Battery recycling regulations are important in the search for US electric vehicle tax credits

The primary objective of the Inflation Control Act is to drive investment in American manufacturing. To this end, the law and the rules that were put in place to implement it require that a certain percentage of the materials and components used in the manufacture of electric vehicle batteries be obtained from American sources. This made battery recycling an important new industry in the United States.

Right now, there are few places in America where the materials needed to manufacture batteries can be sourced. Until the IRA was passed a year ago, almost all of them were from China. Even if the finished batteries come from South Korea or Japan, the materials and components inside were often derived from China.

But there is an oddity in IRA law. A battery may have been made in China using Chinese materials and components, but if it is recycled In the United States, these items are now considered to be locally sourced. This means that lithium mined and processed in China will be treated as a domestic source if it is recycled in America.

Reuters Reports indicate that she has interviewed more than a dozen industry officials and experts who say IRA eccentricity is responsible for initiating a surge in battery recycling plants in America. It also encourages car companies to find more ways to use recycled materials in batteries for new cars and trucks.

Currently, China handles nearly all of the recycling of electric vehicle batteries in a global market that is expected to grow from $11 billion in 2022 to $18 billion by 2028. Recyclers in Europe are already taking old lithium-ion batteries and reducing them to what is known in the industry as “black mass,” the stuff left over after a battery cell is dismantled. But then that black mass is shipped to China, where the individual materials that make up the battery cell are separated and reprocessed.

The impulse now in the US is to do more than just shred old batteries to produce black mass. The next step — purification of their basic elements — is what must happen locally in order to produce new batteries that qualify as American-made so that the cars that use them qualify for federal EV tax credits. said Thomas Becker, Head of Sustainability at BMW Reuters The metals in those batteries – mainly lithium, cobalt and nickel – are estimated to be worth between 1,000 and 2,000 euros per car.

The materials inside a lithium-ion battery “can be recycled infinitely many times and don’t lose potency,” said Louie Diaz, vice president of Canadian battery recycling company Li-Cycle, which recently received a $375 million loan from the US government for a recycling plant in New York that’s set to open later this year. This financing helped advance the investment decision for the plant, Diaz said. Li-Cycle uses a hub and spoke system. It turns old batteries into a black mass in several locations, then ships them to a central reprocessing center where the pure material is produced.

JB Straubel, founder of Redwood Materials and former Tesla co-founder and CTO, said the IRA treats recycled battery materials as “urban salvaged,” or materials recovered from scrap rather than obtained from mining. His company received a $2 billion government loan in February to build a battery recycling and recycling complex in Nevada.

The European Union also encourages battery recycling by requiring that new batteries use a certain proportion of recycled materials. It also wants recycling within the European Union rather than being shipped to China for further processing.

Battery recycling and IRA

Image courtesy of Primobius.

Last month, China announced stricter standards and increased research support for recyclers. She called the law to reduce inflation “anti-globalization” and accused the United States of “unilateral bullying”. This is correct. The COVID-19 pandemic has shocked the business world by showing just how vulnerable business relationships that span the world can be. This, in turn, convinced many to give priority to domestic production and consumption, which is the exact opposite of globalization. Bullying is by definition one-sided.

Battery recycling race

There are at least 80 companies around the world involved in electric vehicle battery recycling. In the past six years, more than 50 startups have jumped into the battery recycling space and attracted $2.7 billion in investment from automakers, battery manufacturers and miners like Glencore, according to data from PitchBook.com that they reviewed. Reuters.

11.3 GWh of batteries will reach the end of their life in 2022. That could rise to 138 GWh by 2030, according to Circular Energy Storage. That would be enough new batteries from recycled materials to power about 1.5 million electric cars. JB Straubel said his company expects to recover up to 95% of the material in old batteries for use in new batteries.

To control the batteries in the cars they make, many automakers rely on leasing until their cars are returned to them. That way, they decide how to treat the batteries in those cars when they reach the end of their useful life.

For the US, the upshot at this early stage in the industry is that the little-known advantage of the IRA is creating a flood of interest in battery recycling in America and creating more jobs in a circular economy for Americans.

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