An international consensus seems to have  emerged over the importance of a transition towards a low-carbon future. The energy transition to renewable sources of energy is the capstone  of a greener future. However, it would be harmful to pretend it does not have its dark side, and to overlook its negative externalities. One of them is the excessive reliance on scarce raw materials.

When it comes to the energy transition, there are so many factors to be taken into account that it is impossible to identify one “major” feature. Nonetheless, because renewables are exclusively a source of electricity, the electrification of all energy sectors – industry, transport and heating– is arguably a pivotal step. In turn, the electrification process can only be effective if it is possible to store the electricity that is produced. Think of smartphones: we can use them because they have batteries capable of storing a certain amount of electricity. The same logic holds true on a much bigger scale, for example, for cars as well as plants. The battery industry is at the core of the low-carbon transition.

The popular example is that of the transport sector. The substitution of combustion engine cars – powered with fossil fuels (mostly oil) – with electric vehicles (EVs) is a key driver to the decarbonization of the economy. EV’s engines run on electricity that is stored in batteries.. Perhaps more importantly, batteries will have a major impact in eliminating or reducing intermittence of renewable energy sources, which remains the main obstacle to their use on a large scale. In time, the possibility to store electricity – and to discharge it whenever needed – will allow a substantial integration of renewables to the energy grid. This could mean, for example, that excess solar energy captured in summer could be stored and discharged only in winter, when households need more heating.

The transition won’t be in a distant future. As a matter of fact, the “battery revolution” has already started. EVs stock has doubled between 2015 and 2016 [1], and 100 million electric vehicles should be added globally by 2030 if we are to meet the Paris Agreement goals – a 50-fold increase compared to today’s stock [2]. The political climate as well as the automotive industry are also moving in this direction. China, Britain, France and India have already launched plans to phase out combustion engine cars in favor of EVs, and automakers such as Toyota, BWM and Volkswagen are gradually introducing hybrid and fully-electric vehicles to their fleets. The prospects for the storage of (clean) energy, though still at the infancy stage, are also encouraging: a 100MW battery station – Tesla’s Powerpack in South Australia, the world’s largest of its’ kind, has been built and made operative in 63 days.

The dominant technology in the sector currently and in the coming years is the lithium-ion (or Li-ion) battery. This is because of its high energy density, which allows it to safely store very large quantities of energy, but also because of the economies of scale that have been developing since the 1980s. Due to the rapid expansion of the EVs industry, Li-ion batteries production costs have dropped up to 70% in the past two years [3]. The opportunities coming from grid-scale usage may further foster production from 30 GWh per year today to 200 GWh within the next few years [4]. Although alternative storage solutions exist, Li-ion technology has acquired such a remarkable advantage that it will likely remain dominant in the batteries’ sector for the years to come.

As the demand for Li-ion batteries increases, so does the demand for the raw materials that constitute them, including cobalt. (Today, 40% of cobalt mined worldwide is used in the Li-ion market, mostly for smartphones’ and laptops’ batteries). This poses a series of worrying questions to be addressed.

The first worrying question is scarcity. Among the materials the compose Li-ion batteries, cobalt is the one whose availability is most at risk [5]. Indeed, cobalt production is already incapable of meeting a ceaselessly growing demand, which is driven by the EVs industry. Each electric car requires between 10 and 15 kg of cobalt – that is, 1000-2500 more the quantity needed for a smartphone. An even larger quantity will be needed for grid-scale battery systems. Speculation is causing prices to rise at unprecedented levels, but cobalt scarcity is a tangible issue – it suffices to look at how much mining companies such as Glencore are investing – and its consequences in the long run are worrisome. If production does not keep up with cobalt demand the batteries revolution cannot take off.

The second problem is the geographical concentration of the material. Over 65% of cobalt supplies worldwide come from the Democratic Republic of Congo (DRC). As the mining industry is pouring more money in the country (Glencore, Eurasian Natural Resources, China Molybdenum), the percentage is destined to increase. This means that the global batteries industry – and consequently EVs and renewables storage – depends on one source country that has serious issues with rule of law and stability. Although it has been a reliable supplier of cobalt in the last years, the DRC is still recovering from a bloody civil war and it remains one of the poorest states in the world; additionally, the production region – former Katanga – has explicit independentism claims. This is threatening to the global cobalt value chain[1].

The third problem is an ethical one, that is, whether human rights abuses are the price to pay for the energy transition. The extraction of cobalt in the DRC often involves dire working conditions, child labor and environmental degradation, as denounced by Amnesty International in 2016. The main reason behind it is artisanal mining, an activity performed by an estimated 10 million citizens [6] across the country and that accounts for 20% of DRC’s cobalt exports. Artisan mining includes both the unauthorized descent into unsecure underground tunnels to have access to ore, and the digging for by-product rocks from the mining and refining processes. The former activity, which can be fatal even in situations of high safety standards, is usually performed by men without any form of safety equipment, whereas the latter by women and children, who work using their bare hands and for over ten hours under the sun. Both activities expose the workers to inhalation of the toxic dust from cobalt, which can lead to fatal lung diseases. Amnesty International has also reported that working in these areas exposes children to physical and drug abuse, sexual exploitation and violence [7]. Last August, the DRC government has announced a plan to eliminate child labor in the mining sector by 2025, a decision that further underlines the scale of the problem.

The situation improves only slightly when it comes to authorized mining and refining, which is largely in the hands of big multinationals. Not only most of them refuse to release information regarding working conditions their mines; multinationals often undertake opaque activities with the corrupt DRC government. Suffice it to say that the Paradise Papers scandal has found Glencore, which controls one third of the global cobalt mining industry and has a strong presence in Congo, associated with Dan Gertler, a mining tycoon that the US treasury has described as a serious human rights abuser and corrupt actor [8]. The other large companies involved in the DRC’s cobalt industry, including Huayou Cobalt, are Chinese and reportedly accused to buy cobalt ore regardless of where it comes from or how it has been mined [7].

The current situation is unlikely to stop as the world’s appetite for cobalt increases. Here is the conundrum: although a raw material whose extraction involves human rights abuses should not be traded, it is unrealistic to renounce to the DRC’s cobalt reserves – for the consequence would be to renounce to the energy transition. However, the situation can be improved. How?

First, by accepting that there is no feasible alternative for cobalt in the batteries industry. If it were it would have already been replaced for economic reasons, as cobalt is the most expensive among transition metals, which include manganese, nickel and iron. Cobalt guarantees the highest number of charge-discharge cycles of batteries compared to its possible substitutes. Second, by advocating for higher transparency standards. More than a half of the refined cobalt used in the battery industry comes from China, which in turn gets around 90% of cobalt ore from Congo. Although tracking cobalt poses many challenges, multinationals in both the automotive and electronics sector – from BMW and Tesla to Apple and Panasonic – must guarantee the sustainable origin of their cobalt stocks and provide transparent information about it. Finally, recycling Li-ion batteries will be pivotal not only to avoid waste damage, but also to reduce our dependence on the source country: by reusing cobalt, smaller quantities will need to be imported from the DRC, thereby dis-incentivizing its extraction. The road to a greener, but also fairer, future is a long and rocky one.

PDF

Article written by Federico Mascolo

 

---

References

[1] AffarInternazionali, 2017. Energia: l’Europa prova a caricare le batterie, l’Italia arranca, http://www.affarinternazionali.it/2017/10/energia-europa-batterie-italia/

[2] IEA, 2017. Global EV Outlook 2017, https://www.iea.org/publications/freepublications/publication/GlobalEVOutlook2017.pdf

[3] The Guardian, 2017. Tesla moves beyond electric cars with new California battery farm, https://www.theguardian.com/sustainable-business/2017/jan/31/tesla-battery-farm-california-energy-elon-musk

[4] World Economic Forum, 2017. The future is battery-powered. But are we overcharging the planet?, https://www.weforum.org/agenda/2017/09/lithium-ion-batteries-ethics-global-battery-alliance

[5]Simon et al., 2015. “Potential metal requirement of active materials in lithium-ion battery cells of electric vehicles and its impact on reserves: Focus on Europe,” in Resources, Conservation and Recycling 104, 300–310.

[6] World Economic Forum, 2017. There’s a dark secret powering your smartphone, https://www.weforum.org/agenda/2017/09/global-battery-alliance-child-labour-congo/

[7] Amnesty International, 2016. This Is What We Die For, https://www.amnesty.org/en/documents/afr62/3183/2016/en/

[8] Financial Times, Why Glencore bought Israeli tycoon out of Congo mines https://www.ft.com/content/8c4de26e-0366-11e7-ace0-1ce02ef0def9