ESG Risk Briefing – The role of lithium in a low-carbon economy
In the transport sector, road transport has by far the largest share in the sector’s GHG emissions. Therefore, one of the initiatives to reduce them is to encourage the deployment of low-emission transport alternatives such as electric vehicles (EVs). Scientific studies have come to different conclusions about the actual environmental footprint of electric vehicles and the extent to which they can help mitigate climate change. The differences are due to the scope of the research and other factors such as the energy mix of the site studied. Nonetheless, EV adoption continues to increase year on year. According to a report by the International Energy Agency (IEA), the global stock of electric vehicles reached 7.2 million in 2019. This amount represents only 1% of the total global car fleet. However, this also represents a 40% year-over-year increase from 2018; Electric vehicles continue to gain share in global car sales.
Countries around the world with different market sizes for these vehicles are offering incentives to increase the number of these units on their streets. For example, in Mexico, where only a few dozen electric vehicles are sold per month, owners are exempt from a tax that applies to all new cars and from driving bans that apply to classic cars to reduce traffic. pollution. In China, the largest market for electric vehicles which accounts for around 50% of global sales, electric vehicles are not subject to registration restrictions or driving bans and benefit from purchasing incentives. Norway has set a target that all new cars sold by 2025 will be zero-emission vehicles. In this country, electric vehicles are exempt from import tax, are not subject to 25% VAT and enjoy other types of benefits such as reduced parking fees. In 2019, one in two newly registered cars in Norway was electric. The IEA estimates that under a stated policy scenario, the global EV stock will reach nearly 140 million by 2030.
With more electric vehicles on the market and strong incentives to increase this number, the demand for materials used in electric vehicle batteries, such as lithium, cobalt, nickel and others, is expected to increase accordingly. Lithium-ion (Li-ion) batteries are the most widely used today and are likely to dominate the market over the next decade. Compared with its competition, Li-ion batteries can store greater amounts of energy with lower mass and weight, have high energy efficiency, good high temperature performance, and lower self-discharge. The US Geological Service (USGS) reports that in 2020, 71% of global lithium end-use was for batteries. The IEA has estimated that the demand for lithium could increase to 185,000 tonnes per year by 2030, from 17,000 tonnes per year in 2019, without taking into account other lithium applications such as electronic devices, storage in grid, ceramics and glass.