How to solve battery demand without digging deeper

Key takeaways

• As battery demand accelerates for electric vehicles and grid storage, so does the need for key minerals like lithium, nickel, cobalt, and graphite. These materials are foundational to the clean energy transition today.
• Yet China dominates their mining and refining. The ongoing trade tensions between China and the United States have exposed the fragility of current supply chains and the urgent need to build more resilient systems to decrease China’s leverage in using it as a geopolitical weapon.
• The solution is not simply more mining and refining outside of China. We also need to improve how mining is done and reduce our dependence on newly mined materials altogether.
• The good news is that innovation is already offering better paths forward. New technologies are helping to lower the impact of mining and decrease the need for it in the first place.
• At Carbon Equity, we back companies that are driving this change by minimising the footprint of mineral extraction (1), scaling reuse and recycling (2), improving battery performance (3), and changing battery chemistries (4). This newsletter will highlight several of them.

The battery boom is also a mineral boom

The energy transition isn’t just about shifting from oil to electrons. It’s also in part a materials transition. As we electrify transportation, power grids and industries around the world we are also increasing our need for certain key minerals, including: lithium, cobalt, nickel, graphite, rare earth elements and copper.

According to the IEA, batteries alone will drive 97% of the increase in lithium demand, 80% of cobalt and 78% of nickel. Battery demand itself has grown at an incredible rate of 33% annually over the last thirty years, and the curve is still climbing.  The lion’s share of demand stems from electric vehicles, followed by stationary battery storage to stabilise grids powered by solar and wind. Only a small portion of demand will come from consumer electronics.

More and more, this skyrocketing demand is revealing just how vulnerable our current mineral supply chains are.

A fragile supply chain plagued with environmental and social costs

Today, the world is extremely reliant on China for the mining and the refining of critical battery minerals. Holding a ~ 70% share across key minerals, China serves as the world’s go-to processor for 19 out of the 20 critical materials. When geopolitical tensions arise, this control becomes a pressure point as shown by recent restrictions on rare earth exports to the U.S.

Other players are asserting their influence as well. Earlier this year, the Democratic Republic of Congo suspended cobalt exports for four months in an effort to stabilise falling prices, temporarily disrupting a significant share of global supply. These dependencies on China and Congo pose not only risks to energy security, but increasingly also to defense security, as battery-powered technologies such as drones and robots play a growing role in modern warfare.

Diversifying supply chains will be important to reduce dependencies, but it is not as simple as opening new mines and refineries elsewhere. New projects come with long lead times and often still cause serious environmental and social damage, including deforestation, biodiversity loss, water overuse, toxic pollution, and human rights abuses such as forced labour and unsafe working conditions.

This is why we must meet growing battery demand with as few new mines as possible. The long-term end goal should be a fully circular battery economy. Encouragingly, innovation across the battery value chain is moving in this direction. New solutions are helping reduce supply chain vulnerabilities and the environmental impacts of extraction. Key advances include improving mining practices, scaling battery reuse and recycling, increasing battery energy density, and developing new battery chemistries.

Solutions across the battery supply chain

Battery innovation is hitting every part of the value chain. Here are four areas where companies are moving the needle:

1. Smarter mining with a lighter footprint

New tech is making it possible to extract minerals with less environmental damage and fewer resources.

• Ceibo: is developing a cleaner copper extraction method that uses far less water than conventional techniques. Their tech could help unlock copper from low-grade ores and make better use of existing mines, reducing the need to open new ones. MIT recently named it one of the top climate tech companies to watch.
• Lithios: Current lithium extraction methods use a lot of water and chemicals. Lithios is scaling a process that significantly reduces water use and avoids the runoff of chemicals, making lithium extraction more sustainable.

2. Reuse and recycling of batteries

By extending battery life and recovering valuable minerals, we can reduce reliance on virgin materials. This means we don’t need to mine everything from scratch and move toward a more circular battery economy. Better yet: Today’s recycling processes can already recover 80 to 95% of key minerals. That’s huge.

• Redwood Materials: This US-based company recycles lithium-ion batteries (from EVs, scooters, even e-bikes) and produces battery materials. Its processes cut energy and water use by up to 80 percent and reduce carbon emissions by 70 percent compared to mining. And it works! Tests from U.S. Department of Energy’s Argonne National Lab show Redwood’s recycled cathodes match or exceed the quality of newly mined alternatives.
• Stabl: turns used EV batteries, like those from decommissioned electric buses, into modular, second-life energy storage systems, extending their life before recycling. By giving batteries a productive second life before they’re recycled, Stabl helps reduce demand for new materials and lowers the overall cost and footprint of energy storage.

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3. Increasing battery energy density: doing more with less

Higher energy density means batteries can do more with less, reducing the amount of material needed per unit of storage.

• Adden Energy: is developing solid-state batteries that charge in under 10 minutes and are non-flammable, while delivering 50 percent higher energy density than current lithium-ion batteries.
• Group14: is creating advanced silicon materials that can significantly boost both the energy density and lifespan of batteries. Recently, Group14 partnered with BASF to launch a market-ready silicon anode solution that performs reliably even under extreme temperatures.

4. Better battery chemistries

Some innovators are ditching hard-to-source minerals altogether and are creating batteries with more abundant, less rare, materials.

• Inlyte Energy is building long-duration batteries using iron and sodium: abundant, low-cost materials that sidestep the need for critical minerals like lithium or cobalt. Their batteries are designed to last 20 years and store energy affordably at grid scale. In a major milestone, Inlyte recently signed its first utility deal with Southern Co.
• Form Energy uses a rust-based process (literally) to store energy using iron, air, and water. Their reversible rusting process stores energy for up to 100 hours: perfect for balancing renewables. Together with Xcel Energy, an electric utility, they are developing two long duration energy storage assets to be deployed at two of Xcel Energy’s retiring coal plant sites.

Thanks to these types of innovations, we’re already using far fewer critical minerals for batteries than we otherwise would. If we had stuck to 2015 technologies, demand for nickel and cobalt would be 2x higher today and lithium demand would be up 58%.

A circular battery future

The long-term strategy is clear: minimize new extraction and improve current mining practices, moving towards a system that doesn’t depend on digging deeper every year, but on getting smarter about what we already have.

So we’re not there yet, but the long-term trajectory is clear… and hopeful!

• If current trends continue, global demand for virgin battery minerals can peak by the mid-2030s.
• After that, as recycling scales, battery designs become more efficient, and new chemistries reduce the need for scarce minerals, the net demand (meaning total demand minus recycled supply) starts to drop.
• According to the RMI, reaching net-zero mineral demand before 2050 is possible. Robin Zeng, founder of CATL (the world’s largest EV battery manufacturer), recently stated that China is on track to eliminate new battery mineral extraction by 2042 thanks to its booming recycling market.
• In total, to electrify global transport and energy systems, we’ll need about 125 million tons of critical minerals. That’s a lot but in return, we replace the need to burn over 2,150 million tons of oil every single year (that is 17x more, every year!). And unlike fossil fuels, minerals aren’t destroyed when we use them. They can and should be reused again and again.

By taking a holistic approach with better mining, greater reuse and recycling, and smarter batteries, we can design battery supply chains that are more resilient, more local, and more fair. This allows us to unlock the full potential of electrification without creating a new form of extraction dependence. The energy transition should aim not only for cleaner power, but also for smarter systems.

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