What is the market potential for sustainable battery recycling in Europe?

As electric mobility becomes commonplace an increasing number of questions with regard to the efficient recycling of batteries are raised, not only for ecological reasons, but also for reasons of competition. Mechanical and plant engineering sectors will be able to make a substantial contribution to this, bringing new and efficient procedures onto the market. A study carried out by the Fraunhofer ISI, commissioned by the IMPULS-foundation of the VDMA, reaches the conclusion that Europe can develop into the leading market for green and highly efficient battery recycling and its related technology.

Through the increasing spread of electric vehicles, an enormous market for battery cells is developing in Europe, with an expected 2.5 megatons per year of new batteries in the EU by 2030. This leads not only to questions about the ecological footprint of vehicle batteries, but also about the availability and reliability of the raw material supply chain and the associated competitiveness of German and European industry. In this context, a local solution for battery recycling and the recovery of the raw materials is an important component of the European circular economy. Especially for Germany, as a traditional mechanical engineering location, it is not only the development of the direct battery value chain that is of great importance.

Great potential for market and employment growth

“There is great potential for market and employment growth in the upstream stages of the value chain, especially for mechanical and plant engineering,” says Henrik Schunk, Vice President of the VDMA and Chairman of the Board of Trustees of the IMPULS Foundation, which commissioned Fraunhofer ISI with the study “Recycling of Lithium-Ion Batteries: Opportunities and Challenges for Mechanical and Plant Engineering”. “German and European mechanical and plant engineers are already active as development partners and suppliers for the growing recycling industry. Especially with the pilot plants now being built in Europe, there are great opportunities to establish a strong long-term market position. This is where cooperation with local plant suppliers is crucial,” emphasizes Schunk.

The study now published forecasts the growth of a future European battery recycling market and quantifies the effects for mechanical and plant engineering. The forecasts are based on battery market models from the Fraunhofer ISI and interviews with experts from the mechanical and plant engineering sector, the recycling industry, vehicle manufacturing and research and development.

Recycling capacities must be significantly expanded

The study results show that in Europe, the volume of end-of-life lithium-ion batteries and battery components to be recycled could amount to about 230 kilotons per year from 2030, and about 1,500 kilotons per year from 2040. These figures, already adjusted for possible vehicle and battery exports, imply an annual growth of the recycling industry of more than 30 percent in the coming years. The return of traction batteries from electric vehicles will be the main factor in the medium term. “In order to be able to handle such volumes, recycling capacities in Europe would have to be significantly increased from their current low double-digit kiloton range per year. This will necessitate plant technology in Europe which, depending on the speed of market growth and the global share of European recycling capacities, will require cumulative investments of around €6.6 billion by 2040,” explains Dr Christoph Neef, who researches battery issues at Fraunhofer ISI and coordinated the study. This corresponds to a European market size of about € 810 million for new plant technology in 2040.

The favorable conditions of German and European mechanical and plant engineering could help to bring new and efficient processes to the market. These are needed particularly in view of the European Commission’s latest regulatory proposals: future recycling processes and plants should not only guarantee proper recycling of battery components, but also high recovery rates of important battery raw materials. Even today this is still a challenge, especially for lithium. According to the study, if a European recycling industry with highly efficient process and plant technology is successfully established, recyclates could cover more than 40 per cent of the cobalt and over 15 per cent of the lithium, nickel and copper demand for battery production in Europe by 2040. “Efficient battery recycling could make a decisive contribution to reducing the overall CO2 footprint of batteries and to reducing the dependence on raw material imports in the long term,” emphasizes Hartmut Rauen, Deputy Managing Director of the VDMA.

The employment potential of a growing battery recycling market

Christoph Neef of Fraunhofer ISI also underlined the employment potential of the growing battery recycling market, especially in the component supply sector of mechanical and plant engineering: “For the supply of the European recycling industry, we see a global potential of about 570 jobs in the mechanical and plant engineering sector by 2030, and about 3,800 jobs could be created by 2040.” According to Neef, this could make it worthwhile for European mechanical and plant engineering to expand its existing competitive position in order to benefit from the employment potential of this growing market.

Since there is already a large battery recycling industry in Asia and particularly in China, there is no time to lose in Germany and Europe: On the one hand, clarity is needed quickly with regard to the planned regulation on batteries. On the other hand, appropriate plants must be built and investments made in recycling technologies. The European regulatory framework in particular could provide an important opportunity as it takes into account the ecological footprint of batteries, regional conditions such as energy sources and energy mix, and logistics costs. This could help Europe become a leading market for green and highly efficient battery recycling and its related technologies.

The Fraunhofer Institute for Systems and Innovation Research ISI analyzes the origins and impacts of innovations. We research the short- and long-term developments of innovation processes and the impacts of new technologies and services on society. On this basis, we are able to provide our clients from industry, politics and science with recommendations for action and perspectives for key decisions. Our expertise is founded on our scientific competence as well as an interdisciplinary and systemic research approach.


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