Recycling and utilization of waste traction batteries
Recycling and utilization of waste traction batteries
Business Model Description
The composition of valuable metals in the cathode material of different power lithium batteries is different. Profit can be generated by extracting the metals with the highest potential value, including cobalt, lithium, and nickel, and selling them to relevant companies.
Expected Impact
Battery recycling industry reduce pollution, protect people's health, promote recycling, reduce production costs and bring economic benefits.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Zhejiang
- China: Inner Mongolia
- China: Jiangsu
- China: Hebei
- China: Henan
Sector Classification
Renewable Resources and Alternative Energy
Development need
China's current energy structure dominated by fossil energy. Fossil energy resources are limited and can release large amounts of carbon dioxide when burt, accelerating global climate change and extreme weather events. Thus, renewable energy is crucial to China's green transformation and energy security. (1)
Policy priority
The proportion of non-fossil energy in total energy consumption should be increased to about 20%. State Council's action plan for carbon peaking stated that wind and solar power generation, biomass power generation and heating should be developed. By 2030, the total installed generation capacity of wind and solar power will reach above 1200 gigawatts. (1)
Gender inequalities and marginalization issues
Renewable energy employs about 32% women, compared to 22% in the energy sector. (2)
Investment opportunities introduction
The IOAs in the renewable energy sector center around the utilization of solar energy, wind energy, and biomass energy.
Key bottlenecks introduction
The energy endowment and demand don't match. Hydropower generation is centralized in southwest China, while wind and solar energy are centralized in northern China, which is far away from the centers of consumption in the eastern and coastal areas. The instability of renewable energy poses a challenge to the consumption and stable operation of the grid.
Alternative Energy
Development need
The transportation industry accounted for 10% of China's total carbon emissions in 2020. The development of new energy vehicles is important to a clean and low-carbon transportation industry and battery technology is a key factor. Batteries directly impact the driving range and even the quality and cost of electric vehicles.
Policy priority
It is specifically mentioned in the "Planning for the Development of the New Energy Automobile Industry (2012-2020)" that breakthroughs should be made in battery technology, establishing an efficient battery recycling system, and speeding up the construction of charging and battery replacement infrastructures. (3)
Gender inequalities and marginalization issues
Most buyers of new energy vehicles are from the first- and second-tier cities in China, accounting for more than 80% of the total. Buyers from the first- and second-tier cities account for 46% and 37%, respectively, and buyers from the third- and fourth-tier cities take up 11%. (4)
Investment opportunities introduction
The IOAs in this sector center around the construction and operation of battery swapping stations and the recycling of traction batteries.
Key bottlenecks introduction
Relevant policies, regulations, and mechanisms need further improvement.
Fuel Cells and Industrial Batteries
Pipeline Opportunity
Recycling and utilization of waste traction batteries
The composition of valuable metals in the cathode material of different power lithium batteries is different. Profit can be generated by extracting the metals with the highest potential value, including cobalt, lithium, and nickel, and selling them to relevant companies.
Business Case
Market Size and Environment
> USD 1 billion
> 25%
With the continuous expansion of the new energy vehicle industry, the traction battery recycling market has huge potential. The market size is expected to reach over 70 billion RMB by 2030, which corresponds to a CAGR of 58.3% from 2021 to 2030. (6)
Indicative Return
10% - 15%
According to GEM Co., Ltd.'s announcement, in 2020, the gross margin of the company's waste battery recycling business was around 12.81%. (5)
Investment Timeframe
Medium Term (5–10 years)
The project is expected to reach an annual comprehensive sales revenue of 518 million yuan. The investment payback period is expected to be 5.5 years (after tax, including the construction period of 2 years), and the investment profit rate is expected to be 19.3%. (7)
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Impact Case
Sustainable Development Need
The elimination of countless traction batteries poses a potential threat to the environment and human health. Used traction batteries are classified as hazardous waste that will cause environmental pollution and affect the health of people, animals, and plants without proper treatment.
Gender & Marginalisation
At present, domestic power lithium battery recycling businesses are mainly concentrated in coastal provinces like Guangdong, Jiangsu, and Shandong.
Expected Development Outcome
Traction battery recycling can reduce land and water pollution caused by the batteries and can bring economic benefits. Recycling can not only improve the utilization efficiency of materials but can also cut costs, contributing to the development of circular economy.
Gender & Marginalisation
The development of traction battery recycling networks can bring development opportunities to more regions and address pollution issues.
Primary SDGs addressed
6.3.2 Proportion of bodies of water with good ambient water quality
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Indirectly impacted stakeholders
People
Corporates
Outcome Risks
The dismantling process of used traction batteries is complicated and would cause potential safety risks.
Impact Risks
Informal recycling companies have cost advantages, probably rendering formal recycling companies in want of materials as numerous used batteries flow into informal channels.
Impact Classification
What
As laws and regulations improve, the battery recycling industry will be formalized while those smaller recycling companies with outdated technology will be eliminated.
Risk
Without proper regulation, waste batteries may flow into informal recycling channels.
Impact Thesis
Battery recycling industry reduce pollution, protect people's health, promote recycling, reduce production costs and bring economic benefits.
Enabling Environment
Policy Environment
17 regions in Beijing, Tianjin, Hebei, Shanghai, Guangdong, Hunan, and China Tower Corporation Limited were identified as pilots, and the construction of several key recycling projects would be supported. (17)
In 2020, the "Planning for the Development of the New Energy Automobile Industry (2021-2035)" published by the General Office of the State Council required that a sound traction battery recycling industry system should be established. (11)
In 2021, NDRC issued the "14th Five Year Plan for Circular Economy Development": strengthen the construction of a traceability management platform for new energy vehicle traction batteries, improve traceability management system for traction battery recycling. (20)
Strengthen the whole life cycle traceability of new energy vehicle traction batteries, build an integrated recycling system through upstream-downstream and cross-regional cooperation, promote utilization of waste traction batteries in power backup, charging, etc. (18)
Financial Environment
The "Provisions on Administration of Investment in the Automobile Industry" issued by the National Development and Reform Commission stated that the focus shall be put on investment in technology and special equipment for traction battery recycling. (15)
In 2019, the Ministry of Industry and Information Technology stated in the information disclosure that it will actively work with relevant departments to implement preferential fiscal and tax policies. (19)
Regulatory Environment
In 2018, the Ministry of Industry and Information Technology, with six other ministries, issued a interim measures which specified detailed requirements for the production, recycling, comprehensive utilization, supervision and management of traction batteries. (12)
In 2019, MOIIT specified the requirements for the construction, operations, safety, and environmental protection of the recycling service network targeting waste traction batteries and scrapped cascade utilization batteries. (13)
In 2021, MEE issued the "Technical specification of pollution control for treatment of waste power lithium-ion battery (Trial)", which specified relevant regulations on environmental protection issues in waste traction battery treatment processes. (14)
Marketplace Participants
Private Sector
Contemporary Amperex Technology Co., Ltd., GEM Co., Ltd., Shanshan Group Co., Ltd., Gotion High-tech Co., Ltd., BYD Co., Ltd., etc.
Government
Hefei Government, Anhui Province, provides financial incentives for vehicle and battery manufacturers who establish waste power battery recycling systems and implement battery recycling. (16)
Target Locations
China: Zhejiang
China: Inner Mongolia
China: Jiangsu
China: Hebei
China: Henan
References
- (1) State Council, 2021, Action Plan for Carbon Dioxide Peaking Before 2030, http://www.gov.cn/zhengce/content/2021-10/26/content_5644984.htm
- (2) IRENA, 2019, Renewable energy: a gender perspective. https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective
- (3) State Council, 2020, Planning for the Development of the New Energy Automobile Industry (2021-2035), http://www.gov.cn/zhengce/content/2020-11/02/content_5556716.htm
- (4) iiMedia Research, 2020, Automotive Industry Data Analysis, https://www.iimedia.cn/c1061/74723.html
- (5) GEM Co., Ltd., 2021, 2020 Annual Financial Report, https://pdf.dfcfw.com/pdf/H2_AN202104141484995631_1.pdf?1618437846000.pdf
- (6) cls, 2022 China's retired power batteries may reach 137.4 GWh in 2025 and Battery recycling output value can exceed 100 billion， https://www.sohu.com/a/593504605_121335114
- (7) Department of Commerce of Jilin Province, 2020, Liaoyuan traction battery recycling and cascade utilization production line construction project, https://chuneng.bjx.com.cn/news/20200120/1038043.shtml
- (8) Tus-Sound Environmental Resources Co., Ltd., 2018, Announcement on Investment Matters, http://www.cninfo.com.cn/new/disclosure/detail?orgId=gssz0000826&announcementId=1205467969&announcementTime=2018-09-27%2007:39
- (9) Contemporary Amperex Technology Co., Limited, 2021, Investment Announcement, https://pdf.dfcfw.com/pdf/H2_AN202110121522145131_1.pdf?1634040522000.pdf
- (10) Gotion High-tech Co., Ltd., 2021, Announcement on Agreement Signing with Feidong County Government, http://www.cninfo.com.cn/new/disclosure/detail?orgId=9900001001&announcementId=1209428011&announcementTime=2021-03-23
- (11) State Council, 2020, Planning for the Development of the New Energy Automobile Industry (2021-2035), http://www.gov.cn/xinwen/2020-11/02/content_5556762.htm
- (12) Ministry of Industry and Information Technology, 2018, Interim Measures for the Administration of Recycling Traction Batteries of New Energy Vehicles, http://www.gov.cn/xinwen/2018-02/26/content_5268875.htm
- (13) Ministry of Industry and Information Technology, 2019, Guidelines for the Construction and Operation of Recycling Outlets for Power Storage Battery Used in New Energy Vehicles, http://www.gov.cn/xinwen/2019-11/08/content_5450006.htm
- (14) Ministry of Ecology and Environment, 2021, Technical specification of pollution control for treatment of waste power lithium-ion battery (Trial), https://www.mee.gov.cn/ywgz/fgbz/bz/bzwb/gthw/qtxgbz/202108/W020210820583000818668.pdf
- (15) National Development and Reform Commission, 2018, Provisions on Administration of Investment in the Automobile Industry, http://www.gov.cn/gongbao/content/2019/content_5377111.htm
- (16) Science and Technology Department of Hefei City, 2021, Notice on Liquidation of Partial Financial Subsidies for New Energy Vehicles at City Level， http://kjj.hefei.gov.cn/zwgk/tzgg/14613773.html
- (17) Ministry of Industry and Information Technology, 2018, Implementation Plan for the Pilot Program of Recycling Traction Batteries of New Energy Vehicles, http://www.gov.cn/xinwen/2018-03/05/content_5270958.htm
- (18) Eight departments including the Ministry of Industry and Information Technology, 2022, Notice on Issuing the Implementation Plan for Accelerating the Comprehensive Utilization of Industrial Resources, http://www.gov.cn/zhengce/zhengceku/2022-02/11/content_5673067.htm
- (19) Ministry of Industry and Information Technology, 2019, Reply to Recommendation No. 3239 of the Second Session of the 13th National People's Congress, https://wap.miit.gov.cn/zwgk/jytafwgk/art/2020/art_e69d1ee74a4245a1954ea4f8f73ddec4.html
- (20) National Development and Reform Commission, 2021, The 14th Five Year Plan for Circular Economy Development, http://www.gov.cn/zhengce/zhengceku/2021-07/07/content_5623077.htm