Towards a Circular Economy of Lithium-Ion Batteries – Is a Fast Ramp-up of Recycling and Circularity Sustainable?
Authors: Wesselkamper Jannis , Lux Simon , von Delft Stephan 
Published: February 2024

With the rapidly growing demand for lithium-ion batteries (LIBs) in electric vehicles (EV) major global challenges for policymakers and companies arise. Global production and supply chains of battery materials increasingly account for environmental issues accompanied by social problems of raw material mining (e.g., for cobalt in DR Congo) and recent highly fluctuating raw materials prices. To face these problems, policymakers and companies are pushing for circular economy strategies for battery supply chains to guarantee a sustainable supply of critical raw materials such as lithium, cobalt, and nickel, and to integrate used batteries back into the value chain by recycling or reuse. But reaching a full circular economy early does not translate into improved sustainability at the same time. A circular economy of batteries in EVs is fully developed once the demand for raw materials in EV batteries is completely covered by recycled materials, the break-even points (BEPs) of a circular economy. At this stage, regional independence from primary raw materials with critical production and supply chains is achieved.

In this study, a critical perspective on the pushing for strategies to reach circular economy of EV batteries early is taken. Within three steps it is shown, (1) when the circular economy is realized on a regional level by reaching BEPs, (2) how to accelerate reaching these individual BEPs for battery materials through different scenarios, and (3) what this acceleration scenarios implies in terms of a sustainable global production of battery materials via mining and transportation compared to reuse and recycling.

In the first step, this numerical analysis focuses on identifying the BEPs of lithium, cobalt, and nickel for EV batteries in key regions, namely Europe, the US and China, by using a dynamic material flow analysis (MFA). For this purpose, the life cycle of a battery is considered and analyzed in a circular economy approach via production, EV life, secondary application (re-use) and recycling. The results show that China is the first region to achieve BEPs for Co and Ni in the 2040s while focusing on LFP as the main battery technology in the upcoming decades, followed by Europe and the U.S. Compared to China, EV battery technologies in Europe and the USA are dominated by NMC and NCA leading to later BEPs for cobalt and nickel. Generally, cobalt will be the first metal to achieve BEPs, while the secondary coverage of lithium poses a major future global challenge.

Second, based on a sensitivity analysis of the model parameters with the highest impact on the BEPs, different scenarios of parameter adaptions are presented which lead to potential earlier achievement of the BEPs in Europe, the USA and China (shift scenarios). These scenarios include early full electrification of car sales, no secondary application of EV batteries, reduction of EV battery sizes in time, shorter lifespan of batteries in EVs and high production scrap rates. The results show that each of the five shift scenarios has a different impact on accelerating reaching the BEPs in each region for the individual raw materials.

Third, in each shift scenario, the necessary mining and production amount of primary EV battery materials until reaching the BEPs are analyzed. Although achieving BEPs earlier by applying the shift scenarios seems beneficial, the results indicate that more primary raw materials must be produced annually until reaching the BEP under certain conditions, suggesting that more social and environmental problems linked to raw material mining and transportation would have to be tolerated. Therefore, a sustainable slow ramp-up of mines and recycling must be weighted individually against a fast ramp-up and, thus, against reaching a full circular economy early.

This analysis and the model in general can help policymakers and companies to strategically decide whether and how to accelerate achieving certain BEPs for an early independence from primary raw materials. However, by taking a critical perspective here, it is shown that accelerating the transition towards circular economy by reuse and recycling can be accompanied by intensifying temporary sustainable issues of raw material mining and transportation.