that's probably true because I absolutely agree with that sense of there is a delay and the delay happens in different ways. One is certainly, as you say, what is the scale of battery growth that we're experiencing today? BNEF, we've been tracking the EV markets and the stationary storage markets for quite a few years. And, just to give you a sense of the growth that we're talking about when we're talking about that S-curve, we are talking about a little over 600 gigawatt hours of battery demand for 2022 alone.

So that's both for EVs, so across all passenger EVs and other EV applications, as well as stationary storage. And that's about double what we saw in terms of battery demand last year. Yeah, so that's incredible rate of growth. Obviously, the S-curve means each year we don't double every single year, but by 2030, we're talking about five times what we're expecting in 2022 in terms of battery deployment. So that's a lot of cumulative. Just batteries that are going to be on the roads, on the grids, and a lot of materials that are related to that. And this is just talking about this year and last year alone.

And of course, there's a history, of course, smaller history in terms of demand of batteries in electric vehicle and stationary storage applications, some...a few of which are starting to roll off their end-of-life. So coming into recycling facilities today, a lot of that capacity and processing power is in China today. But generally, we're starting to see that scale up. And just in terms of like, what it is in terms of tonnage of materials. But in 2030, that's about 18 million metric tons of materials. Yeah, exactly. That's a lot of stuff that needs to get done and defined and processed into materials that goes into that.

David Roberts

So lithium-ion batteries last. Do we have sort of a hard estimate of how long they last in EVs before they need to be recycled?

Yayoi Sekine

That's ultimately the question about when will recycling matter or when do we need it by?

David Roberts

Right.

Yayoi Sekine

The answer is that...there isn't one specific number because, of course, for different chemistries and different applications, you end up having different lifetimes. In the past, when we were doing this analysis, we kind of had an estimate in place, which I would already argue it's outdated because we're already getting new information about batteries lasting longer than we originally expected. So we're talking about 10, 11, 12 years for some EV applications. And potentially they'll last longer for grid applications, stationary storage. We do see projects being, kind of, like, envisioning themselves, being online for 15, sometimes 20 years. A lot of the new battery technologies or the LFP that's coming into the stationary storage systems today, or even a lot of passenger EVs have longer cycle life.

So, the expectation is that they might actually last longer. Which actually goes to your point about volumes and timing. When does that matter? Probably soon, for a lot of capacity. But that capacity just starts ramping up more and more as the years go by for that reason.

David Roberts

Right, yeah. A wave is going to hit and it's just going to get bigger and bigger and bigger forever. So maybe wave isn't the right metaphor. So what about now, the lithium-ion batteries? I can't imagine there are a ton of EV batteries specifically just coming into circulation for recycling since the EV market itself is not huge. But are current batteries being recycled? Like what's happening to the current lithium-ion batteries when they reach their end-of-life.

Yayoi Sekine

There are many batteries that are being recycled. The ones that are coming off vehicles, the stuff that's essentially recalled, they have to go somewhere, they get stored and then basically broken down and then recycled, taken to a recycling facility. Generally, the scale of the operations really depends on the geography because, as you mentioned, the EV industry in the US or in terms of battery demand or EV demand is not as big as what we see, for example, in China. So, China actually has the majority of the recycling capacity in the world. Our numbers estimate that to be about 80%, if not more.

Some facilities were commissioned this year, and there, actually, we see a lot of like a lot of batteries that are rolling off EVs already. So in terms of facilities, they are being recycled and there's a whole process around that. In the US and Europe, the capacities are typically still ramping up. I think we're actually in a crux in terms of the industry of where it's going to shift from primarily trying to find sources of batteries that are rolling off end-of-life. Be that from consumer electronics industry towards what will be a higher volume in the long term, which would be passenger EVs, mainly passenger EVs, but from other EVs as well.

David Roberts

Is it safe to say though, that most lithium-ion batteries that are now reaching their end-of-life car batteries are getting recycled? Or is there a big waste problem? Are some of them getting thrown away or landfilled or whatever? Or are most of them in a pipeline now where they're going to recycling?

Yayoi Sekine

Yes, so in the US, there's a lot of partnerships actually that have emerged over the last couple of years. Just for some context, like Redwood Materials, Ascend Elements, Lifecycle. These are some companies that are directly involved, either with battery manufacturers or the automakers themselves, to basically form a collection and shredding and some recycling value chain in the US. And a lot of them have pilot facilities or have just kind of ramping up their facility to scale up some operation at the back of the little volumes of EV batteries that there is today. But actually, historically, the volumes were so low that a lot of the companies are trying to look for other sources of batteries, mainly consumer electronics, right?

So it's an interesting phase in the industry today. Slightly different in China. China has had more regulation and more structure around the recycling market, I guess, actually for the last four years. So we see a bit more, kind of, like, an infrastructure around collection, transportation, and then of course the whole recycling process itself. So it's slightly different there.

David Roberts

Let's talk about that then. When we talk about lithium-ion batteries being recycled today, what are we talking about? What happens? Give me a sense of like when the battery enters the door of the facility, what do we mean when we say we're recycling that battery? What happens to it?

Yayoi Sekine

Yeah, there's actually quite a long value chain. So, in as much as there's a long value chain to actually manufacture a battery, there's kind of the opposite direction when you're trying to recycle it. And it starts, like, when the vehicle is at the end of its life, you're either taking it to the automaker or figuring out what to do with that. Essentially, there is a cost associated, somewhere, someone is paying a cost associated with actually taking that EV and then getting out the battery and then transporting it to a location where they're probably going to do some preliminary part of the recycling process which is essentially unpackaging the stuff around the actual battery cells and module and kind of taking that out.

And then you're essentially trying to shred everything that's in the, kind of, the battery so that it's in a smaller particle size that can be digestible in some way. Typically in that process, they remove copper and aluminum foils which are more easily recyclable and can be taken out through that process, and then whatever is left—which typically is called like black mass—that is what is actually like high-value minerals and elements and metals that then gets processed through additional processes, which we can talk about. And that's essentially what they're trying to do, which is like getting some black mass and transforming that into, again, the elements that will then be reused, hopefully in the battery value chain, or potentially used in other value streams like downcycles.

David Roberts

This is what I'm mostly interested in, is this black mass. I can envision physically disassembling the battery and taking off all this stuff, but then you end up with this slurry, I guess, this goop. How do you take a goop and decompose it into its mineral constituents? How do you get a particular mineral out of goop? What is the physical process that goes on right now?

Yayoi Sekine

I'm loving the use of the word "goop," the value-add goop. So that goop, which is very valuable. There's really two main pathways to really extract the value from that goop. And essentially, different companies might follow slightly different pathways, but the general chemistry of it is fairly similar, or the general chemistry of the physical process is fairly similar. So one of the ways is through a hydrometallurgic process. Hydro, because there's a water-based element to it and essentially you're using chemicals to extract whatever is most valuable in that process.

And you're adding acids and bases. It's kind of like a chemical experiment to maintain a certain level of acidity so that you can extract kind of the leach solutions, which can then get the valuable materials out of that process.

David Roberts

That's like a bath. You put the goop in this solution and it pulls out. It decomposes particular minerals.

Yayoi Sekine

Exactly. You can kind of sieve out the different materials depending on kind of what you're throwing into that bath. The other kind is kind of an extension of that, which is just kind of adding something prior to doing that chemical process, which is a pyro hydro. So pyrometallurgy and hydrometallurgy, the pyro part is essentially heating process. Like firing. You associate that with burning. It's essentially the use of high temperatures to extract the metals. And typically that would be done before the hydro process in these types of two-way or two-step process. In that process, you're burning out, like, electrolytes, the electrolyte, the binder, the additives to kind of makes the second process a bit more efficient.

David Roberts

So the goop gets superheated and then it takes a bath.

Yayoi Sekine

It's like a sauna experience. You go to the sauna and then you go relax.

David Roberts

Sounds kind of nice.

Yayoi Sekine

Yeah.

David Roberts

So in this process, one of the big things here in terms of economics that I want to talk about is so right now, when you're recycling a battery, what minerals are you going after? What are the valuable constituents currently?

Yayoi Sekine

Yeah. So historically, what was primarily sought after from that goop was essentially nickel and cobalt, which are the high-value metals, that is for batteries that contain nickel and cobalt, lithium-iron phosphate batteries don't contain nickel or cobalt. Now, I guess, there's just...not just because lithium prices are five to six times higher than a year ago, but there's also very much an interest in increasing the recovery rates of lithium as well. So there's essentially those three major ones. Of course, you can remove manganese as well, but I would say the higher-value ones would be nickel, cobalt, and increasingly, lithium.

David Roberts

There's a sort of movement on to reduce the amount of cobalt in batteries. Of course, I don't know if we've said this yet, I think most Volts listeners know, but LFP batteries that we keep referring to, lithium-iron phosphate uses iron rather than cobalt or nickel in those batteries. LFP batteries are, as I understand it, sort of growing quickly, especially in China. They're getting used in lots of Teslas in China, and I think they're sort of like spreading here, too. Is it worth it to recycle an LFP battery? Like, is there enough valuable material in an LFP battery to make the recycling process pay?

Yayoi Sekine

It's a good question. We've done some analysis and essentially what you want to look at is, of course, the cost of what the process is. And then that stack of the cost, there's obviously CapEx and then the operational expenses. And then in the operational expenses, besides equipment that you have to pay for, is essentially what are you paying for energy-input costs as well as the chemicals that you're using for it. When you're recycling LFP, it's a slightly different composition of chemicals that you're using to extract chemicals. And actually, when you're doing the pyro process, you're kind of extracting more from that as well.

So essentially the cost itself of recycling LFP is lower. If you look at markets like China than it would be for, say, DNMC chemistries that have nickel, and manganese, and cobalt. The reality is that it's still kind of barely breaking, even when you make assumptions about essentially, like, logistics. So getting the materials to where it's going to be processed. And that math actually looks quite different twelve months ago to what it looks like today, because, as I mentioned, lithium prices are six times higher.

David Roberts

Right. I was going to say that the recycling process is cheaper, but at the same time, also the materials you're getting out are less valuable, right? I mean, it's just the lithium, basically. No one wants the iron, I assume. So it's just lithium basically that's paying for...

Yayoi Sekine

Mainly lithium and then the copper from the actual, obviously the coils. So you're right that you get less in terms of actual payment for whatever gets recycled, but you're also paying less because the process tends to be cheaper.

David Roberts

I mean, is lithium ever going to go back down, or is the sort of rising demand around the world basically going to mean lithium is on an upward trajectory? What do we know about the future of lithium prices?

Yayoi Sekine

Our metals and mining team has basically tracked the main battery metals in the markets related to that. Generally speaking, with any commodity market, it's really hard to expect prices to continuously go up nonstop because it's kind of laws, or however, you want to call it around supply-and-demand if you go up too high.

David Roberts

Right, economics.

Yayoi Sekine

Yeah, exactly. The economics of it dictate that, eventually, at a certain price points, things make less sense from a demand standpoint. And generally speaking, what's happening is that there is significant ramp up of lithium mines across different geographies to be that Australia, Argentina, Chile, and China as well.

So, actually, the supply is ramping up. Our expectation is not that prices will continue to go up. The question is really about when prices start to ease, just because we've now been, as I mentioned, the period of about six or so months where prices for lithium have sustained at a high. We're going to be publishing some work around our battery price survey, which of course, if you're doing near-term or long-term forecast for battery prices, the prices of metals or inputs like lithium, cobalt, nickel really matter. So we'll be publishing some workarounds to show what is our outlook around that.

What I can say is essentially it won't be sustained high. The overall question is, like, how soon is soon?Maybe it's in a year, maybe it's in two years, but it's certainly not going to sustain for three or four years.

David Roberts

Right. And I guess one of the things I wonder is, is it ever going to come down? Like, if LFP recycling is basically paid for by the lithium? If the lithium is what is the valuable material in there that is paying for the operation. Is there any risk of lithium getting cheap enough that it's no longer worth it to pull it out of these dead batteries? You know what I mean? I just wonder, the economics of recycling, are they on firm ground or is there some chance that it's going to require subsidy basically?

Yayoi Sekine

I think that there's a few elements regarding that question, which is, yes, uncertainty around lithium prices will matter in recycling economics. That's always been true for recyclers, but for lithium, that obviously matters. What we're seeing now is actually just an interest from both kind of the lithium value chain as well as the general battery value chain to include more recycling materials into their batteries. I'm not going to say regardless of price, but certainly in the interest of kind of going in a more sustainable pathway. And that's really true in markets like the US and Europe where there isn't necessarily a robust value chain around lithium or even cobalt refining or processing and the production of materials.

And so in order for us to kind of depend less on China, for example, one way to do that is to actually take advantage of the materials that are ready in batteries that are in the country, be that either from imports or manufactured within the country. So that's kind of the direction that the industry is moving towards. Which is not to say that costs and economics don't matter. I think they do, ultimately, as an industry has to move to a point where the scale is big enough and scale meaning both of the actual process itself. So having economies of scale of the actual facility, but actually also the scale of the supply of the batteries that are coming in so that you're utilizing that facility since full capacity.

David Roberts

So, part of the point here is that demand regulations, sort of, insisting that more recycled elements be used in new batteries is a way of sustaining the economics of recycling that's going to create some of the demand that will sustain recycling demand.

Yayoi Sekine

I agree with that point.

David Roberts

And so one question is—and I meant to ask this when we were talking about the process—is when I envision a bunch of battery goop going into a big fire and then going into a bath, I guess it just all sounds kind of dirty. So I'm wondering, how clean is that current process of recycling? Does it create environmental harms of its own?

Yayoi Sekine

Now I regret comparing it with a spa where you're going to. Anyway, so there's definitely emissions related to like say if you're in the pyrometallurgic...kind of that process around heating and fumes that will be released, you can mitigate that by having scrubbers in the gas furnaces to capture the unwanted stuff from going into the atmosphere. The hydro process is a little less, like, emissions aggressive on the kind of the atmosphere standpoint, but there's always subproducts that come out of any chemical reactions. So, at the moment, I haven't heard much about huge environmental impact on the hydro side.

I think the idea is generally like what we see from companies in the US and in Europe, is really a push towards having very low emissions and low environmental impact around recycling because a lot of the autos, the OEMs, really are interested in kind of moving that pathway towards reducing their emissions regarding their operations. So that is happening. And generally, environmental regulations in the US and in Europe are more stringent than what we see in China, although I think that might be changing as well, as China tries to increase its presence in other markets. Like, emissions will matter on batteries that are imported into Europe or into US.

David Roberts

So the current process is, if not completely benign, at least not like some other looming environmental disaster we have to worry about. The pyro and then hydro is the standard way. Is there any fancy, different technology on the horizon? What's the best state-of-the-art way of recycling lithium-ion batteries? Is it pretty standard, or are there technological advances that we are seeing or can anticipate?

Yayoi Sekine

Generally, not really. It's like innovation is hard to do when you're trying to extract the same materials. There's only so many chemicals that you can use to do that. I guess where we see more differentiation or companies trying to do something different is regarding the end product of what they're actually producing after the recycling or as part of the recycling process. I know you mentioned this a little bit prior to the call, but just in terms of the closed loop concept, which is you want to have the batteries come in, and then you also want the materials as close as they would be to the materials that actually go directly into batteries. So making cathode materials from that process.

David Roberts

Just to insert this, there's a difference between sort of just a raw mineral and a sort of cathode-ready mineral. Like, there's some processing that goes on to sort of purify it and stuff like that. Are they doing that in the recycling process?

Yayoi Sekine

That's a great question. So in the past, a lot of the recycling had been primarily looking at breaking things down and extracting them in the form of, say, sulfates, which can then...cobalt sulfate, nickel sulfates. And those are kind of precursors that go into then the production of the cathodes, potentially in another facility. So they might sell that to a cathode producer, and then the cathode producer will then specialize in the production of those materials, produce that material to the battery maker. Now, what we're seeing with companies like Redwood Materials and RecycLiCo, which is previously American Manganese, they're trying to play into the market, into—not just breaking down the individual materials—but essentially trying to produce the actual cathode material for end use.

David Roberts

Which is presumably much more valuable than the raw material.

Yayoi Sekine

It is more valuable. It's more complex as well. It entails because as you can imagine, every single battery has a different specification. And with that specification you need a very specific type of material and that can look slightly different if you're doing a high-power battery versus an energy...it doesn't want to make out of materials. There's a reason why that value chain is not robust in the US. Starting to happen now, but essentially it's complex. Like each battery maker and automaker has different specifications.

David Roberts

So of a lithium-ion battery that goes in with, say, some copper, some lithium, some nickel, some manganese, how much of that material is recovered by the recycling process? Is it close to 100% or 50%? Is it close to complete recovery? Or where are we on that scale?

Yayoi Sekine

Yeah, it definitely depends on the process and the company and maybe the geography that you're asking. Nickel and cobalt typically have very high recovery rates, and that's a really good question, by the way, because essentially, if you're trying to make economics work, recovery— the percentage recovery rate really matters. And yeah, nickel and cobalt typically have very high recovery rates. It can be as high as 95 plus percent.

David Roberts

Is that because they're so valuable or is it because something physical there that is easier to get?

Yayoi Sekine

Because they're valuable and so there's more of an interest to extract them, but definitely, the maturity of how to extract them from process standpoint is just further along compared to, especially compared to lithium. So that's kind of the piece that's getting a bit more of, not just interest, but certainly being zoomed in to try to extract more increased recovery rates. And that can really range can be like as low as 60%, and really a lot of the companies are saying they can achieve 90-95% plus, but they're still at very early stages in terms of the scale.

David Roberts

And those companies are just, they can increase recovery rates by just tweaking the formula of their hydro bath. Is that what's going on to improve this?

Yayoi Sekine

I think that that's a good way to put it. Without being a chemist myself, I had to kind of go into the details of this with the team to get a good sense. So the actual chemicals that are thrown into this bath for the lithium extraction side would be something like sodium metabisulphites. Sounds very fancy. But there is an interesting factor, which is just that, it's not as if you double the amount of this chemical that you're going to get double the amount of lithium. So there's a point at which it's not as efficient in extracting lithium.

And if you want to increase the recovery rate, you might still be throwing that bath again into a process where there's more lithium. So it is a matter of like, how much of these expensive chemicals are you trying to throw in for how much you're actually extracting out?

David Roberts

Interesting, yeah, well, we'll get out of my depth on chemistry real quick, so we'll just leave it there. So I'm wondering, you mentioned earlier that most recycling currently is in China. Tell me a little bit about the US industry. How nascent is it? Are we talking about like one or two companies? One or two or three companies. Is there anything like a robust expansion happening yet in the US?

Yayoi Sekine

Yeah, so there's a scale up happening which is quite sizable, and I should have gotten some of the capacities to list it off here. But just to talk about some of the companies who are actually scaling up operations. Ascend Elements, they're going to have a facility working with SK Echoplant investing, $50 million to essentially do recycling their life cycle. They have a hub which is in Rochester, that's just commissions and ramping up capacity. And essentially they have a few partners, but one of them includes Ultium Cells, which is the joint venture between GM and LG Energy Solution.

They have some capacity numbers I don't know off the top of my head, but essentially that's ramping up quite a lot. And aside from that hub facility, they also have these additional facilities which are essentially more logistical and shredding facilities that then process the materials to a point where that can be processed in that hub facility. And then we have I mentioned, Redwood Materials. They have a facility in Nevada which is scaling up. And so, a lot of companies that I would consider startups in terms of their operation compared to a lot of the large chemical companies that typically operate in the material standpoint.

And in terms of capacity, most of them are just scaling up, like larger facilities now. So we're like, based on announcements, larger scale operations will start probably closer to 2024 to 2025, with a lot of the ramping up of the facilities happening between now and then. That's really soon. It's not that far.

David Roberts

Is that ramp up mostly driven by economics, or are there incentives in legislation or incentives needed or economics going to drive this to the point that it's going to take care of itself, or do you feel like incentives are needed? And while we're on the subject, are there incentives in the Inflation Reduction Act or the Infrastructure Act?

Yayoi Sekine

Actually, a lot of the companies in the value chain, including autos, even battery companies, are investing in the companies or in facilities specifically to ramp up the recycling capacity. And that's generally justified also through the partnerships, a lot of these companies have signed either directly with the OEM or with the battery company themselves. In terms of incentives, there's probably a couple of important bits in terms of how the US is structured, which is there isn't abroad yet. I would say yet, but there isn't yet abroad regulation around what happens to EV batteries at an end-of-life and how to actually collect them, process them, and recycle them.

Yeah, there's a lot of state regulation around lithium-ion batteries, but it really has to evolve into...EV batteries are much bigger and much harder to handle. And that's something, I guess, that the Biden administration is trying to work on to figure out what does that roadmap and regulation, what that should look like. But aside from regulation on what has to happen or how it has to happen at end-of-life, as you mentioned, the Inflation Reduction Act actually does have an interesting structure around recycled battery materials. And that's specifically around the EV credits.

So in the EV credits, which awards an EV up to $7,500, half of which you can qualify if you meet a critical minerals requirement, and then the other one if you meet a battery materials or battery requirements, both of which require kind of the materials or the actual product to be produced in North America. And then for critical minerals, also if it's in a country in which the US has a free trade agreement, I highlight that specifically on the critical minerals, part of it is that they actually outline recycled materials as part of that as well. So if you're thinking about it correctly, imagine a battery, what's the highest cost of that battery?

And you want to qualify for that critical minerals component, you need to have at least 50% of your minerals sourced from the US or North America or a free trade agreement country, including recycled materials.

David Roberts

Let me pause for a question about this because my understanding is that at least—taking a snapshot of the present—it's not really possible to get all those materials from North America or friendly countries. The vast, vast, vast bulk of those materials are mined and processed overseas, processing mostly in China. So I wonder if...the EV supply chain is being sort of onboarded into the US—or at least that's the idea behind the legislation—and I wonder if, in some sense, it might be if the makers of EVs might think it's easier to get recycled materials than it is to get virgin materials from a friendly country. And that might sort of induce more recycling. Sort of, recycling could be the biggest kind of producer of materials that qualify for these credits.

Yayoi Sekine

I definitely think recycling will play an important role in meeting these requirements. And, you know, like Redwood Materials, they just signed an agreement with Panasonic to basically source them with high nickel cathodes for their new plant in Kansas starting 2025. So I do think that that's one of the ways in which companies will try to meet that. Yeah, I think it's challenging. We're moving into an environment where automakers now really have to disclose, as well as source, all these materials and batteries in a way that they really haven't had to do before. And there's a lot of questions still yet to be answered.

And I think that's an important point, which is, the way that this is actually explained through additional regulation, which is kind of the guidance that the treasury is drafting now that will really matter in how the automakers actually comply or decide their material strategy or their battery strategy. But generally speaking, I think this is a challenge and certainly one that—this makes me excited for recycling for sure.

David Roberts

Yeah, I know. It just seems like a huge...people, I don't know, think of legislation being so hard-fought and tentative and insufficient, et cetera, these days that I'm not sure people really appreciate what a big thing this EV credit thing is. They're basically saying like starting from almost nothing, stand up, a domestic supply chain of minerals and materials and all this stuff. It's like a shock treatment sort of legislation in a way that you don't see very often. So these partnerships because one of the aspects of recycling that I have wondered why I haven't heard more about, it seems like one of the ways you could make recycling easier and expand faster is to design batteries to make them easier to recycle.

And one of the things I've heard talking around about this is people complaining that Tesla, for instance, is going the opposite direction. Like their battery is getting more and more sort of physically integrated into the car itself, which gives you performance advantages, but at the same time, makes it just a complete pain in the ass to get it out and recycle it. So is that part of what's involved in these partnerships? If the recycling company has a partnership with a battery manufacturer, are battery manufacturers thinking about this now? How to design differently or better so that recycling is easier?

Yayoi Sekine

I think there's always that push and pull, like the push of optimizing for best performance and, of course, optimizing the energy density of the batteries in the vehicle so that you can get more out of that. And then the pole around on the other end, which is at the end of the life, as you say, is this easy for me to unpackage?

David Roberts

It seems like those pull in different directions.

Yayoi Sekine

Yeah, they can do. I think that, generally speaking, automakers have been a lot more conscious about end-of-life. Like if you compare it to five years ago. And so it has evolved to a point where it's not completely separate in terms of business and planning. And of course, automakers could see like, okay, so we're going to get all these batteries end of their life. There must be a value related to them and potentially they can sell them in scrap or of course, if they have a partnership, they can work that problem. And if they're playing their cards right, they want to reduce the cost of the actual process of recycling if they want that material to come back to them at a rate that's reasonable.

So I don't think it's completely separate one from the other. But you're right, that sometimes things will advance in a way that's not advantageous for the end-of-life.

David Roberts

It will be interesting to see that play out, to see if somebody can sort of crack the easy-to-recycle, without losing any performance benefits or something like that. It seems like an interesting area of research and testing. So what would you, if you were queen for a day, what sort of like regulations or policies would you like to pass to make recycling better, to goose the industry, to grow it faster, to do what's needed? Like what do you think is needed if you are making policy?

Yayoi Sekine

Queen for a day? That sounds very grand. Yeah, I think there are great examples already of policies, I guess in China, and then the EU is moving in that direction, and then the US is figuring out what to do. But there are a few really important elements of what can make this work better, which is obviously requiring recycling as a first step. Somebody has to be in charge of it and is figuring out through regulation and legislation, who actually is in charge of that. And the models say in Europe and China typically is whoever is the end seller of the battery, be that the company who's integrating them into EVs and then selling them.

Or if you're actually in second-life applications, which we haven't talked too much about, but those companies would also be in charge of what happens to the end-of-life of batteries after they're done that second life. So that's number one.

David Roberts

And isn't there a term for that? For making the producer responsible for disposal at the end-of-life? Because that's something you see talked about a lot, not just in cars and batteries but across the materials chain producer something. I feel like there was a clever term for that, but maybe...whatever. That's a brain fart.

Yayoi Sekine

That is a brain fart for me too. But there is a term for that.

David Roberts

But I've always thought that...to me that has always kind of struck me as kind of like the silver bullet here. If you make the people who make the batteries responsible for disposing of the batteries, they're going to be much more incentivized to make batteries that are easy to recycle.

Yayoi Sekine

Yeah, absolutely. And in terms of additional policy and regulation to help if you require that, you should also help to create an infrastructure that makes that process easier. And so, like, things besides, like requiring recycling, you could implement, like, recovery rate requirements, which is, you know, what China did and what Europe is intending to do over the next couple of years, which is to say, like, "Okay, and when you recycle, you need to have at least a 95 plus percent recovery rate for these elements." So that's definitely something that's doable, again, so that's kind of like the whip in a certain situation.

And then something else like collection networks. So if you have a bunch of batteries that are spread out all over the country, you kind of need to figure out the logistics and what will benefit from logistics that's shared between companies. So I think that's another element that can be aided by regulation or definitely more transparency of what the network could look like and to share that. Individual cell traceability. So Europe has definitely moved in that direction or is moving towards that direction through the battery passport. China has been doing this for a few years already.

David Roberts

So that would mean like, an individual battery has got like a sensor or a stamp or a VIN or how do you trace an individual battery?

Yayoi Sekine

Yeah, it could be a QR code. It could be essentially something that can trace a battery to where it's produced and then give details about what went into the battery in terms of materials, and then over time also get additional data on how it's been performing and what it looks like at the end of life. So can it be used for a second life application because it's fairly decent in terms of its performance?

So it sounds like it's going to produce a flood of information to really interesting data.

Absolutely. And that data is super valuable, not just for recycling, but certainly for other applications or even extending the life of the first application.

David Roberts

Right, let's touch on that briefly. Just we don't have to spend a lot of time on it. But how does second life figure into all this? I mean, it's just sort of like a stage between the first car and the recycler, I guess. Does it affect the recycling business or chain at all?

Yayoi Sekine

Absolutely. And we mentioned actually LFP batteries before, an LFP typically has longer lifecycle, which means there can be more appropriate for a second life application.

David Roberts

Right, let me pause here because I don't want to assume that listeners know what we're talking about. Just second life just means once you're out of the original car, I think it's like 80% is sort of the benchmark, like once you're at 80% of original capacity, you're considered like not a good enough performer to be in a car, but you still got capacity. So you can stack those batteries and make them grid storage or use them for smaller machines, I guess. There's a lot of different ways to use a battery that's already been through its first cycle. Just for some background there for listeners.

Yayoi Sekine

Yeah, that's a really great way to explain that. So I won't add anything to that.

David Roberts

How does that affect recycling, though? Does using a battery up more affect its value?

Yayoi Sekine

So the way you described it before was perfect, which is it just kind of extends the time in which that battery will end up in recycling. Ideally, it goes to recycling. And the way it actually impacts the market is just whatever we assume around second life will impact the total supply of batteries for recycling, which is really why the performance of batteries really matter when you're trying to make the case of "I need to build a recycling facility" and you're trying to foresee how much demand there is in terms of battery supply. And generally, the answer will be it kind of depends.

And data on that is live at the moment. So quite challenging to forecast to a very strong degree, but eventually that, in terms of demand, should roll back into the value chain. So, second life is really interesting because it potentially provides lower cost batteries for a second life application. Although there are certain challenges that maybe is a whole other podcast, but there's certain challenges around that as well.

David Roberts

I wrote a piece about it last year. It's really interesting. You talk to people about second life and it's just one of those subjects upon which you can find people who are extremely bullish and people who are extremely bearish and both certain of their positions. Where are you, just out of interest, like, where are you on that spectrum? Do you think there's going to be a robust—because the challenges you refer to as just batteries have coming out of their original vehicles where they're used, they're all going to have different capacities, some of them are going to have slightly different chemistries.

So coordinating all those disparate batteries into a coherent application is challenging. And I've heard from some people who are just like, "Yeah, it's never going to be worth it." Do you have any prediction on that?

Yayoi Sekine

Yeah, so we've done some analysis on it—and I'd love to read your article to this. So it's somewhere in the middle, but it will be very application-dependent. So for certain applications, say for backup batteries, for telecoms, which is where we saw quite a lot of batteries in China, that kind of makes sense because you are talking about batteries that, we don't know the full degradation of it after second life. So as we have more data on the battery operation and it's life and afterlife, I think it does make sense naturally that it will be more economic for you to use them for second life application.

And if things are repackaged easily and in a way that's not too costly, then actually there is a big pool of batteries that could be used for second life. But if you're developing a new energy storage project and you really have a bank trying to finance that project, I think that there are specific applications where it would be challenging for you potentially to make a case around using used batteries for that. But there are certain segments and certain investor appetites that probably change. EV charging is another one where I can see second life battery applications taking off.

David Roberts

Yeah, yet another super interesting and dynamic and uncertain area to watch in this general field. So are there obvious barriers, if you were in a catastrophizing mood, what could impede the growth of this industry now? What are the sort of barriers that it has to overcome? Are there choke points ahead that you see or are we on a smooth expansion path here?

Yayoi Sekine

I think it's still related to the timing of the volume. That is a certain uncertainty that if you invest too early and then you have overcapacity, you underutilized to make a business case. And then I think the other bit is around business models. How to best strategize as a recycler as to where you locate certain parts of the recycling value chain in terms of the facilities that will make a big difference. Because for you to work very closely with an automaker and then kind of optimize the actual transportation, that can actually reduce your costs quite significantly. So I think that those two would be major elements to kind of crinkle out of this challenge.

David Roberts

We're getting close to time. So I had a couple of sort of dreamy questions here at the end, some dreamy speculative questions. So the dream here is that eventually, in some future time, we are going to reach a closed loop in batteries. I guess, the bigger dream is that we achieve a fully closed loop economy generally. But the dream here is that, eventually, all new battery demand will be satisfied with recycled materials. In other words, you have something close to a closed loop and you no longer need to mine new materials.

So a couple of questions about that dream. Obviously, that's never going to happen until sort of initial demand is saturated, right? Like you have to make new batteries. As long as demand is rising and rising and rising, you won't have enough batteries coming in to satisfy that. So my first question is just: do we have any sense of where that point is and how many EVs that is before you, sort of, saturated that initial demand and you can get something close to a closed loop, like how far away is that point of saturation and is there any real way to know?

Yayoi Sekine

Any real way to know would be to live until that point. But in terms of what that saturation point looks like, we do have actually, like, BNEF projections on EV uptake and energy storage uptake. We released last week our new Energy Outlook. So I can tell you that we have some data to quantify how we've created those scenarios to tell you what those S-curves and the point at which it saturates and what different markets look like, I can't tell you off the top of my head and when exactly that is. So I'll plug that one for kind of a future answer.

David Roberts

I'll put a link in the show notes.

Yayoi Sekine

The one thing I will say though is just that the technology is also changing. And you kind of mentioned this as well in the context of there's more LFP batteries now, but also that the batteries of the 2030s might look different or will look different.

David Roberts

I meant to ask about solid-state, like whether solid-state is recyclable. Does it affect the recycling process?

Yayoi Sekine

So it's definitely recyclable. Yeah, the lithium content is definitely higher in terms of concentration. So there's definitely pathways to recycle. And then you're talking about slightly different materials for the actual electrolytes and for the separate...There is a difference in terms of what that will look like from materials and recycling standpoints, but then it also means whatever point of the S-curve in terms of demand, what that looks like. It actually looks kind of different from a battery chemistry standpoint. So, yeah, I think that that's an important point.

David Roberts

And, finally, on this closed loop question, could we pull that off with current technology or will recycling technology have to improve while we're going through this period of saturating demand? I mean, presumably, technology will improve. It tends to be what it does. But do we have the technology now, or are we within striking distance of being able to close that loop to recycle to the extent that we no longer need new materials?

Yayoi Sekine

So the technology does exist. I think the process and the way to optimize, and maybe there are different pathways to recycle that can be improved to make the closed loop, like, kind of better. There is a pathway, but it will take time because even like scaling industrial operations, I think that that's tricky, right? Going from a pilot facility, where you're doing 10,000 consumer electronic batteries compared to, say, scaling up hundreds of thousands of EV batteries, that's quite a different operation.

David Roberts

It really is. I mean, are we going to have just dozens of these factories or, whatever, facilities in the US? Or is this more of like a few mega factories or maybe you don't know. I guess that has to do with the logistics of collection and stuff.

Yayoi Sekine

Yeah, I don't know what the number is, but there's definitely an optimal number at the moment, knowing that there are dozens of companies scaling up, there's at least dozens. We'll see what that looks like. And then that probably also depends on which part of the recycling value chain. So the first part, which is collection and shredding, there might be more of those compared to, say, just the chemical recycling part of it.

David Roberts

Right. Well, this is super interesting and fascinating, this whole area. I feel like we could have a pod on this like once a year and there would be new things to...

Yayoi Sekine

We should do it.

David Roberts

...talk about it. It's so dynamic and uncertain. I find it fascinating for that reason. So thank you so much for taking all this time and visiting with us.

Yayoi Sekine

Well, thank you so much, David, for having me. It's been great to talk to you.

David Roberts

And enjoy your football.

Yayoi Sekine

Thank you very much. I will, I hope I will.

David Roberts

Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid volts subscriber at volts.wtf. Yes, that's volts.wtf, so that I can continue doing this work. Thank you so much and I'll see you next time.

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Volts is a podcast about leaving fossil fuels behind. I've been reporting on and explaining clean-energy topics for almost 20 years, and I love talking to politicians, analysts, innovators, and activists about the latest progress in the world's most important fight. (Volts is entirely subscriber-supported. Sign up!)