About Environmental, Social, And Governance Risk Briefing

Electric mobility is being incentivized around the world to reduce the environmental impact of the transportation sector and to further the transition into a low carbon economy.
With more electric vehicles in the market, the demand for the lithium used in their batteries is expected to increase accordingly.
The journey to achieve the goal of the Paris Agreement, limiting global warming to 1.5 °C, has opened the way for technological innovation to help reach a peak of greenhouse gas (GHG) emissions. Technology aims to have the double purpose of improving our resilience towards climate change and to reduce GHG emissions. That is why technological innovation is key to move towards a low carbon economy, where the output of GHGs into the atmosphere is minimal.
Electric mobility is one of the solutions being incentivized around the globe in varying magnitudes. Nevertheless, its implementation presents challenges to keep up with the growing demand of electric batteries and the risks in the lithium supply chain. A sustainable approach is needed to address the challenges from the extraction of this critical raw material, which is crucial in the fight against climate change.

The Future Of Mobility

Within the transportation sector, road transport has by far the biggest share in the sector’s GHG emissions. Therefore, one of the initiatives to lower them is to incentivize the deployment of low emission transport alternatives such as electric vehicles (EVs). Scientific studies have reached different conclusions about the real environmental footprint of EVs and the extent to which they can help mitigate climate change. The differences are due to the research scope and other factors such as the energy mix of the studied location. Nevertheless, the uptake of EVs continues to increase year-on-year. According to a report from the International Energy Agency (IEA), the global stock of EVs reached 7.2 million in 2019. This amount makes up only 1% of the total global car stock. However, it also represents a 40% year-on-year increase from 2018; EVs keep gaining share in the global car sales.

With more EVs on the market and strong incentives to increase this number, the demand for materials used in EV batteries, such as lithium, cobalt, nickel, and others, can be expected to increase accordingly. The lithium-ion (Li-ion) batteries are the most widely used today and will likely dominate the market in the upcoming decade. Compared to its competitors, Li-ion batteries can store higher amounts of energy with lower mass and weight, have high energy efficiency, good high temperature performance, and lower self-discharge. The US Geological Service (USGS) reports that in 2020, 71% of the global end use of lithium was for batteries. The IEA estimated that the lithium demand could increase up to 185,000 tons per year by 2030, compared to the 17,000 tons per year in 2019, without considering other lithium applications like electronic devices, grid storage, ceramics, and glass.