Exploring Barriers to the Implementation of Circularity Processes for Batteries ^†

Abstract

The batteries sector is expected to play a key role in the energy transition and will need to cope with soaring material demand in the future. Implementing circularity approaches for batteries that enter the EU market is considered to be among the key options for mitigating the impacts of increased resource use, but also for securing future access to raw materials needed for decarbonization technologies. Using a multi-case study method, this paper aims to identify key challenges that hinder the adoption of circularity and resource efficiency practices by companies in the battery sector. The analysis is based on qualitative data collected from a sample of 10 companies. To support the categorization of data, a conceptual framework of existing barriers faced by businesses implementing circularity models is developed through a literature review. This paper concludes by identifying areas where EU policy intervention is needed.

1. Introduction

The importance of batteries as a source of electrical energy is expected to further grow in the coming years due to the need to accelerate the energy transition and decarbonize the transport sector [1,2]. Lithium-ion batteries (LIBs) are expected to become the dominant source of power for vehicles in the near future, as many governments around the globe put forward plans to gradually phase out internal combustion engine (ICE) vehicles [3,4]. Even though LIBs provide several environmental benefits compared with ICE vehicles (see [5,6]), they entail higher environmental impacts at the production stage due to their raw material needs [2,7,8]. Given that a large number of LIBs will enter the market in the coming years and decades, eventually reaching the end-of-life (EoL) stage, it is necessary to establish processes to manage these batteries in a sustainable manner and minimize environmental and health risks [7,9].

Implementing circular economy (CE) approaches for batteries such as recycling and/or reuse in secondary applications holds the potential to deliver benefits in terms of alleviating environmental pressures from battery production [10,11]. Recovering materials from EoL batteries can also support the domestic supply of critical raw materials for the green and digital transition, which has recently become a flagship priority for the EU [12]. Even though there is an expanding literature on the CE [13,14], only a few studies explore barriers to implementing such approaches in the battery sector [11]. This paper aims to address this gap by providing empirical evidence on barriers faced by companies from various segments of the battery value chain that focus on improving the circularity of batteries and their materials.

This paper is structured as follows. Section 2 describes the methodological approach of the paper. Section 3 provides the results of the literature review and the empirical insights from the interviews. The concluding remarks are presented in Section 4.

2. Methodology

A qualitative case study approach is adopted for this paper (see [15,16]). Development of the sample of 10 companies was based on the list of companies participating in the BATRAW EU-funded project (See: https://batraw.eu/, accessed on 30 May 2023) and the snowball sampling technique [17]. The objective was to include at least one company from each step of the battery recycling value chain. Data were collected from selected companies in the battery sector through online in-depth interviews. A general questionnaire was prepared and sent to all interview participants prior to the interview. The questionnaire presented five categories of barriers identified through a literature review and asked participants to discuss the barriers they had faced in an open manner. Participants were also informed through a consent form that all information would be presented in the paper in an anonymous way. For each interview, a detailed transcript was then prepared. As a next step, collected data from each transcript were coded and transferred to a spreadsheet. This exercise allowed the identification of common barriers and trends among the case studies.

3. Results

3.1. Literature Review on Barriers to Circularity in the Battery Sector

This section reviews the existing literature on the circularity of batteries, focusing on the most relevant barriers to implementing circularity. The identified barriers are grouped within a framework of key categories. This framework consists of five different categories: policy and regulations, finance/economic factors, supply chain, technology, and consumer/societal awareness.

Table 1. The framework of barriers to the implementation of circular batteries.

Category	Barrier	References
Policy	Insufficient, unclear, or complex policies and regulations	[11,18,19]
	Lack of safety standards	[11,20]
	Lack of battery assessment guidelines	[20]
	Classification as ‘waste’ or ‘dangerous goods’ implies high safety requirements and long notification periods	[21]
	Lack of harmonized battery shipment regulations	[8]
Finance/economic factors	Uncertainty regarding economic viability	[8,11,18,20,21]
	Lack of competitiveness with virgin batteries	[8,21]
	High costs of storage, handling, transportation, recovery, and recycling	[8,11,20,21]
	High financial risks associated with investments	[11,18]
Supply chain	Concentration of EoL management infrastructure in specific regions	[20]
	Long transport distances	[8,20]
	Difficult to optimize material flows	[8]
	Lack of communication and coordination	[11]
	Reluctance to share information/lack of data sharing	[11,19,22]
	Uncertainty about which data are relevant to other stakeholders	[22]
Technology	Insufficient/inefficient EoL management infrastructure	[8,11,18,20,23]
	Uncertainty due to ever-evolving battery design and chemistry, which impedes standardized safety testing and automated disassembly/recycling	[7,8,11,18,21,24]
	Lack of design for recycling/reuse/repurposing	[8,11]
	Lack of skills, trained personnel, and specific tools	[8]
	Risks to human and environmental health	[7,8]
	Insufficient data for environmental and market assessments	[8,18]
	Uncertainty regarding data sharing and storage for DPPs	[25]
Consumer/societal awareness	Lack of consumer awareness	[11]
	Low return rates at EoL	[11,18]
	Perceived low quality of second-life/recycled batteries	[8,11,18]

provides an overview of specific examples of barriers in these five categories, based on the literature review presented in the following paragraphs.

Policy is a crucial category of barriers. Inefficient, inadequate, complex, and unclear government policy has been highlighted as a key concern in this area [11,18,19]. As an example, the lack of standards regarding safety and criteria guidelines for evaluation of battery status and suitability for recycling or second life can pose a challenge for many types of batteries [11,20]. Since EoL batteries are classified as waste and, in particular, as dangerous goods, they are subject to high safety requirements dependent on prior notification [21]. As a result, transportation for second-life processes remains slow and expensive [20]. The lack of harmonized battery shipment regulations across the world is another challenge in this regard [8].

Implementing circularity in the battery sector can also be constrained by financial and economic factors. First, the economic viability of recycled and second-life applications for batteries remains an open question [8,11,18]. The uncertainty in price, cost, and value for LIBs, for instance, is likely to slow down progress towards implementing circular strategies [21]. Currently, second-life applications are not economically viable for some batteries. For instance, prices of (first-life) LIBs are expected to decrease, reducing the competitiveness of repurposed or recycled batteries, particularly when taking labor costs into account [8,21]. Moreover, the cost of storing, handling, transporting, and recovery processes are high, exacerbating the lack of profitability of recycled and reused batteries [8,11,20]. Due to a lack of dismantling and recycling facilities for EVBs across Europe, EoL batteries need to be transported across long distances [20]. Transport and storage costs further increase for critical and unsafe batteries [20,21].

Further barriers may arise from supply chain aspects. Facilities for the different EoL management steps for EVBs (from collection to recycling) are often lacking or are concentrated in specific regions, requiring long transportation and resulting in dependency on certain countries [20]. As a result, it can be a challenge to find the optimal locations for collection, reuse, and recycling, and to optimize material flows [8]. Another supply chain barrier results from insufficient and ineffective communication and coordination of supply chain players, particularly regarding a lack of sharing of data and information on EoL processes [11,19]. While many companies gather information that is relevant for other supply chain players, there are often no incentives in place to encourage data sharing, and there is no clarity on which data are relevant to other stakeholders, or which format of data sharing facilitates circular strategies [22].

Technological factors can pose barriers to circularity in the battery sector. Particularly, challenges arise from insufficient infrastructure for the disposal, collection, sorting, dismantling, recycling, and remanufacturing of electric vehicle batteries (EVBs) [11,18,23]. One reason for the inefficiency of EoL management is the ever-changing battery pack design and chemical composition of EVBs, and the related uncertainties [8,11,18]. For example, accurate measurement of battery state-of-health and remaining useful life is challenging and leads to inconsistencies in battery assessments [21,24]. Moreover, the variability impedes the establishment of automated disassembly and recycling processes [7,18]. This is connected to the lack of EVB design that explicitly targets efficient EoL management [8,11]. The specific knowledge, skills, and trained personnel as well as specialized tools required for handling EoL EVBs are still lacking in the industry [8]. There are health and safety concerns connected to different steps in the reverse logistics supply chain (e.g., dismantling, discharging, and reassembly of batteries) that pose risks for insufficiently trained personnel [8]. Pollution from battery recycling processes also entails risks to ecosystems, but data gaps and study design render accurate assessments of these risks difficult [8]. For example, environmental assessments focus mostly on greenhouse gas (GHG) emissions, omitting other impact categories, while life cycle inventory data are often not available [8]. Data aspects can also hinder the implementation of digital product passports (DPPs), which are crucial for enabling battery circularity [25].

Finally, challenges to battery circularity stem from societal factors. There appears to be a general lack of customer awareness of second-life applications for batteries, which may lead to low rates of returned LIBs from EVs at EoL [11]. As reuse and recycling options are often costly and inaccessible, consumers tend to opt for disposal instead [18]. Moreover, products derived from second-life applications are often perceived to be of lower quality compared with new ones [8,11,18].

3.2. Empirical Insights from the Interviews

A diversity of policy-related barriers linked to recycling processes, second-life applications, and data challenges emerged from the interviews. The uncertainty surrounding the legal framework for second-life batteries was a key barrier raised during four interviews. In the view of the experts, there are legal uncertainties with regard to the batteries’ waste status as well as the liability and responsibility for handling them. Concerning the latter, experts raised that there is no formal process in place to ensure that the responsibility for the battery is transferred to another actor after it reaches the end of its first life. This can discourage companies from investing in business models for second-life applications. Barriers linked to carbon footprint requirements for batteries that will be introduced through the new EU Battery Regulation were brought up by four companies. Two experts specifically noted that although the introduction of Product Environmental Footprint Category Rules (PEFCRs) for batteries is a step in the right direction, in practice comparing the carbon footprint impacts of different materials used in different environments is a very complex task. This is also linked to the difficulty in acquiring detailed documentation of carbon data across all stages of battery production, and in ensuring that all these data are comparable. One other expert, however, urged that the PEFCRs lack ambition since they do not encourage the production of smaller battery packs. Finally, according to one interviewee, it is important to have a proper allocation of credits for the recycling of batteries in the PEFCRs and avoid any double counting when a battery is reused.

The complexities linked with implementing the requirements of the EU DPP furthermore arose as an important barrier in four interviews. Two interviewees particularly raised concerns about how the collection of data across the various segments of the battery supply chain will be enforced and under what mechanisms it will be ensured that collected data (e.g., about the battery’s carbon footprint, raw materials, etc.) are reliable. Two other experts noted that given the tight time frame until the formal introduction of the DPP requirements, it is important to define a proper framework under which data are shared among different actors in a standardized way. In addition, shipping batteries for recycling or second-life applications is legally complex according to two interviewees. According to one expert, due to the absence of clear rules at the national level, large LIBs need to be stored for long periods, which in turn poses risks for accidents and fire hazards. Another expert held that if the system for transferring batteries to other regions for safe recycling is not simplified, there will be significant challenges in dealing with the large flow of EoL batteries in the future.

From an economic perspective, the high costs entailed by circular processes for batteries is a key barrier raised during five interviews. According to the experts, the collection of batteries at scale is a costly process that may require the establishment of small-scale collection schemes and investments in transport capacities in some cases. Although there are legal obligations to support battery recycling, the process is still expensive; therefore, for a new company, it may not be profitable at the early stages of development. The disassembly of batteries can also be a complex process, thereby further increasing the cost of battery recycling. For second-life applications, the uncertainty surrounding the costs for new materials and for remanufacturing operations poses further economic challenges for building viable business models according to two experts.

Within the supply chain category of barriers, the reluctance to share data about the batteries was an important barrier put forward during four interviews. This was attributed to the fact that companies are accustomed to exchanging data on the basis of non-disclosure agreements, and they are reluctant to go beyond the terms of these agreements. Key types of information that companies are hesitant to share include the composition of the battery, its state of health, charge level, and the various components and materials. The absence of this information can complicate the recycling or repurposing of batteries (i.e., second-life applications). A related barrier discussed during three interviews refers to a general lack of transparency across supply chains about batteries and the various steps that lead to the development of the final product. For instance, one expert noted that companies sourcing cells often have limited visibility about the steps that have been taken for their production and the origins of materials. Another interviewee remarked that it is often difficult to obtain information such as recycled content in batteries, the type of recycling process, and the percentage of scrap used. The difficulty in collecting the different types of batteries that at some point reach the EoL stage at a large scale across the EU was noted as a barrier by two experts. One expert specifically mentioned the example of portable rechargeable batteries, for which collection rates are still small.

On the technology front, two experts held that implementing the DPP will be technically challenging unless a clear framework for sharing data in a standardized manner is provided to avoid fragmentation of approaches. Supporting the development of stakeholder alliances was seen as a means to promote the use of common standards for data sharing. Technical complexities with removing the batteries from electronic devices due to certain battery design choices were raised as a barrier by one interviewee, while one other noted that given the diverse geometries, chemistries, and shapes of LIBs batteries, it is difficult to develop standardized processes for second-life applications. Finally, one expert remarked that the evolving battery chemistries create uncertainties for recyclers, which can hinder investments in certain processes.

On the consumer side, barriers mainly stem from a lack of interest or trust in circular solutions according to three experts. Among them, one interviewee held that companies in the business-to-business market have low interest in the environmental benefits of second-life batteries and place a high priority on the lower price of new batteries. Another expert pointed out that the low interest in circularity practices is evident in the case of small electronic devices containing batteries, which often remain uncollected. A key reason for this is the low consumer awareness about the benefits of collecting and recycling batteries and the low proximity of collection points for electronics and batteries.

4. Concluding Remarks

Based on a multi-case study analysis and in-depth interviews, this study provides insights into the barriers faced by companies implementing circularity processes in the battery sector. The interview results indicate that there are various bottlenecks in place stemming from policy, economic factors, supply chains, technology, and consumer awareness. Among the key identified barriers are the unclear legal framework for second-life batteries, complex requirements linked to carbon footprint requirements and the DPP, difficulty in shipping EoL batteries, higher cost of circular processes for batteries, reluctance to share data, lack of transparency across supply chains, technical difficulties in removing batteries from EoL products, and lack of interest in circular solutions. While these findings indicate that a mix of different policy actions under a coherent overall framework will be needed to boost circularity for batteries, they also highlight some priority areas. One particular area calling for policy attention concerns the limited exchange of data across the various segments of the battery value chain and the overall low transparency with regard to the batteries, their state of health, and their components. Even though the EU DPP will bring forward legal requirements on data sharing, addressing the above challenge will require the involvement of all relevant stakeholders to increase awareness about the benefits of moving towards more transparent battery value chains. Providing clarity about aspects such as the waste status of batteries as well as their management or shipping after they reach the EoL stage, can increase certainty for companies wishing to invest in circularity processes. Future studies can provide further empirical insights about the barriers faced by companies in the sector and also investigate the factors that have so far enabled companies to implement such processes.