The road to carbon neutrality entails a significant shift
in sourcing and production strategies for automakers and their
battery suppliers.
The transportation sector’s objective to curtail greenhouse gas
emissions has evolved beyond merely addressing emissions during
vehicle operation. The focus has broadened to encompass a life
cycle assessment perspective, spanning the extraction of minerals
used in vehicle production to the recycling process. This
comprehensive approach aims to assess and manage GHG emissions at
every stage of a vehicle’s life and acknowledges the environmental
impact from raw material extraction to end-of-life
considerations.
The elephant in the room in this quest is the electric vehicle
battery supply chain. A new forecast by S&P Global Mobility
shows that battery cells account for 43% of the total carbon
footprint of materials used in an EV. The research identifies that,
in the cell’s overall carbon footprint, cathode active materials
account for the highest portion of the overall cell carbon
footprint at 58%, followed by anode active materials and cell
assembly at 14% each. Additionally, the research shows that lithium
iron phosphate chemistries have a higher overall carbon intensity
than nickel cobalt manganese chemistries. This adds another
dimension to portfolio management since some original equipment
manufacturers turn to lithium iron phosphate as a low-cost,
higher-volume solution. The forecast covers the CO2 equivalent for
cathode active materials, anode active materials and battery cells
from a cradle-to-gate perspective.
Evolving regulatory requirements
The regulatory winds of change are also gathering around battery
carbon accounting. The European Council adopted a new battery
regulation that strengthens sustainability rules for batteries and
waste batteries. The new rules aim to improve the internal market
for batteries and ensure fairer competition through safety,
sustainability and labeling requirements, which include mandatory
information on the carbon footprint of batteries. The new rules
require battery manufacturers selling in Europe to calculate and
report the total carbon footprint from the battery life cycle,
starting July. This data will be used to set a maximum CO2 limit
for batteries produced and sold in Europe in 2027.
China, which has one of the highest emissions per kilowatt-hour
of battery produced, implemented its GB/T 34014-2017 regulation;
this assigns a mandatory traceability code involving carbon
footprint information for EV traction batteries throughout their
life cycle. The Japanese government is also said to be preparing
mandates for EV-makers in the country to calculate and report CO2
emissions from the production of batteries from 2024.
Regional advantage
Europe has the lowest CO2 emissions per kilowatt-hour, mainly
due to the high percentage of renewables in its energy mix. China,
which will likely continue being the biggest battery manufacturer,
is also taking the initiative to switch to renewable sources,
prompted by the GB/T 34014-2017 regulation. Our forecast indicates
that Chinese initiatives, marked by the implementation of GB/T
34014-2017 will help bring China’s battery carbon footprint during
battery assembly below the global average by 2026. Average CO2
emissions for battery assembly in Greater China are expected to
drop to fewer than 5 kg/kWh in 2030 from 12.59 kg/kWh in 2022, a
marked improvement that will put the region back on the competitive
front foot. China’s progress in just a few years is stark; the
country is expected to race ahead of Japan and South Korea, while
North America’s progress will be much more measured.
The carbon neutrality of an OEM is directly affected by the
carbon footprint of its battery value chain. Our data indicates
that OEMs with a higher dependency on Europe for battery production
are expected to have much lower carbon intensity than the global
average in 2030 compared with the current scenario. However, there
are substantial regional variations in the carbon emissions
associated with OEMs’ battery cells. In Europe, cell manufacturers
are actively working to diminish their carbon footprint,
contributing to the broader objectives of OEMs.
What’s the opportunity cost?
A regulatory shift is making it necessary for OEMs to evaluate
the sources of GHG emissions in their supply chains and industrial
sites. Many have started including climate requirements in their
component purchasing agreements, with an eye on capturing
cradle-to-gate emissions. Automakers’ carbon-reduction targets will
heavily depend on the efforts of their battery suppliers,
especially in key areas such as raw materials sourcing, process
innovations and the use of renewable energy in cell
manufacturing.
S&P Global Mobility’s research reveals that if the battery
manufacturing industry can execute planned steps to achieve carbon
neutrality according to their respective targets, the carbon
footprint could be reduced by 31%, or about 79 million metric tons
of CO2 equivalent emissions, by 2030. The estimate is based on a
forecast of battery cell production increasing from about 537 GWh
in 2022 to 3,363 GWh in 2030. On a per kilowatt-hour basis, CO2
emissions are expected to be reduced to 52 kg/kWh in 2030 from
75kg/kWh in 2022.
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- Source: http://www.spglobal.com/mobility/en/research-analysis/race-to-reduce-carbon-footprint-of-electric-vehicle-batteries.html
