How Germany’s ‘Battery Passport’ enables a secure & sustainable EV battery economy
Douglas Johnson-Poensgen explains how the “Battery Passport” launched by the German government enables a secure and sustainable battery economy
As the world pursues lower carbon emissions to build a more sustainable and secure future, focus has shifted toward electric vehicles (EVs) and the minerals within their batteries. Collectively, consumers are turning to EVs, with passenger EV sales set to increase from 6.6 million sold in 2021 to 21 million in 2025, according to BNEF. This is an exciting time for many but can also lead to several unanswered questions.
A number of these questions involve the sustainable and secure supply of battery raw materials and how industry can create more EVs without harming people or planet. The extraction and production of minerals used in EV batteries can—if not designed with intention and continuous monitoring—have a negative impact on our ecosystems and environment—turning rock into something that rolls can be enormously intensive.
The increasing popularity of EVs means more minerals like lithium, cobalt, mica, and nickel are needed. According to the International Energy Agency (IEA), a battery electric vehicle (BEV) can contain six times more minerals than an internal combustion engine vehicle. While EVs have no tailpipe emissions, they have much larger resource and emission costs in the production phase. Exponential demand of extracted raw materials per car, coupled with continuous growth in EV sales, is in part the reason that global demand for lithium, as just one an example, could increase by between 13 and 42 times by 2040 (IEA).
In addition to growing demand for battery materials, Russia’s invasion of Ukraine and the COVID19 pandemic have illustrated that these supply chains are particularly fragile and susceptible to geopolitical risks. Industry must steer away from buying materials from high-risk and conflict-affected areas, while reducing carbon emissions as much as possible given available technologies and manageable costs.
For all these reasons, transparency and diversity is needed more than ever within our supply chains, and this can be achieved by using technology that lets us illuminate full supply chains, reveal their activity, and make more informed, data-driven decisions in our sourcing.
There is a lot of work to do to reach greater transparency and advanced supply chain performance. Today, only two percent of companies have visibility of their supply chains beyond their second-tier provider according to McKinsey. There is a long way to go to achieve more transparent, resilient, sustainable supply chains, especially in the battery value chain, and this is where the concept of a battery passport comes in.
How Germany is developing a “battery passport” for EVs
The European Union (EU) is preparing to enact a new global standard for regulating battery materials and assets—with aspects of the regulation expected to come into effect as early as 2024. The EU Battery Regulation will introduce requirements for sustainable and responsible batteries—such as proof of provenance, embedded carbon, and minimum recycled content, ensuring companies have more responsibility and are held accountable for their supply chain activity.
In coordination, Germany’s Federal Ministry for Economic Affairs and Climate Action (BMWK) created a new consortium, including world-class market German leaders like acatech – Germany’s National Academy of Science and Engineering, AUDI AG, BASF SE, BMW AG, Circulor, FIWARE Foundation e.V., Fraunhofer IPK, SYSTEMIQ GmbH, TWAICE Technologies GmbH, Umicore AG & Co KG, and VDE Renewables GmbH. They work in association with partners in the space like the Global Battery Alliance (GBA), GS1 Germany GmbH, RWE Generation SE, and more.
Together, these companies—through this consortium—are leading the German government’s “Battery Pass” project, a three-year, government-funded R&D project to develop core data specifications and technical standards for a battery “passport,” as well as a standardised dataspace to manage batteries that are manufactured or placed into service in the European Union.
Circulor will lead one of the project’s five work packages – the “Battery Pass Demonstrator” work package – using content and technical standards to simulate data flows and system transactions. With Circulor’s technology, EV original equipment manufacturers (OEMs) and supply chain participants can track the physical flow of critical materials from extraction to final production, as well as associated Environmental, Social, and Governance (ESG) characteristics, including embedded carbon across Scope 1 and 2 emissions, to create a dynamic picture of inherited (Scope 3) emissions at the downstream. This experience will inform the “Battery Pass” work, especially on how to link data, safely and securely, among supply chain participants, and prove—battery by battery—that the production of these important assets is done in ways that meet specific standards in responsible and sustainable sourcing.
Battery passports enable circular and sustainable value chains
Production of materials used in EVs can include, for example, poor or inhumane labour practices in mining cobalt, environmental impacts that come with extracting nickel or manganese, high carbon intensity production, and uncared for toxic wastes. With a battery passport, such as the one under development by the German government and its “Battery Pass” consortium members, such concerns can come to light and start to be improved.
A battery passport is also useful from a geopolitical standpoint. Both Europe and North America have a strategic over-reliance on Asia for critical raw materials and their processing. Keeping and recycling more of these materials in the EU after they’ve been extracted means that the pace of Europe’s energy transition will depend less on the decisions made by China. Assigning batteries with digital identities or “battery passes” will make it easier to identify volumes on the market and create new economies in reuse and recycling, cutting dependence on raw material supplies that may come from other countries around the world.
The power of traceability
Battery passports function as a digital IDs and technology can be used to trace battery minerals and materials along their supply chains. Embedding traceability into the supply chain from the start can display the proof of provenance, embedded carbon emissions and minimum recycled content.
A battery passport shows the key information about a battery, including where and how it was made. It can also show how much CO2 was emitted in the battery production process, and what actions were taken to produce it sustainably by recording the materials used in batteries throughout their life so they can either be reused or recycled more effectively.
Who is already ahead of the game?
There are several key players who are already pioneering in this space and have started to utilise supply chain traceability platforms like Circulor. Here, are notable examples of those who are benefitting from transparency of their supply chains, and creating a sustainable and secure battery economy, and are prime examples of how a “battery passport” can work.
Volvo Cars is working with Circulor to have full traceability of cobalt from source to the EV itself. Volvo Cars and their downstream suppliers were able to monitor and manage risks in their supply chain using Circulor’s dashboards. Traceability of cobalt and other critical minerals is one of the main sustainability issues faced by automakers today, and Volvo Cars is taking the step to tackle this.
They are also planning to track and reduce CO2 footprints in their supply chain, according to Kerstin Enochsson, head of procurement at Volvo Cars in a recent blockchain panel discussion in Davos, Switzerland. Besides that, they are also working on getting lithium and nickel in the blockchain.
Another company is Rock Tech Lithium, which is extracting raw material for the lithium hydroxide. Their planned battery-grade lithium refinery in Germany will produce 24,000 metric tons of lithium per year – enough for the batteries of half a million EVs. Their goal here is to produce lithium with the lowest possible environmental impact and to ensure that 50 percent of materials come from recycled batteries by 2030. The partnership with Circulor will give Rock Tech Lithium clear proof of origin of the lithium as well as embedded CO2 emissions and in the future, the recycling rates at the facility.
Conclusion
The aim of a “battery passport” is for supply chains to become transparent, and thus allow for data-driven decision-making and ensuring a secure and sustainable battery economy. As EV sales increase, the minerals used to make these EVs must be made with care, and a detailed plan. By building the battery supply chain with traceability embedded from the start, the industry can lead in reducing carbon emissions, creating responsible and secure supply chains, and establishing new domestic economies for the coming electrified future. This will prepare supply chains for all kinds of disruptions, whether its war, or a pandemic, the industry will be fully equipped. Those that manage to quickly demonstrate verified sustainable practices here will soon have a clear advantage.
Douglas Johnson-Poensgen Founder Circulor
