The global battery market is surging. By 2040 the global energy storage market is projected to attract $620 billion of investment. Over the past decade, the rechargeable lithium-ion battery market doubled on average every three years. To cope with this growth, we need the development of a sustainable and low-carbon value chain for batteries in order to contribute to the implementation of the 2015 Paris Climate Agreement, says Martin Brudermüller, Chairman of the Board of Executive Directors and Chief Technology Officer, BASF and Benedikt Sobotka, CEO of Eurasian Resources Group.

The World Economic Forum’s meeting in Davos concluded last week, with an agenda that included The Future of Energy. This is the second of three articles Energy Post has picked out for our readers.

There is a growing need for mobility worldwide. By 2025, there will be approximately 1.5bn cars on the roads. Electromobility, especially in combination with renewable energy, is an important contribution towards addressing global mobility needs. On top of this growth, batteries power everything from portable electronics devices to back up renewable energy in homes, businesses and national grids. They are a key enabler of global efforts to curb climate change, and market developments reflect this.

Batteries are a core technology underpinning the shift to energy decarbonisation and transport systems, and could be a game changer in efforts to curb climate change. Historically, portable electronics have been the primary driver of growth in the battery market; however, today the growth in demand comes from electric vehicles.

Batteries leap from small portable electronics to power plant storage

The International Energy Agency projects that by 2030 a stock of 130 million electric vehicles could be on the world’s roads. While scenarios vary, significant investments in electric vehicle and battery production are well underway. They are also fuelled by national and international targets to support climate action, while several cities and governments have announced their intentions to ban internal combustion engines.

Looking beyond transport, the entire energy system is undergoing a systemic transformation. By 2050, wind and solar energy are expected to account for 50% of global power generation, while in 2017 fossil fuels made up 85% of the global energy system. Beside the fact that batteries are the basis for future mobility, they are key as they ensure energy availability when the wind is not blowing and the sun is not shining.

The battery value chain needs help

However, without deliberate intervention, the potential of batteries to support sustainable development and climate change mitigation risks being undermined by its own value chain.

Firstly, the extraction of raw materials used in batteries can come at a significant social and environmental cost. About two-thirds of the world’s cobalt, for example, comes from the Democratic Republic of the Congo and about 20% is estimated to come from sources that can be linked to unsafe working conditions and child labour.

Secondly, battery production carries a large carbon footprint.

Thirdly, a lack of coordination and effective financing schemes across the value chain appear to be hampering the deployment of batteries to bring affordable, clean energy to low- and middle-income countries.

Fundamental improvements to the full battery value chain are needed to allow batteries to power sustainable development and climate change mitigation. Collaborative action is required today to develop a sustainable backbone for the energy and transport systems of tomorrow. This requires the realisation of three core objectives:

3 steps to a sustainable and fair transition

First, stable and transparent raw material supply chains must be built, characterised by good working conditions and providing shared prosperity. This includes alignment on standards and assurance frameworks as well as the mobilisation of blended finance at scale to tackle challenges such as child labour.

Second, a circular, low-carbon and pollution-free value chain must be created to unlock the potential for batteries to contribute to the realisation of the 2015 Paris Agreement.

Third, the full potential of batteries must be unlocked to bring electricity and productivity enhancements to one billion people in low and middle-income countries.

How can we achieve these three core objectives?

– We need clear and firm commitments and coalitions of public, private and civil society organisations agreeing to align investments. The target is to develop and endorse standards for responsible, sustainable sourcing of cobalt and lithium supply chains.

– We need to assess the opportunities associated with a circular economy for batteries. Multiple action partnerships have to be formed to define sustainability criteria for battery design, and lower transaction costs in electric vehicle battery reuse and recycling.

– We need to support existing commitments to boost battery storage and the electrification of transport in low and middle-income countries.

All these efforts are being taken up by the World Economic Forum’s Global Battery Alliance, which is co-chaired by the authors of this article.

The Global Battery Alliance

The Global Battery Alliance is a unique public-private partnership and collaboration platform whose aim is to accelerate public-private action towards the aforementioned goals. It brings together businesses along the value chain with governments, international organisations and civil society to coordinate and boost the many good efforts that are already underway.

This year, we must build on the momentum already generated – by the World Bank’s $1 billion investment in battery storage, for example, or the Global Battery Alliance’s mission to build responsible global battery supply chains. Realising these goals will take us a big step closer to a world in which batteries power sustainable development.

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Martin Brudermüller is Chairman of the Board of Executive Directors and Chief Technology Officer, BASF

Benedikt Sobotka is CEO of Eurasian Resources Group

This article was originally published by the World Economic Forum, and appears here with permission.