U.S. Inflation Reduction Act Sparks Race to Recycle Electric Vehicle Batteries
POOLE, England (Reuters) – A little-known clause in the U.S. Inflation Reduction Act is causing companies to scramble to recycle electric vehicle (EV) batteries in North America, putting the region at the forefront of a global race to undermine China’s dominance in the field. The clause automatically qualifies EV battery materials recycled in the U.S. as American-made for subsidies, regardless of their origin, making it easier for automakers to receive incentives for using U.S.-recycled battery materials in EV production.
This clause is leading to a boom in factory building in the U.S., as automakers are encouraged to research more recyclable batteries. It may also make it harder for buyers in developing countries to purchase used EVs. Currently, China handles almost all of the global EV battery recycling market, which is projected to grow from $11 billion in 2022 to $18 billion by 2028. The minerals in these batteries, such as lithium, cobalt, and nickel, are valuable and could be in short supply as EV production increases. However, these materials can be recycled multiple times without losing their power.
The U.S. government has provided significant funding for battery recycling plants in the country. Li-Cycle, a Canadian battery recycling firm, received a $375 million loan for a New York plant. Redwood Materials, a company awarded a $2 billion loan, plans to build a battery material recycling and remanufacturing complex in Nevada. The Inflation Reduction Act treats recycled battery materials as locally sourced, which has encouraged U.S. companies to move faster on recycling efforts than their European counterparts.
Many European recycling firms are planning to build plants in the coming years, but the availability of funding and the made-in-America incentive means that several U.S. plants are already under construction. The goal is to create “closed-loop supply chains” where recycled minerals are used to produce new batteries locally. This would allow countries to control their own supply chains and reduce reliance on China.
Despite the efforts in North America and Europe, China still leads the race in EV battery recycling. The country recently announced tougher standards and increased research support for recyclers. However, the global market for EV recycling is growing rapidly, with over 80 companies involved and more than $2.7 billion in investments in the past six years. The volume of EV batteries available for recycling is expected to increase tenfold by 2030.
Currently, there is limited recycling capacity in the U.S. and virtually none in Europe. In Europe, EV batteries are shredded and shipped to China for recycling. Companies are now focused on improving the recovery process to obtain higher yields of valuable materials such as lithium, cobalt, and nickel. This is important because the European Union will mandate minimum amounts of recycled materials in EV batteries within eight years. Additionally, the EU will impose strict conditions on recycling outside Europe, effectively keeping recycling local.
There are also concerns about finding old EVs for recycling, as many are exported to developing countries or scrapped. Some automakers are exploring ways to keep track of these vehicles to ensure they can be recycled. Nissan and Chinese EV maker Nio have implemented leasing programs to maintain control of the batteries.
The race to recycle EV batteries is driven by the desire to control supply chains and reduce reliance on China. While China currently leads in this field, the U.S. and Europe are making significant investments to catch up. The goal is to establish a sustainable and efficient recycling process that maximizes the value of battery materials and reduces environmental impact.
Reporting by Nick Carey in Poole, England, Paul Lienert in Detroit, and Victoria Waldersee in Berlin; Editing by Ben Klayman and Claudia Parsons
Original Story at www.reuters.com – 2023-07-21 07:45:02
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