Global electric vehicle demand raises concerns about battery cell carbon footprint
By a wide margin 2023 was the hottest year on record — and
scientists warn that the weather could only get warmer.
Amid escalating global temperatures and extreme weather events,
the automotive industry faces increasing pressure to reduce
emissions. Rising worldwide demand for battery electric vehicles is
expected to alleviate some climate change effects, but it’s little
respite. Inherent risks and complexities across the vehicle’s life
cycle make realizing their true environmental impact
challenging.
Decarbonization in the mobility sector is now a matter of
necessity. As wildfires, heatwaves, water stress, and hurricanes
become more frequent, they cause ecological and social disruptions
and expose companies’ assets to physical risk. The transportation
sector accounts for a quarter of global greenhouse gas emissions
and is receiving a solid push from government action and regulatory
frameworks to pivot toward sustainability.
Global initiatives such as the Paris Agreement 2015, which aims
to limit global warming to 1.5°C above pre-industrial levels by
2050, have set a clear precedent. Fifteen countries have already
signed net-zero regulations into law, while another 50 countries
have pledged to carbon-neutral targets. The financial sector
displays similar commitments with central banks and stock exchanges
integrating environmental, social, and governance (ESG)
considerations into their reporting and operating requirements.
At the heart of the automotive industry’s journey to
sustainability is the EV revolution. Once a niche market, EVs are
now seen as a critical component of the decarbonization strategy.
However, the transition to electric mobility faces environmental
concerns and sustainability challenges, particularly regarding the
production and lifecycle of EV batteries.
The carbon footprint of an electric vehicle is not confined to
its tailpipe emissions—non-existent in EVs—but is
intricately linked to its battery. The production phase of battery
cells, which involves extracting and processing minerals like
lithium, nickel, and cobalt, is particularly energy intensive. For
example, the cathode and anode materials alone constitute about 72%
of the total emissions from battery production. This aspect is
concerning as it represents a significant portion of the vehicle’s
overall environmental impact.
To further complicate the matter, there are difficulties in
assessing the carbon footprint of EV batteries. The boundaries of
carbon footprint — whether cradle-to-gate, cradle-to-grave, or
well-to-wheel — significantly influence the results and
interpretations of these assessments. Different boundaries in
calculations can lead to varying conclusions about where to make
the most impactful emissions reductions, affecting everything from
consumer choices to regulatory policies.
The United Nations, European Union and other major countries are
attempting to establish globally recognized standards and provide
much-needed consistency in carbon footprint calculations. While
this homogenization remains a work in progress, automakers,
regulators, and manufacturers must increase their efforts to
mitigate carbon emissions from BEVs across the value chain.
S&P Global Mobility’s High Voltage Battery Forecast projects
a 24% compound annual growth rate (CAGR) for global demand for
electric vehicles, from 750 GWh in 2023 to over 3400 GWh by 2030.
With this surge in demand for EVs, the automotive industry faces a
dual challenge. Not only does it need to ramp up production to meet
this demand, but it must also ensure that this expansion does not
come at an unsustainable environmental cost. Companies such as
Tesla, BYD, and General Motors aggressively pursue carbon
neutrality, integrating advanced technologies and renewable energy
sources into their production processes to reduce emissions.
The scale of emissions from batteries by 2030 is estimated to be
equivalent to the carbon footprint of 39 million people globally,
reinforcing the need for aggressive carbon reduction strategies
across the battery production lifecycle. Europe is leading the way
with stringent regulations that push for lower carbon footprints in
battery production, which may slow their progress towards becoming
fully self-reliant on domestic supply.
In contrast, China, as a significant battery producer and
exporter, now faces the challenge of reducing its higher carbon
footprint to meet these European standards. With emissions per kWh
of cell manufacturing measured at about 17 kilograms of
CO2 in 2022, China is focusing on reducing this to
sub-10 levels by 2030 through electrification of gigafactories and
investing in provinces with abundant hydroelectricity.
Decarbonizing cathode and anode material production is also
critical, given their significant contribution to the overall
carbon footprint. Together, these changes are setting a precedent
that could define the future of automotive manufacturing
worldwide.
Moreover, the entire supply chain, from mine to market, is under
scrutiny for its environmental impact. The concept of “scope
emissions,” which categorizes emissions into direct, indirect, and
supply chain categories, is helping companies identify and mitigate
their environmental impacts. Using renewable energy in battery
production and adopting carbon-neutral shipping practices are
becoming increasingly common. Such practices are examples of
innovations in supply chain management.
The push for decarbonization is also reshaping consumer
expectations. Today’s consumers are more environmentally conscious,
often willing to pay a premium for sustainably produced goods. This
shift is influencing the automotive sector and the broader
manufacturing landscape as companies across industries strive to
align themselves with their customers’ values.
However, achieving true sustainability in the automotive sector
requires more than clean manufacturing processes. It necessitates a
holistic approach considering the vehicle’s entire lifecycle, from
design and production to end-of-life recycling. The future of
mobility, therefore, lies not only in electrification but in a
comprehensive rethinking of how vehicles are made and used.
As the industry navigates these complex challenges, the role of
international cooperation and technological innovation becomes
increasingly apparent. The journey towards a sustainable automotive
sector is not a solo race but a collective effort that spans
continents and industries. With the right mix of policy support,
corporate governance, and consumer engagement, the goal of a
carbon-neutral mobility sector will be within reach.
This article is part of a series featuring highlights from
S&P Global Mobility’s 2024 Solutions Webinar Series. Objective
Assessment of Battery Cell Contributions to Carbon Footprint
webinar occurred on April 11, 2024.
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.
