Bridging the gap between due diligence principles and on-the-ground actions

For the past few years, civil society was alerted through NGOs and media coverage of the adverse effects of some mining practices directly affecting the social and environmental sustainability of consumer goods, first consumer electronics and now (and increasingly in the future) electric vehicles.

Due diligence guidance has existed for about a decade, and high-level principles related to supply chain traceability and risk identification and mitigation have been brought into national and EU laws.36 These principles, in theory, are applicable to any supply chain, but there is a trend to increasingly adapt them to a specific value chain structures, such as the risks of battery materials, such as cobalt. Japan, for example, included cobalt as a strategic resource for the future battery industry in its “Well-to-wheel Zero Emissions” long-term plan to 2050 (Government of Japan, 2018).37

Currently, due diligence frameworks are only voluntary in the case of battery materials. Despite an increasing pool of private sector stakeholders abiding by the voluntary guidance principles, via the RMI for example, a gap clearly needs to be bridged between the level of requirements set by due diligence guidance and concrete requirements to reach full supply chain transparency and the proper identification of the various stakeholders along the chain to take concrete risk mitigation actions locally. In the specific case of cobalt, the DRC government developed a National Action Plan to improve working conditions at artisanal mining sites (LeCongolais, 2017) and the Congolese Mining Code was revised in March 2018 and it imposes an increase of the tax from 2% to 10% on metals considered as strategic by the government, including cobalt. (Government of the DRC, 2018; Delamarche, 2018). However, in the case of cobalt and other battery materials today, the implementation of many mitigation solutions at the mine level are only at pilot stage.

Overall, this suggests that some end-product manufacturers (battery producers and OEMs that are in direct contact with the EV customers) increasingly feel responsible for their supply chain to the mine level; increasing the sustainability of the supply chain requires this to be extended to a larger scale. Such actions could be supported and scaled up via binding regulatory frameworks that encourage international multi-stakeholder co-operation to address challenges related to the international span of mineral supply chains, so that effects are visible at the local community and local ecosystem levels.38

Battery end-of-life management

The fate of batteries at their end-of-life also has an impact on the sustainability of the material value chain. Different options (some of which can be combined) exist at the end-of-life of the battery as electricity storage on-board of the vehicle. They are broadly grounded on the reuse and recycle components of the wider 3R39 framework on waste prevention, as key alternatives

36As mentioned, these countries include the United States and a few African countries such as Rwanda and the DRC. The Conflict Minerals Regulation will be adopted in 2021 in the European Union and aims to ensure that EU companies import the 3TsG from responsible suppliers only (EC, 2017b).

37The plan states that the procurement of cobalt needs to be guaranteed and stabilised, referring notably to the need to address stockpiling issues.

38One example of such regulation is the loi sur le devoir de vigilance (duty of vigilance law) established in 2017 by the French government. It forces companies to establish and publish their strategies to identify and prevent environmental, human right abuses and corruption risks not only for their own work, but also on their suppliers and subsidiaries activities in France and abroad.

39Reduce, Reuse and Recycle. The 3R principles are guidance to help reducing the amount of waste generated.

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to landfilling.40 Such end-of-life treatments fall within the circular economy, which ensures that products are kept in use. In terms of battery materials, it enables limiting shortage risks and the dependency on primary raw materials that could be related to potential risks depicted in the Table 5.1.

Reuse: EV batteries degrade over time and with use.41 Once the service they provide is no longer optimal for use in the vehicle sector, they can find useful purposes in other areas (Casals, et al, 2019). An often-mentioned solution is the use of an "old" EV battery as stationary storage (available capacity requirements are less of an issue than for a vehicle where it matters for driving range). A number of OEMs have announced efforts on such options, in order to maximise the economically viable lifetime of a single battery pack (the recovery of production costs therefore would be spread over the mobile battery lifetime and the stationary battery lifetime of the same pack) (Volvo Group, 2018a; FCA, 2017; Renault-Nissan-Mitsubishi Alliance, 2018).42 In the European Union, the European Commission via the Innovation Deal developed a process to allow easier reuse of batteries for stationary purposes.43 It includes the assessment of the national and EU laws to determine whether some of them hinder the reuse of EV batteries (EC, 2018). Indeed, it is crucial that legislation on end-of-life management enables the use of batteries for secondary purposes.

Recycle: Recycling allows materials to be reinjected into the economy, lifting pressure to exclusively resort to new raw material extraction. Although it is unlikely that recycled materials in the short and medium term will supply a large share of the metal demand regarding the expected growth of EV sales and the time it takes for EV batteries to reach their end-of-life. However recycling could limit risks of material shortages and reduce dependency of consumer regions on supply chains associated with transparency issues and risks. Table 5.2 summarises the main recycling processes possible for batteries and their advantages and disadvantages.

A relevant example of co-operation of battery/auto manufacturers with material producers to enable increased recycling rates as well as material traceability is the case of Umicore and Audi, which are working on a closed-loop battery cycle. The objective is to both improve the recycling rate of the battery and create a closed-loop for the recycled metals. Under this initiative, laboratory tests showed that under optimised recycling processes, 95% of the cobalt, nickel and copper in batteries could be recovered. The objective is to attain such rates at an industrial scale (UMICORE, 2018).

As recycling processes have specific advantages and challenges, developing a cost-effective, environmentally respectful recycling method requires the close co-operation of governments and the transport sector to provide appropriate regulations to incentivise companies to recycle when it makes sense and that makes recycling economically viable. A number of initiatives, some of which take inspiration from the “extended producer responsibility approach” have

40Landfilling of non-recyclable materials or even of entire, non-recycled batteries, is the "last-resort" solution for batteries at end-of- life.

41The order of magnitude of a battery lifetime is eight to ten years [(Casals et al, (2019)].

42The battery packs, aggregated together into large stationary storage packs, would typically be used to absorb variable renewable energy to be able to redistribute it when called upon. Volvo, for instance, works with the City of Gothenburg in Sweden to reuse its batteries from electric buses for local energy storage for a building initiative called “Positive Footprint Housing”. So far, it has been on one building as a pilot test. It aims to study the potential lifetime extension of the battery and its role in facilitating residential energy management before further large-scale applications (Volvo Group, 2018b). Such projects can expand the lifetime of the battery up to an estimated ten years for the project (Volvo Group, 2018b).

43Innovation Deals are voluntary agreements that help to overcome barriers to innovation (EC, 2018).

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IEA. All rights reserved.