Clean Energy? It All Depends on Affordable Batteries

THE GREEN FUTURE OF TRANSPORT IS DEPENDENT ON GLOBAL SUPPLIES OF RARE METALS, SUCH AS LITHIUM AND COBALT, PRESENTLY CONTROLLED BY A HANDFUL OF COUNTRIES AND CORPORATIONS

by Matteo Di Castelnuovo
Translated by Alex Foti

 
When you read in the Financial Times that one of the world's most important and innovative vacuum cleaner manufacturers, Dyson, will invest around £2 billion to launch a new model of electric car in 2020 and go on to join the race to control electric mobility competing with car manufacturers like BMW, Tesla, Ford, etc., then you begin to wonder if we are really on the eve of a major technological revolution centered around sustainable mobility.
 
In fact, at different paces and with different goals, for some years now most countries around the world have started to decarbonize their economies to make them more environmentally sustainable. Decarbonization first started in power generation, with the ongoing transition from traditional electricity production technologies based on fossil sources to those based on clean, intermittent sources, such as solar and wind energy. According to a UNEP study, in 2016 renewable energy sources, excluding large-scale hydroelectric power, accounted for over 55% of new investment in energy generation capacity worldwide.
 
More recently, the trend towards the adoption of cleaner technologies has begun to spill over to the transport sector, where there is growing interest in electric cars coming from automotive companies, and not only them (e.g. Dyson, Apple, Google), and consumers alike. Government policies can certainly play a key role in accelerating the diffusion of such technologies: for example, China, France, the United Kingdom, and the United States have recently announced their intention to ban sales of cars with gas-fueled combustion engines starting in 2030.
 
In both cases, namely the large-scale adoption of intermittent renewable sources in the electricity sector and the transition to electric mobility in public and private transportation, it is essential to understand how electricity storage technologies will be developed and deployed. Among the various technological solutions available, much of the investment is currently focused on lithium-ion batteries, basically the same technology you find in smartphone batteries currently in use. Two of the raw materials required to make this type of battery are lithium and cobalt. From an economic point of view, it is interesting to note that nearly all of the world's lithium production is concentrated in just four countries, Chile, Australia, Argentina and China, while about 90% of the cobalt supplies of the world come from a single country, Congo. In addition, the supply of these two metals is concentrated in the hands of few conglomerates. For example, in the case of lithium, four companies control the bulk of world production (one is Chilean, two are American, and the fourth is Chinese). There are currently no signs of shortage in the supply of these two mining commodities, although their international market prices have grown considerably over the last three years.
 
In fact, the exponential growth scenario for the battery market (such as the  one portended by the Tesla Gigafactory in Nevada) suggest that scale of production concerning these two metals (as well as battery components) will have to increase significantly over the next few years, in order to mitigate the inevitable growth in world prices, which could slow down the adoption of clean technologies (renewables, but especially electric cars) that crucially depend on the diffusion of cheap and reliable batteries.
 
Most experts seem to agree that the transition toward a more sustainable economy will largely depend on using batteries, for their undoubted benefits in both electricity generation and electric mobility. In order for this transition to take place in a short time-span, while also taking into account standards of economic efficiency, it seems crucial to invest resources in studying how the world market for lithium and cobalt, basic inputs in battery production, may evolve over the next few years.