The Lithium Industry Should Meet the Moment: Go 100% Carbon Neutral by 2030

Alex Grant, Principal, Jade Cove Partners, San Francisco, USA

Robert Pell, President, Minviro, London, UK

David Deak, President, Marbex, Palo Alto, USA

February 2021

The PDF of this article is available here and its associated LinkedIn post is available here.

The lithium industry would be a different place today if the technology decarbonizing the transport sector in electric vehicles (EVs) was not called the “lithium-ion battery”.

If it was called the “nickel-graphite battery”, the lithium industry may have attracted significantly less attention. (1) There might also have been less scrutiny of the industry’s environmental performance by investors, customers, academics, governments, and other global stakeholders. Elon Musk may not have been implicated in flamingo deaths. (2)

Beyond the hype, specifications from battery manufacturers are catalyzing rapid change in lithium. In the 2010s, new demand prompted the creation of an entire new trade route. A decade ago, South American brine operations were the dominant source for low-cost lithium. Today, half of supply comes from spodumene “hard rock” mined in Australia, concentrated, and shipped to China for conversion into chemicals.

The Australia-China spodumene trade route is different from the incumbent South American brine ecosystem. It is generally more expensive, and spodumene requires high-temperature roasting to extract lithium. Current mining and conversion are powered by fossil fuels, using high CO2 intensity reagents. This means the CO2 emitted from lithium production via this new trade route is 6-7x higher than previously publicly understood. (3)

This has caught some EV manufacturers off guard. Their end customers are paying a premium for decarbonized cars, but EV manufacturers typically have minimal insight into the way the chemicals used in their batteries are made, with minimal resolution of the CO2 emissions tied to extraction and processing. How do we know if we are playing a game of “carbon whack-a-mole”, where we eliminate the CO2 emissions from burning gasoline, but substitute them for emissions elsewhere? What’s the point of electrifying Norway’s vehicle fleet if we have to emit hundreds of millions of tonnes of CO2 in China? The atmosphere’s greenhouse effect doesn’t care where the CO2 molecules came from.

This is one reason why the European Union will start legislating disclosure and control of the embodied CO2 footprint of batteries sold in the EU. (4) Fortunately, a number of life cycle assessments (LCAs) on EVs have found that CO2 emissions of ground transport are reduced by 50-95% with a renewable energy powered grid, depending on the exact CO2 intensity of the power source(s). (5)

It may be the case that a coal plant emitting 1,000 gCO2/kWh makes an EV as polluting as an internal combustion engine. Yet most of the world’s power is not that dirty, and there is significant growth in renewable power sources like wind, solar, and hydroelectric which emit closer to 30 gCO2/kWh, annuitized over their lifetime of power production. For the most part, as the grid greens, so do electric vehicles. (6)

Electrification must continue, but there are new “carbon moles” that need to be whacked back into their holes. Just as the Australia-China lithium value chain expanded in the 2010s, increasing the CO2 intensity of producing batteries, alternative natural resources are being developed which risk increasing the CO2 intensity of the battery further. These new resources typically contain lower concentrations of lithium, meaning more energy and reagents are required to produce lithium chemicals from them unless step-change better technologies are deployed.

When world leaders signed the Paris Climate Agreement in 2015, they did not include a decarbonization exemption for battery raw materials like lithium. They said we need to decarbonize everything, with net zero emissions in 2070. (7) There is a need to tackle the CO2 emission increase tied to lithium and other battery metal production: a consequence of industries simply responding to demand.

To demonstrate sincere alignment with battery manufacturers and the consumers who purchase electric vehicles, the lithium industry should meet the moment: every single lithium producer should target carbon neutrality by 2030. The path that every developer or producer takes to achieve this goal will be unique, but they will all follow a common framework which includes:

  1. Use development-phase LCA to inform process development and ensure emissions are reduced before CAPEX is spent, and construct with minimized CO2 footprint by design.

  2. Take measurements at new operations to maximize certainty of LCA models.

  3. Acquire high-quality carbon offset credits proportional to CO2 emissions. Offset credit projects must be additional, permanent, verifiable, and cannot suffer from leakage.

  4. Certify CO2 emission management plans with the Science Based Targets Initiative (SBTi) or similar groups which help companies align with the Paris Accord.

  5. Justifiably claim carbon neutrality to customers, investors, and other stakeholders.

The lithium industry can meet the moment by producing the chemicals needed for battery manufacturing and eliminating CO2 emissions. Two major lithium companies have already made carbon neutrality commitments and the rest of the industry must follow.

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Alex Grant is a Forbes 30 Under 30 honoree in Energy 2021. He is Principal at Jade Cove Partners, a technology advisory based in San Francisco. He is Partner at Minviro, a life cycle assessment firm based in London, and Technology Innovation Advisor to Zelandez, a lithium brinefield services company. He has a B.Eng. from McGill and a M.Sc. from Northwestern.

Robert Pell (PhD) is President at Minviro where his team builds sophisticated environmental impact models for the mining industry. Mr. Pell obtained his PhD from the University of Exeter where he studied life cycle assessment (LCA) of rare earth mining. His work was recognized by the European Commission as a best practice for mine development, and is the basis for Minviro’s methodologies.

David Deak (DPhil) is President at Marbex, a battery materials consultancy, a Partner at Minviro, and an Operating Partner at Azimuth Capital Management. Previously, he was Chief Technical Officer of Lithium Americas Corp (NYSE:LAC), and is an alum of Tesla (NASDAQ:TSLA), where he was responsible for building up the battery supply chain of raw materials.

References

(1)   Mining Journal, 2016. Lithium-ion batteries should be called nickel-graphite. URL.

(2)   Reisinger, 2016. Elon Musk Slams Suggestion Tesla Is Indirectly Killing Flamingos. URL.

(3)   Grant, Pell, & Deak, 2020. The CO2 Impact of the 2020s’ Battery Quality Lithium Hydroxide Supply Chain. URL.

(4)   European Commission, 2020. Green Deal: Sustainable batteries for a circular and climate neutral economy. URL.

(5)   Volvo, 2020. Battery electric XC40 Recharge and the XC40 ICE. URL.

(6)   Hoekstra, 2019. The Underestimated Potential of Battery Electric Vehicles to Reduce Emissions. URL.

(7)   IPCC, 2015. Global Warming of 1.5C. URL.