Bigger, better & faster circular part 1
How start-ups are trying to capitalize on business opportunities in battery recycling in North America
Introducing Jannis, a student at the University of Münster specialising in circular economy for electric vehicle (EV) batteries. Jannis is currently on a research visit at the Lawrence Berkley National Lab, California and from his knowledge of both American and EU markets is intercalating extra economics into our usual technical discussions. Strap in for some shrewd observations on recycling!
For a long time, North America lagged behind in the establishment of domestic battery value chains for the electrification of the automotive and energy market. However, in the last year North America has been gaining enormous momentum building its own battery value chains. The reasons are major investment and subsidy programs as part of the US Inflation Reduction Act (IRA).
In particular, electric vehicles which contain a certain amount of raw material in their batteries that are sourced from or produced by the US or free-trade partner countries, are eligible for subsidies under this massive program of over $70 billion [1,2]. In addition, there are subsidies for the installation of private energy storage systems.
Some important countries in global battery supply chains such as China, DR Congo or Argentina are not free trade partners of the US, so that the construction of battery systems in the US is booming like never before. Also, new mining techniques, such as direct lithium extraction, and mining areas within the US are currently being investigated [3,4].
The IRA also embraces another domestic source of raw materials: secondary raw materials from recycling [1]. Recycling makes local and, above all, ecologically and socially more sustainable battery raw material supply chains possible [5]. In addition, costs and supply risks can also be reduced drastically.
In theory, recycling seems sensible and unavoidable due to limited natural resources and enormous market opportunities through the IRA. In practice, however, there are major challenges for companies that want to close raw material loops by recycling batteries. Companies Redwood Materials, Li-Cycle and Ascent Elements are tackling the challenges, and some trends are already clear from the early stages of their business development processes.
The three start-ups were all founded in the mid-2010s. Redwood Materials was founded in 2017 by former Tesla technology manager J.B. Straubel and is now based in Carson City, Nevada [6]. Li-Cycle is headquartered in Toronto, Canada, and was founded in 2016 [7]. The oldest of the three companies is the US-based Ascend Elements, which was founded in 2015 with its headquarters now in Massachusetts [8].
All three companies have received major governmental support to expand their recycling capacities rapidly. In February 2023, the US Department of Energy announced a $2 billion loan for the construction of Redwood Materials' battery recycling site in Nevada [6]. Also, Li-Cycle was provided with a $375 million loan to build its main battery recycling facility in Rochester, New York back in October 2023 [7]. Even one year before in October 2022, Ascend Elements was granted a $480 million loan for installing a plant in Hopkinsville, Kentucky [8]. In the meantime, Ascend has also started operating a second plant in Convington, Georgia.
In total, once these three sites are up and running, they could supply battery materials for around one million electric vehicles per year - the same number of electric vehicles that were sold in 2022 in the US (plug-in hybrid and battery electric vehicles combined) [9]. But how do these start-ups use the money to realize recycling, and try to earn money? Three major trends of current practices and strategies emerge.
In the next article, Jannis will discuss these in depth.
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References:
[1] Trost, J.N., Dunn, J.B. Assessing the feasibility of the Inflation Reduction Act’s EV critical mineral targets. Nature Sustainability 6, 639–643 (2023). https://www.nature.com/articles/s41893-023-01079-8
[2] One year on, Biden’s IRA has changed the battery landscape. Benchmark Minerals (2023); https://source.benchmarkminerals.com/article/one-year-on-the-ira-has-changed-the-battery-landscape-in-the-us
[3] International Battery Metals leases lithium filtration plant for US production. Reuters (2024); https://www.reuters.com/markets/commodities/international-battery-metals-leases-lithium-filtration-plant-us-production-2024-01-11/
[4] U.S. to lend ioneer $700 million for Nevada lithium mine. Reuters (2023); https://www.reuters.com/business/autos-transportation/us-offers-700-million-loan-ev-battery-material-project-2023-01-13/
[5] Wesselkämper, J., Dahrendorf, L., Mauler, L., Lux, S., von Delft, S. A value chain independent from primary raw materials – Towards circularity in China, Europe and the US. Resources, Conservation and Recycling, 201, 107218 (2024). https://doi.org/10.1016/j.resconrec.2023.107218
[6] Redwood Materials, News; https://www.redwoodmaterials.com/news/
[7] Li-Cycle, Newsroom; https://li-cycle.com/newsroom/
[8] Ascend Elements, News & Insights; https://ascendelements.com/
[9] Global EV Outlook 2023. International Energy Agency (IEA) (2023); (https://www.iea.org/data-and-statistics/data-tools/global-ev-data-explorer)
