Sustainable future for the used battery industry… “Comprehensive policy support considering eco-friendliness and economic feasibility must follow”

Preemptive response to global regulations on the battery industry raw material supply chain
Establishment of a battery life cycle carbon footprint calculation method and evaluation system
Strengthening global cooperation, including inter-ministerial governance and international standards and certification
Expanding provision of essential battery information required for battery safety diagnosis and disassembly, etc.

index
1) Great value in escaping dependence on environmental friendliness and overseas sources of key minerals
2) Electric vehicle popularity ↓… What is the outlook for the used battery market?
3) Current status of Korean used battery industry players and technologies (1)
4) Current status of Korean used battery industry players and technologies (2)
5) LFP battery recycling is a must… but monetary value alone should not be considered
6) The path forward for the used battery industry

[Editor's Note] It is expected that the number of electric vehicles scrapped by 2040 will exceed 40 million.Battery recycling technology, which accounts for about 30% of the carbon footprint of a car's entire life cycle and more than 30% of the price of an electric vehicle, is considered a very important technology in the economic sector. If used batteries are not reused or recycled, waste will continue to increase, and if they are left unused or landfilled or incinerated without proper treatment, hazardous substances will be generated, which can cause environmental pollution. The market size for recycling used batteries is expected to continue to expand in response to the trend of having to respond to CRMA in Europe and IRA in the US, which place great importance on eco-friendliness. We will take a closer look at the used battery industry, which encompasses both economic feasibility and eco-friendliness, and cover the current status of technology and business of Korean companies as well as the industry outlook in articles every Wednesday starting April 24 for six weeks.

In the previous five articles in this series, we covered everything from the importance of the used battery industry to the need for LFP battery recycling.

This industry, which embraces both eco-friendliness and economic feasibility, is positioned as a key axis for a sustainable future.

In the final article, we will look back at the value and importance of the used battery industry and explore areas for improvement and policy support to achieve a truly circular economy through the used battery industry.

The Battery Alliance, in which the three major battery companies and Hyundai Motors are participating, is redefining used batteries not as "waste" but as "batteries that are separated from electric vehicles and subject to remanufacturing, reuse, and recycling."

Used batteries have sufficient environmental and economic value because they can be installed in automobiles after repairing and replacing some of the cells (remanufacturing) or converted into uses such as energy storage devices (reuse).

Through the 2015 Paris Agreement on Climate Change (Paris Agreement), our society set out to reduce greenhouse gases so that the global temperature rise would not exceed 1.5℃ by 2100.

In the transportation sector, which accounts for a large portion of carbon emissions, electric vehicles are bringing about innovation in reducing carbon emissions, especially in the road sector, which accounts for a large portion (96.5% in Korea).

Electric vehicles are not completely carbon-free.

According to Hyundai Motor Group's 2022 Sustainability Report, the Ioniq 5 model's total greenhouse gas emissions of 169 gCO2-eq/km in terms of global warming impact at each stage of its life cycle are 'pre-manufacturing stage'' accounts for 27.78%.

Battery recycling and reuse are essential technologies to reduce energy consumption and environmental impact in the mining and processing of battery raw materials, which correspond to the 'pre-manufacturing stage'.

In addition to being environmentally friendly, the used battery industry also has great significance in terms of supply chain resource security.

It is one way to respond to supply chain risks and resource weaponization in our country, which lacks resources.

In an interview with our paper, Son Jeong-su, a senior researcher at the Korea Institute of Geoscience and Mineral Resources, emphasized that in order for South Korea, which is showing strength in the battery industry, to become a true powerhouse, it must reduce its dependence on resource imports, and that recycling of used batteries can play a role in that.

Senior Researcher George Hye also said that in relation to resource security, it is possible to replace rare metals with renewable raw materials obtained through material recycling, which can contribute to securing a more sustainable raw material supply chain.

Our country relies on overseas imports for 95% of its mineral demand, and as of 2021, our country's dependence on imports of secondary battery cathode materials reached 89%.

The minerals that go into batteries are finite and ubiquitous.

In an international situation where the future is uncertain, such as the risk of nickel price volatility due to the war between Russia and Ukraine last year, ubiquity and high dependence on foreign countries could pose a major crisis to the battery industry.

LG Energy Solution announced that its operating profit for the first quarter of 2024 was 157.3 billion won, a 53.5% decrease from the previous year.

LG Energy Solution Vice President Lee Chang-sil said, “The profit and loss decreased in the previous quarter due to increased fixed cost burden, such as adjustment of operating rate due to decreased market demand, and the lag effect of raw material input caused by the decline in metal prices. It was also announced in a press release that “the contrast has declined.”

It is also interpreted that the operating profit of the world's leading battery manufacturers may be affected by the decline in metal prices, and securing raw materials through recycling, etc. is expected to provide a small stability to the profits of manufacturing companies.

Recycling of LFP batteries as well as NCM batteries, the main products of the three battery companies in our country, should be considered.

LFP batteries are expected to dominate the global stationary energy storage market, with demand exceeding 3,000 GWh by 2030.

It is true that there are still questions about whether it can lead to a circular economy due to the low profitability and high recovery cost when recycled compared to NCM.

Nevertheless, sustainable recycling of LFP batteries must be pursued to ensure a safe supply of critical raw materials such as lithium, phosphorus and graphite while minimizing environmental impact.

For companies that need to generate profits, recycling LFP batteries, which have low monetary value, may not be attractive, but it is absolutely necessary for environmental friendliness.

Kim Pil-soo, a professor at the Department of Future Automotive Engineering at Daerim University, said in a column submitted to our newspaper that LFP batteries that do not undergo battery recycling could cause serious environmental problems, as about 500 kg of batteries are separated per vehicle.

In an interview with our paper, Cho Ji-hye, a senior researcher at the Korea Environmental Research Institute, said, “LFP batteries are being used not only in vehicles but also in electric bicycles, electric scooters, and home appliances, and they contain important raw materials such as lithium and phosphorus. On the other hand, if improperly disposed of, such as through landfill, it can cause environmental pollution,” he said. “In the future, it is necessary to increase circular use through research on introducing a recovery and resource recycling system based on the outlook for generation volume from the perspective of a circular economy.”

According to the report titled ‘Current Status and Significance of the Domestic Electric Vehicle Spent Battery Industry’ by Lee Seon-hwa, Senior Researcher at the Industrial Technology Research Center of the KDB Future Strategy Institute, active investments are being made to secure leadership in the electric vehicle spent battery market, and major domestic companies are attempting to complete the value chain of the spent battery industry through M&A, joint ventures, and cooperation between affiliates or external companies to preempt the market.

In addition, in the case of recycling, in order to secure raw materials, it is necessary to build and utilize overseas networks as well as domestic networks, so cooperation with overseas companies in the relevant function is on the rise. In addition, since batteries used through reuse and remanufacturing must ultimately be processed through recycling, the cooperation is expanding to include companies in the recycling sector.

Son Jeong-su, a senior researcher at the Korea Institute of Geoscience and Mineral Resources, spoke at a conference hosted by the Korea EV Technology Association at the K-BATTERY SHOW 2023 held at KINTEX in Ilsan in September last year, saying, “All companies are paying attention to the prospects of the waste battery business and are continuing to invest, but no one has yet conquered the market.”

This means that it is an industry that is just beginning to emerge, and that there is a lot of potential for opportunities and development in the future.

This means that with rapid market value increases and technological advancements, there may also be growing pains.

In order to activate the circular economy through the used battery industry, there are clearly areas that need to be improved, and supporting policies must follow.

Comprehensive policy support that takes into account both eco-friendliness and economic feasibility We must strive to ensure that the used battery industry can play a key role in opening up a sustainable future through the development of innovative technologies.

When asked about key policy tasks for activating the domestic battery circular economy, Jihye Cho, a senior researcher at the Korea Environmental Research Institute, answered, “We must proactively respond to global regulations on the environmental impact of the battery industry and the raw material supply chain.” She added, “We must establish a method and evaluation system for calculating the carbon footprint of the entire battery life cycle, and strengthen global cooperation in areas such as inter-ministerial governance and international standards and certification.”

▲Battery reuse and recycling issues (Image provided by: Jihye Cho, Senior Researcher, Korea Environmental Research Institute)

In addition, the problem of rising dismantling and recycling costs due to the various shapes and specifications of used batteries has been raised, so it was added that it is necessary to support 'sustainable battery product design' in conjunction with Article 16 (Promotion of Use of Circular Raw Materials) and Article 17 (Promotion of Circular Use of Products, etc.) of the 'Act on Promotion of Transition to a Circular Economy and Society'.

The provision of essential battery information, including discharge methods for safety management in case of fire or explosion, as well as for safety diagnosis and dismantling of batteries after use, should also be expanded.

In order to secure quantities for recycling, support should also be provided through understanding whether each importing or exporting country recognizes used batteries as waste in relation to procedures such as consent at the time of import or export.

Since Korea only began to recognize used batteries as recyclable products rather than waste in December of last year, each country has different standards. Monitoring is essential.

Europe has imposed mandatory use of recycled raw materials and has set mandatory standards for the use of cobalt, lead, lithium, and nickel in new product manufacturing for materials used in the manufacture of electric vehicle batteries.

Starting eight years after the regulation takes effect, batteries must be manufactured using recycled materials that account for at least 16% of cobalt, 85% of lead, 6% of lithium, and 6% of nickel.

From 13 years onwards, it was stipulated that at least 26% of cobalt, 85% of lead, 12% of lithium, and 15% of nickel must be recycled raw materials.

Active support is needed to ensure compliance with the above regulations, and if regulations are disadvantageous to our country, the government should maintain close relationships with companies to listen to their opinions and provide for deferrals or relaxations.

As discussed in previous articles in the series, our country has the potential to become a global example in the used battery industry thanks to active research and policy support from many companies and organizations.

We expect that innovative technology development and efficient policy support will come together to fully realize its potential.