Catalyst with Shayle Kann - The Carbon Copy: Get ready for the battery recycling boom

Episode Date: July 7, 2022

On the Carbon Copy podcast this week: It’s been over three months since Russia’s invasion of Ukraine sent shockwaves into global oil markets, causing supply constraints and skyrocketing prices. The conflict has complicated the flow of energy at a time when supply chains were already jumbled up because of Covid. But it’s not just oil. The war is leaving its mark on all kinds of commodities, including the global supplies of minerals and metals. Geopolitical shifts are causing big spikes in the prices of lithium and nickel, two key components of the lithium-ion batteries used in electric cars. However, this supply mess could actually be boosting a positive trend in the battery space: recycling.  Batteries are a pillar of the zero-carbon economy, but are they truly sustainable? And will technical advancements and evolving geopolitical alliances alter the battery-based economy for the better? Our guest is Julian Spector, a senior reporter with Canary Media. Check out his latest report on five exciting startups tackling battery recycling from different angles. And check out all of Canary’s Recycling Renewables special coverage. The Carbon Copy is a co-production of Post Script Media and Canary Media. Catalyst is supported by Antenna Group. For 25 years, Antenna has partnered with leading clean-economy innovators to build their brands and accelerate business growth. If you're a startup, investor, enterprise, or innovation ecosystem that's creating positive change, Antenna is ready to power your impact. Visit antennagroup.com to learn more. Solar Power International and Energy Storage International are returning in-person this year as part of RE+. Come join everyone in Anaheim for the largest, B2B clean energy event in North America. Catalyst listeners can receive 15% off a full conference, non-member pass using promo code CANARY15. Register here.

Hey, everyone. Shail here. We're doing something a little different today. We're bringing you an episode of the Carbon Copy, which is our sister podcast, which explains the changing planet through the lens of current events, taking one story in the news and then explaining the bigger picture in a narrative sort of fashion. You'll know the host. It is the one and only Stephen Lacey. He's the executive producer of this show, Catalyst, and occasional guest. He was on the show last week, you'll remember, and actually shared his excitement on this show for the topic of the episode that we are playing, which is battery recycling. You know, you'll know this from having listened to this show before battery minerals are becoming a really big issue as we scale up lithium ion

battery production, both for electric vehicles and for the grid. It's becoming a reason to clear that there's going to be a bottleneck and some of the key minerals. Now, one way to solve that is to mine more and find more of them. And we've talked a lot about that on this podcast. The other way is to do a better job of recycling the materials in the used EV batteries that are coming off of cars as they get retired now. So how do we recycle those batteries safely and cost effectively? It's a big important topic. It has also attracted a lot of investment over the past couple of years. So I thought that this episode of the carbon copy would be a good one to supplement what we've talked about before on battery minerals here.

So hope you like it. If you do, head over to wherever you get your podcast. Give carbon copy a rating and subscribe to that show as well. It's a good compliment to this one. Enjoy. From the studios of PostScript Media and Canary Media. More than three months after Russia invaded Ukraine, you don't have to look far to see the economic impact. The average price of a gallon of gasoline in America is $5.

That's a record. In some places, it's $6. and you're paying 11% more for food in the grocery store today than you were last year. Russia's aggression has complicated the flow of energy and food at a time when supply chains were already jumbled up because of COVID. And the war has left its mark on all kinds of commodities, including the global supplies of certain minerals and metals. And that is a problem for the battery industry.

Yeah, certainly for the short term, this is a major headache for a lot of people. Commodity traders are in a state of high anxiety and confusion over Russia's invasion of Ukraine. Last night, the nickel price jumped an astonishing 66%. Here's a graph of the nickel price. It's gone vertical. Just in the past few months, the mineral supply question has really surged to prominence because, you know, after Russia invaded Ukraine, we saw a real huge spike in nickel prices and lithium prices have been going through the roof too. There's much more thought going into how we actually get the raw materials that supply the batteries. That's Julian Specter. He's a senior energy reporter at Canary Media.

He covers the storage space, a lot of which includes batteries for the grid and for cars, mostly lithium-ion batteries. And increasingly, he covers the materials that go into those batteries. Lithium prices have risen five-fold since April of last year. Nickel is also a particular concern because Russia supplies 10% of the world's nickel, and that's another key component in lithium ion batteries. Do people in the industry consider these supply disruptions and price increases crisis level? How would they characterize this? I mean, when you look at those graphs, it's a real hockey stick,

and this is not the kind of hockey stick graph that you want to be seeing. People in the industry want to see exponential growth for EV adoption and, you know, stationary storage installation. for the grid. That's what they want to see. They don't want to see price of lithium, price of nickel just shooting through the roof in a matter of days and weeks. So battery prices are going up, when they should be going down. Definitely not a helpful trend for a technology so crucial for balancing renewables on the grid or electrifying vehicles. But this supply mess could actually be boosting a positive trend in the space, battery recycling. Battery recycling was once

seen as an environmental solution. But suddenly, it's turned into an economic, and national security imperative. You know, you can't just spin up a new lithium mine in a brief period of time to respond to these high prices. You've got to get the land and environmental permits and there's all sorts of things. So it could actually take years to kind of expand the global mining capacity

in response to this. Pretty much all the new recycling companies are approaching their work is not just how do we get some metals out of these and sell them on the commodities market, they're really thinking, how do we make battery production a circular system

where old batteries are disassembled and turned back into new batteries? And what's really interesting about that in the critical mineral context is the U.S. does not have a very robust supply chain for batteries domestically, but to the extent that we can recycle the batteries that we are using, that creates a secure domestic stream that can then be used to build batteries

in the future. This is the carbon copy. I'm Stephen Lacey. Batteries are a pillar of the zero-carbon economy, but are they sustainable? Up until now, battery recycling has been niche and fairly unsophisticated, but it's evolving into a diverse industry that's attracting billions of dollars in investment. Will a combination of geopolitical risk and technical advancements alter the battery-based economy for the better.

When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility, built for the moments when utilities can't afford uncertainty.

Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built for utility scale. Predictive, verifiable and designed to perform when it counts. Learn more at energy hub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone.

They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy and building the clean economy. tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Julian, it's Recycling Week. Are you celebrating? It is.

It should be a national holiday, but for now, it's just a Canary Media special celebration. A holiday that you definitely don't get off. It means that you work double time. Yes, we have all been working double time to get a hole. bevy of recycling stories ready, ready for our readers. What on earth is Recycling Week? Well, so, you know, at Canary Media, we cover the work that it takes to build a clean energy society, you know, how to get off of fossil fuels.

And sometimes critics of the clean energy transition will throw this out as a big problem. Like, well, you know, electric cars aren't so clean. What do you do with the batteries? And so we thought it was important to really investigate that and see, yeah. Yeah, what actually do you do with the batteries? You know, you can't just throw them away. And same with solar panels and wind turbines. So we did some digging to find out what's the state of play, you know,

and how concerned we should be about the clean energy recycling question. So this isn't your run-of-mill plastic jugs and tin cans recycling story. This is like, what do you do with manganese and coal-balt and lithium and all that copper? Absolutely. Yeah. No, there's, I mean, luckily, a lot more value in an old lithium ion battery than in a tin can or a plastic cup. But now that mineral scarcity is hitting all these records, people are trying to look for whatever they can find to source the batteries of the future. And a whole bunch of recycling companies are coming up and saying, hey, yeah, we can help with that.

Although those cans are pretty easy to recycle. I wish it was as easy to recycle a battery. That's true. Yeah, it's a little bit more complicated. It is generally packed with some amount of electricity that you don't want to mess around with. And if you do it wrong, there's always a bit of that fire risk. So yeah, you got to do it right. You don't want to just rush into this. It's been a difficult couple of years for the battery industry. Factory lockdowns, labor shortages, rising commodity prices, they've all hit suppliers during a period of historic demand. And it's creating a drag for storage at a moment when we need it more than ever. Yeah, well, for many years over the last decade or so, there'd been this perception that lithium ion batteries, they just get cheaper over time.

You would hear that again and again, this onward march of lower prices, as the factories scale up, and that's a huge reason that electric cars are gaining more market share and battery storage is taking more of a role on the grid. But that came to a halt in the last couple of years due to a number of factors. But yeah, the supply chain crunch. You also had just the surge in demand kind of outstripping the supply for high-quality batteries specifically. And so we've seen prices for the batteries actually start to rise recently. Now, the long-term trend is still very much batteries getting cheaper over time, but it's certainly

not as simple a matter as it used to seem. And then Russia invades Ukraine. We see crazy spikes in commodity prices. The market goes nuts. And suddenly people are talking about this differently. So it was a trend that existed, but it's been supercharged. How is the conversation shifted? I think the Ukraine crisis and all the various energy ramifications of that have really just hammered home a lot of things that people knew they should be doing but maybe weren't prioritizing enough in the past.

You know, like Europe probably knew that depending on Russia for oil and gas wasn't the best thing for its long-term interests, but now they're actually doing something about it. And on the metal side, like it was no secret that building. more robust domestic supplies for our critical minerals was a good idea. But seeing what happened to nickel prices, seeing the way global energy markets have been roiled by the Ukraine invasion has really drawn a clear link between clean energy policy and national security policy. And you see, like, President Biden invoking Defense Production Act for battery minerals, calling it literally a matter of national security, all these companies that were already working on recycling

are now able to say, hey, look what's happening overseas, wouldn't we be better off if we could provide our own continuous source of critical battery materials on into the future? So the urgency is there, and it's fueling a new wave of recycling activity. Coming up, can this burgeoning industry

become a viable alternative to mining domestically and abroad? Virtual power plants are becoming a reliable way for utilities to manage capacity, but enrolling devices is just the start. What really matters is confidence, knowing those resources will perform when dispatched and being able to prove it from the control room to the living room. Energy Hub's platform handles the full picture, from near-real-time forecasting, locational dispatch, and the kind of rigorous verification that holds up when regulators,

grid operators, or leadership, ask, did it deliver? easy enrollment creates momentum, proven performance builds trust. That's why more than 170 utilities rely on Energy Hub to manage over 2.5 million devices delivering 3.4 gigawatts of flexible capacity. See what that looks like at energyhub.com. We're living through a profound economic shift, and energy sits at the center of all of it. Trillions of dollars are flowing into power plants, transmission lines, battery factories, data centers, but the future of energy isn't shaped by technology alone. It's shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of

Crux, the capital platform for the clean economy. Join me for my brand new show, Critical Capital Capital, as I talk with people deploying capital, shaping policy and building projects. Together, we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to critical capital on Spotify, Apple, or wherever you get your podcasts. In the last couple of years, a handful of American startups have raised hundreds of millions of dollars to recycle batteries. They're all pursuing different methods to extract lithium and other critical materials that can be used to make new batteries. It could be a $20 billion industry this decade as environmental, geopolitical, and price volatility concerns collide. They've been raising a lot of money from investors.

So, you know, Redwood Materials, they raised $700 million last summer, which is huge for the kind of climate tech, clean tech space. That deal valued them at $3.7 billion. You know, they've been kind of a fundraising powerhouse. But Ascend Elements also raised $90 million last year to build out their factories. Lifecycle did a SPAC, and that pulled in over a... $500 million, and then they've gotten a few hundred million more since then from like Coke strategic platforms, as well as from a major mining conglomerate. There's real investor interest in this space just very recently. If we already have some billion dollar companies in the

space when there's actually very little recycling happening, you can imagine how much more valuable the sector will be when there's like real mineral processing at scale happening. There's this perception that the explosion of electric cars that is coming over the next decade is going to cause some really serious problems for commodity pricing, for supply of critical materials, and there are worries that we will not have the technologies to economically recycle EV batteries at scale. What's the truth? Yeah, well, there's definitely going to be, I think, an ongoing supply scarcity.

Part of that's just driven by the kind of insane growth curve of electric vehicles. You know, if it's been doubling year over year, and I think we're now into the 8% of new cars globally are electric, and it's just going to keep growing from there. So there's this huge growth, and the legacy mining industry was not built around that. It was built around the demand that existed before this EV bursting onto the scene. So, yeah, there's definitely this need to catch up. And the companies in the recycling space see themselves as playing a pretty essential role in ensuring there's enough minerals to supply the future car battery demand.

I mean, a lot of them talk about this vision of a circular battery economy where there's just a constant cycling of old batteries coming out, getting taken apart and cleaned up and put back into new batteries. And that that should be cheaper than going out and mining new metals out of the ground and refining them and doing all that work. Now, this needs to be proven because the industry today is clearly built around going out and mining new metals and refining them and manufacturing them. But in theory, if you already have this very concentrated supply of already refined metals and you can efficiently pull them out of the old batteries and put them into new ones, then that could, in fact, be cheaper. And then the big question is, can recycling get big enough and good enough to supply a serious portion of the overall new battery demand? We still don't know yet because the challenge is there's a lot fewer EVs from a few years ago, and the future demand keeps getting bigger and bigger. And, you know, it'll take a while for the population of old batteries to kind of catch up to what the new demand. looks like. What happens to the battery industry if it can't properly recycle? If this technologically

doesn't work in the way we think it will or we can't do it fast enough, what are the consequences? Yeah. Well, if the recycling can't scale up to meet the future demand for new batteries, if we aren't able to scale the battery recycling industry to where it needs to be, I mean, one, there's the waste problem of all these batteries will be piling up and they've got to go somewhere where they aren't a threat to the environment or to the infrastructure that they're housed in. But then there would also be this missed opportunity on the supply side of new battery production. And mining is a messy business and it's carbon intensive. And if we're trying to run this whole clean energy shift using batteries as a key pillar, you want those

batteries to be as clean as they could be. And recycling is just much better in terms of environmental impacts and climate impacts. So it's kind of a three-fer. You can ensure secure supply. There's a national security component. You can control the cost of batteries and the materials that go into batteries, and there's a wildly good environmental reason to do it. Is that right? Absolutely.

Yeah, no, it's a win on a whole bunch of different policy objectives. It's a good way to challenge some of the critics of electric vehicles. People will say, well, it's not really that clean, if you factor in the carbon emissions from manufacturing the batteries, and there is a real footprint associated with making a battery. But that's not an absolute truth that's fixed for all time. If you can make the battery with recycled materials that's powered by clean electricity, suddenly that footprint goes down,

and the benefits of adopting an electric car versus a gas-powered car get that much better. Julian Specter, thanks so much. Thanks for having me. It's always a good time. Julian Spector is a senior reporter at Canary Media. This episode is part of Canary's bigger coverage for Recycling Week. Go to Canarymedia.com to read stories from Julian and the other journalists there, and you can find all our episodes.

We are a co-production of PostScript Media and Canary Media. Our producers are Jamie Kaiser and Alexandria Her. Anne Bailey is our senior editor. Sean Markwan is our engineer. Original music came from Echo Finch and Blue Dot Sessions. Sean Markwan composed the theme. PostScript media is supported by Prelude Ventures. Prelude is a venture capital firm that partners with entrepreneurs

to address climate change across a range of sectors. That includes advanced energy, food and agriculture, transportation and logistics, advanced materials in manufacturing, and advanced computing. Give us a rating and review on Apple or Spotify. Thanks for doing that. Of course, share your thoughts on social media. and send a link to anybody who you think would like this show.

I'm Stephen Lacey. This is the Carbon Copy. We'll catch you next time.