China is currently faced with an enormous wave of batteries ready for reuse and recycling stemming from the world’s largest electric vehicle uptake starting around six years ago. In the last six months, the Chinese government has issued a series of new directives that should ensure the battery reuse and recycling industries can effectively expand to scale.
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Projecting back from now, 2015-2017 saw the explosive growth of new energy vehicle (NEV) sales in China that are now flooding into the battery reuse and recycling markets. Last year, 3.3 million new energy vehicles were sold, which gives an idea of the number of batteries that will be heading for reuse and recycling between 2025-2027. Even here, the figures just mentioned are only counting electric cars and not yet the vast array of other electric vehicles, including currently over 400,000 electric buses, millions of electric bikes and mopeds (although many, but not all of which reuse the batteries of electric cars), as well as a growing hoard of electric commercial vehicles.
The recycling and secondary utilisation of retired vehicle batteries have become the hot spot in the development of China’s NEV industry. The category of NEV means ‘new energy vehicle’ and includes purely battery-electric, hybrid electric and plug-in hybrid as well as hydrogen fuel cell vehicles – all of which utilise a number of different battery sizes and types.
The Ministry of Industry and Information Technology (MIIT) charged with industrial planning across the People’s Republic says that its new directives on battery reuse and recycling will ensure greater environmental protection, improve resource utilisation and ensure the healthy development of the NEV industry. This not only makes sense for geopolitical and environmental reasons but also because battery reuse and recycling is big business.
Some estimates in Chinese media see the battery recycling market in China reaching RMB 26 billion (3.59 billion euros) by 2025. However, figures for market value and volume of battery materials to be recycled in China vary wildly. Some variation depends on whether figures include the reuse industry, i.e.: second life, before battery materials move on to the recycling industry. Globally, McKinsey research calculated that the second-life battery supply for stationary applications could exceed 200 gigawatt-hours per year by 2030 by which time it “will constitute a market with global value north of $30 billion”.
In China, second life use is translated as “cadence”, “gradient”, or “ladder” use, which also refers to the Chinese policy of “most urgent use first.” Electric vehicle batteries have a use-life of 4-6 years after which they operate below 70-80% capacity, which means they can generally get another 2-4 years of use in second life applications before being recycled. The second life ‘ladder’ in China primarily involves uses such as in slower light electric vehicles followed by numerous stationary energy storage applications. Although the term ‘second life’ is well known outside of China, no other countries have so far utilised this ‘ladder’ prioritisation scale. Of course, commercial tools and pilot projects for second-life usage exist outside of China, but other countries have yet to experience the kind of scale of batteries hitting the reuse and recycling markets.
On the ground in battery land
In 2018, with the first significant wave of NEV battery recycling regulations, the Chinese government whitelisted an initial list of five recycling enterprises known as the ‘regular army’ of recycling enterprises. Currently, two major companies – Brunp and GEM – now represent around 50% of all official battery recycling business in China. This list has more recently grown to a total of 47 whitelisted companies. Brunp is a partner of CATL, the world’s largest producer of batteries. In October last year, CATL also announced that it will be building its own recycling plant.
What has also sprouted up across China is a sea of unofficial, smaller recycling businesses. For companies involved in bringing batteries to their final recycling, small recyclers are often cheaper than the officially whitelisted recycling businesses. However, these workshop battery recycling businesses do not necessarily recover all of the precious resources, e.g.: cobalt and nickel, and often improperly dispose of precious – and environmentally dangerous – materials.
Currently, estimates sourced in Chinese media report that only around 30 – 40% of battery materials are being recycled. The nascent industries are plagued by a number of growing pains such as a lack of standard battery technology, patchy battery recycling technology and lagging reuse processes, making each recycling process different and costly.
At the same time, existing technology in China can theoretically recover around 80% of the components of different battery types, which means that the currently low rates of recovery, lie more in the standardisation of systems and regulations and pathways than immature technology, although, as is the case with private-public partnerships in other countries, improving recycling technology is also a large focus of Chinese government directives.
Despite the strong starting position, if these materials are not adequately recycled, these resources end up being toxic waste rather than valuable battery materials for new batteries – and China is currently facing this challenge in a big way.
New directives aim to improve resource recovery and effective reuse
Although the regulation of the battery reuse and recycling industries began in earnest with the first regulations in 2018, it has only been throughout the second half of 2021, that Beijing has issued directives that fully address all aspects of the circular economy around NEV batteries.
In 2018, the government made automakers responsible for the recycling of the batteries in their vehicles and stipulated directives for vehicle manufacturers to take a more active role in battery recycling. A ‘Traceability Management Platform’ went into operation to help oversee and manage the process. Then in July that year, China selected 17 cities and regions to launch a pilot program for battery recycling for old EVs. The first five “regular army” battery recycling companies were whitelisted before the list grew to the 47 companies now listed as mentioned before.
Also included in this first round of directives in 2018, the Chinese government encouraged ‘internet + recycling’ business models, which involve a combination of new online business models for reuse and recycling combined with IoT services, which of course includes elements such as software, online business models, AI and big data. These systems and businesses determine the efficacy of the flow of materials, between manufacturers, municipalities, consumers, and businesses trading in second life and recycling materials. In its latest round of directives in December just past, the government markedly reiterated the importance of innovation and development of ‘internet + recycling’ business models.
The most significant shift started in the middle of 2021 when Beijing issued the country’s 14th Five-Year Plan (2021-25) which is primarily focused on electric transport industries in all aspects from energy and raw materials, to manufacture to reuse and recycling in a circular economy development plan. This lays out the goal of building a more complete battery recycling system by 2025. Over the ensuing six months until the latest directives just last month, the Chinese government has set out guidelines for the desired transformation.
Local governments have also started to promote the NEV battery recycling sector. In one such example, the province of Jiangsu has set up 907 NEV battery recycling centres, and in another, Shanghai has initiated a full life cycle tracking and regulation system for NEV batteries. China currently has over 10,000 battery recycling centres across the country.
In August 2021, secondary utilisation of electric vehicle batteries took focus when the MIIT issued the directive called ‘Management Measures for the Gradual Utilization of New Energy Vehicle Power Batteries’ among others. These directives envisage collaboration between national and regional departments as well as business and industry with regulations that set out the provisions for traceability and accountability of ‘ladder’ second utilisation industries. This includes areas such as reuse in slow light electric vehicles, base station power backup, energy storage and battery charging and replacement. Here, the Chinese government says it will encourage “the adoption of leasing, large-scale utilisation and other business models that facilitate the recycling of ladder products.”
In early December 2021, in conjunction with other relevant departments, the MIIT issued the ‘Interim Measures for the Management of New Energy Vehicle Power Battery Recycling’ plan. This included the implementation of the full life-cycle traceability management of batteries, and includes pilot projects in Beijing, Tianjin, Hebei and 17 other regions as well as involving the China Tower Company (based in Beijing, the company which calls itself “the world’s largest telecommunications tower infrastructure service provider”), as well as prioritised ‘ladder’ utilisation directives to promote cross-regional cooperation and industry chain synergy.
Other directives later in December aim to regulate and support the practical frameworks on the ground from consumers to municipalities, to businesses and industrial players. Apart from improving recycling networks and strengthening traceability management, the government is increasing its focus on recycling technology. The newest regulations also envisage the establishment of a number of second life usage ‘ladder’ and recycling benchmark enterprises, as well as ensuring that financial institutions can free up the kind of capital necessary to implement the above ambitions to scale. Other directives set out to tackle the enormous regulatory task of ensuring standards and practices that ensure profitability.
China is the world’s largest early adopter of electric vehicles. It is here that we will see many of the kinds of challenges that will soon face those countries currently experiencing a boom in electric vehicle sales. The ability of these countries to keep those resources they gain through either sourcing materials directly or through importing batteries or battery cells will depend on the health and vigour of their reuse and recycling industries. A look at China over the coming months and years will show just how effective – or not – these recent government directives have been in improving the efficacy of its reuse and recycling markets.
This article was independently sourced from diverse articles in the Chinese media and Chinese government websites.
Keyword: Battery reuse & recycling expands to scale in China