INTRODUCTION
1. As India moves towards the goal of net zero carbon emissions by 2070 it is imperative that we as a nation achieve the EV sales goal of 30% private cars, 70% commercial vehicles and 80% two and three wheelers by 2030. The requirement and potential of the EV market is appropriately evident from the rise of the Elon Musk owned Tesla. The net worth of the company is weighed to be approximately $500 billion. This is way more than the combined net worth of next 10 companies. There might be some exaggeration in the facts collected from open source but the global scenario gives a clear indication of the rising economic potential of the EV market. It is all dependant on Battery Material.
BATTERY MATERIAL – THE CRITICAL COMPONENT
2. The economics related to the EVs is by and large linked with the storage capacity of the batteries used. Though the environment friendly method of electricity production is one of the concerns but batteries are more crucial as they are the key component of any e-mobility vehicle.
3. The Lithium Ion Based (LIB) batteries can help India to achieve its net zero carbon emission goal. The raw materials required for the manufacturing of a LIB are Nickel, Manganese, Aluminum and Copper, Graphite, Cobalt & Lithium. India has good reserves of first four types and is second largest producer of Graphite. But in case of Lithium & Cobalt we are highly dependent on China. Hence, the government has identified that reuse /recycle of LIB is the key. This will reduce dependence on import and in turn make India self-reliant in energy.
INDIA’s ENERGY SECURITY.
4. India is a one of the major energy consumers in world. It is the 3rd largest energy consuming country. Since 2000, India’s energy use has doubled and 80% of its demand is still being met by coal, oil & biomass. We have limited resources inhouse for battery manufacturing. The rare earth materials which are critical for Battery Material & LIB manufacturing are found in countries like Chile, Australia which contain 55% and 25% of the world’s reserves respectively. 70% of the world’s Cobalt reserve is found in conflict zone of the DRC(Congo).
5. Impact of the Russia Ukraine conflict has disrupted the oil supply in the world and has impacted the price of the EVs world over. As per IEA the demand for the EV batteries will grow from 350 GWh to 3500 GWh in 2030. This necessitates us to have robust supply chain of the rare earth materials, which is currently dominated by China. China has competitive capacity to build cathode and anode related products. It is leading in the refining capacity of cobalt, graphite & lithium. China’s hegemony in the supply china is a potential threat for India keeping in mind the relationship between the two countries. For example, during the COVID times China had increased the prices of polysilicon being used for the manufacturing of solar module. Recently the Chinese firm Tongwei increased the cost offer price of solar cells by 4.1% and that of solar wafers by 4%. It is evident that the monopoly of china can be used to weaponize the supply chain and hamper our economy. The demand for the raw materials & Battery Material, not available in India is likely to grow manifold.
6. This threat to the supply chain brings us to the requirement capacity building in terms of battery, material procurement and producing finished products. There are limited chances of overtaking China in the supply chain or to find new resources in India. This makes way for the idea of Circular Economy in terms of batteries. It will enhance the efficiency of India in terms of resource utilization.
CIRCULAR ECONOMY – RULES OF ENGAGEMENT
7. India’s ability as a nation to recycle and reuse the LIB will place it in a geopolitically stronger position. It will reduce the risks emerging out of battery waste. There are heavy metals in batteries which are corrosive in nature and can contaminate the environment. An LIB contains important cathode materials such as Ni,Li & CO. the LIBs have high density in terms of energy & power. In case of a linear economy, the materials will not be utilized up to their full potential. The requirement is of a circular economy with closed loops to mitigate the supply chain threats
8. The requirement is to identify the responsibility for waste management. This is known as Extended Producer Responsibility (EPR). As notified in the Battery Waste Management Rules, 2022, these rules clearly bring out that the producers will be responsible for the collection of used batteries, ensure recycling and reuse. All these will be done with transparency. These rules are amendment to the Battery (Management & handling Rules), 2001 and notified by the Ministry of Environment, Forest & Climate Change on 24 Aug 2022.
9. Recovery target as tabulated in the rules: –
| Type of Battery | Minimum recovery target for the year in % | ||
| 2024-25 | 2025-26 | 2026-27 and beyond | |
| Portable | 70 | 80 | 90 |
| Automotive | 55 | 60 | 60 |
| Industrial | 55 | 60 | 60 |
| EV | 70 | 80 | 90 |
10. It is imperative that the upstream and downstream movement of the battery and waste is planned and incentivized. It can be done by monetary motivation and penalization. The competition so generated should help innovate cost effective technologies and sustain the recycling of batteries. NITI Ayog in its report named ‘Advanced Chemistry Cell Battery Reuse & Recycling Market in India’ has identified the demand for recycling.
11. Facts to Analyze
(a) Carbon generated by new batteries is 38% more than the Carbon generated by recycled batteries.
(b) 95% of the metal components of new batteries can be reused in recycled batteries.
(c) 30-40% of the cost of an EV is due to the LIB or power storage device.
(d) The International Energy Agency (IEA), has estimated that the demand for EV batteries will grow tenfold by 2030.
12. The economic feasibility of battery recycling is dependent on robust supply chain, battery design, composition and methodology involved. Government is required to handle these by the means of the recently notified BWMR,2022. These rules clearly bring out the responsibility of all the key players in supply chain, starting from the importer, manufacturer, distributor, recycler, refurbisher and the end user. Monetary penalties have been clearly defined and regular auditing is also notified. A centralized online portal for the same is functional to ease the process of notifying the government and to regularize.
Recommendations.
13. While these rules a great start for India, the requirement is of unhindered implementation. India is a crucial junction of transformation to EV dependency. And this makes it important for greater center state collaboration to put these rules into effect in letter and spirit.
14. This further brings us to the innovation aspect. Key institutions of India like IITs and DRDO are required to design more environment friendly batteries and share the technology for mass production.
Today China dominates the supply chain of rare earth materials. India should adopt Circular Economy for batteries to reduce dependency on China. Upstream and downstream movement of the battery to be incentivised. – Tweet This