The Case for Effective Reuse and Recycling

Executive Summary

The Government of India has pledged to achieve net-zero greenhouse gas emissions by 2070, the first time India has established such a target. This ambitious target aims for deep decarbonization of India by building on existing policy targets. These include installing 500 gigawatts (GW) of non-fossil fuel electricity generation capacity and reaching 30% sales share of electric vehicles (EVs) by 2030.1 Reaching these targets will require deployment of a high volume of effective energy storage technologies.

Rapid improvements in lithium-ion battery (LiB) performance over the past decade, combined with declining costs and increased global demand, put this technology at the forefront of electrochemical energy storage markets. Total demand for LiBs in India could be between 105 and 263 GWh annually by 2030. This rapid increase in LiB demand in India will be largely in the transportation sector, where EV sales could compose up to 70% of new vehicle sales by 2030. Meeting this demand will require build-out of battery manufacturing capacity, access to adequate resources, and battery management to avoid risks to human health and the environment. The National Programme on Advanced Chemistry Cell (ACC) Battery Storage, implemented by the Department of Heavy Industries and NITI Aayog, aims to establish 50 GWh of local manufacturing capacity by 2030.

The material supply chain will be critical to making LiB manufacturing truly secure and sustainable. The supply chain is currently dominated by China, with Australia, the Democratic Republic of the Congo, and Chile being key suppliers of many necessary raw materials. These materials are often mined via carbon- intensive processes and procured from politically unstable regions. For lithium alone, CO2 equivalent emissions can range from 3 to 17 tonnes per tonne extracted and processed. Physical scarcity may have impacts on price, with bottlenecks already being faced for nickel and cobalt. Concentration of these materials in specific geographies also creates risk for long-term viability for LiB production.

Successfully establishing a sustainable domestic manufacturing industry requires India to evaluate the lifecycle impact of LiBs. This includes cultivating opportunities to implement circular economic principles for LiB stakeholders by establishing a policy framework that promotes proper end-of-life management.

Embracing a circular economic model complements India’s domestic policy goals by increasing control
of the LiB supply chain and reducing reliance on imports to meet growth in domestic demand. By 2030, EV LiB retirements could range between 3.5 and 17 GWh of nameplate capacity (30,000 and 145,000 tonnes), depending on the level of EV penetration. Available capacity will be approximately 70% of retiring nameplate capacity. Developing the recycling capacity to meet these needs will require a clear policy framework with strong monitoring and enforcement capabilities to prevent growth of informal markets, as well as heavy investments in recycling infrastructure.

The Ministry of Environment, Forest, and Climate Change (MOEFCC) introduced “Battery Waste Management Rules, 2020” (draft rules) for proper management of battery waste in February 2020. As introduced, the draft rules establish an Extended Producer Responsibility (EPR) program covering battery stakeholders, mandating collection of 30% of end-of-life batteries (by kg) effective two years after implementation. The policy target then graduates to 70% of end-of-life batteries by the seventh year.

Under this policy, materials recovered from recycled EV LiBs could provide 5% of domestic manufacturing needs for minerals such as lithium, nickel, cobalt, and graphite by 2030. If EV sales accelerate due to effective market development policies, recovered materials may exceed 20% of domestic LiB manufacturing demands for certain materials. Utilization of recovered minerals to meet domestic LiB manufacturing demand will avoid upstream emissions from mineral extraction, processing, and transportation. While the LiB recycling process also produces emissions, primarily through energy use, the avoided upstream emissions outweigh recycling- based emissions. Implementation of the draft rules will reduce upstream emissions by 50,000 to 180,000 tonnes by 2030. Further, as the grid decarbonizes, the LiB manufacturing process will become less carbon intensive.

While the draft rules would provide strong benefits for India’s domestic battery manufacturing sector and decarbonization efforts, the policy can be improved. This report suggests the following:

1. Include specific language on hazardous material transport and handling guidance relevant to LiBs Lack of guidance on clear labelling of LiBs (and the various chemistries) or rules on transportation, collection, and sorting of LiBs may result in LiBs commingling with lead-acid battery (LAB) waste. Comingling may pose health and safety risks to recycling centres and staff. Clear guidance that distinguishes LiB and lead-acid battery handling and transport, and distinct standardized labels for battery chemistries can reduce risk.
2. Establish reuse targetsWhile collection and recycling end-of-life LiBs will recover the value of the minerals, the value of the residual capacity can be captured through second- life applications. Reuse prolongs the use of an EV LiB, delaying the need for recycling. Second-life applications could include firming renewables, battery energy stationary storage (BESS), behind-the-meter storage, or breaking the battery down to cells or battery packs. Reuse targets for four-wheel passenger and commercial vehicles and e-buses could provide between 1.2 and 5.9 GWh of storage capacity by 2030.
3. Formalize second-life performance standards and warrantiesTo improve the market for second-life LiBs and become a global leader in LiB reuse, India should work with industry stakeholders to devise a methodology for certifying refurbishers, as well as metrics for assessing and guaranteeing performance standards, and establish incentives for innovative approaches for second-life applications.

4. Considerations for costs

Establishment of a battery recycling program will create cost implications. While the EPR framework passes costs on to appropriate stakeholders, key considerations for regulatory authorities are to ensure that the associated funding mechanism is adequate, that the estimated program costs are realistic for achieving the collection and recycling targets, and that the funds raised are not inappropriately used for activities that do not benefit the program.

5. Incentivizing consumer compliance

In addition to costs for recycling and collection infrastructure, another key component will be incentivizing consumers to return end-of-life EV batteries to the appropriate collection agent. Any submitted plan should include an incentive mechanism for consumers, which may include a rebate for returned batteries or a deposit system. Regulatory authorities must ensure that a submitted plan includes some form of incentive program to ensure compliance.

6. Enforcement and penalties

Regulatory authorities should develop a transparent methodology for identifying issues, and steps for remediation or penalties.

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