THE BIG BATTERY BOOM - Electrònica Justa

Electric cars can play an important role in the transformation of the transport sector towards a fossil free future. But producing batteries for these vehicles comes with serious social and environmental costs.

A truly just transformation of transport requires reducing our material footprint. This means focusing on more and better public transport, and fundamentally changing our relationship to cars.

Transport plays a key role in the energy transition, as it accounts for almost a quarter of global energy-related CO2 emissions, of which a large majority is attributable to road transport. Transport-related emissions are significantly unequal worldwide, with the United States (US), Europe and China being the largest emitters.

To reduce these transport emissions, the US, the European Union (EU) and China rely heavily on technological solutions, particularly electric vehicles (EVs). In doing so, the world’s largest polluters fail to address the root cause of the climate crisis: their unsustainable consumption.

→ Made by SOMO, the Centre for Research on Multinational Corporations. → Catalan translate by SETEM Catalunya

Human and environmental rights violations behind transition minerals

The extraction of “transition minerals” such as cobalt, lithium, manganese, copper, graphite and nickel takes place in countries with an abundance of natural resources such as Chile, Argentina, the Democratic Republic of Congo, South Africa and Indonesia. The extraction of these minerals is usually related to severe and prolonged impacts on ecosystems, water resources and areas critical to biodiversity, and on the rights of workers, indigenous peoples and local communities. To conclude, minerals such as cobalt or lithium have been declared “critical” by both the US and the EU, since they are considered strategic for economic development. In geopolitical terms, the US and the EU compete with each other and with China to ensure access to critical minerals, by increasing the financial burden and pressure on countries that have reserves of these minerals.

Electric vehicle triggers demand for lithium-ion batteries

The fast growth in lithium-ion battery production is driven by the growing demand for EVs in China, Europe and the US. Analysts estimate that EVs will account for approximately 90% of the demand for lithium-ion batteries in the next twenty years. The implementation of electric vehicles in these regions has strong incentives in subsidies, tax cuts and emission reduction targets.

Corporate giants control the transition

Battery manufacturing is controlled by a small group of large companies, as economies of scale are decisive in reducing production costs. In 2022, three companies (CATL, LG Energy Solution and BYD) accounted for almost 45% of production. Only the largest companies, with abundant resources and powerful technological alliances, will have the ability to survive. Battery manufacturers work with the logic of “either you go wholesale or you can fold.”. According to Benchmark Minerals, by 2031 the nine largest companies will control 53% of production capacity. Capital is concentrated in a few actors that have a substantial weight in the market, and this carries the risk of oligopolies being created.

The winning countries and the losing countries of the energy transition

While EV sales are concentrated in China, Europe and the US and large corporations hide economic benefits, other regions must absorb negative impacts. Thus, for example, in Indonesia, the extraction of nickel has destroyed the forests and contaminated the coastal areas. Rivers and bays have been dyed of a reddish brown by mining slags. These wastes are usually toxic and affect the livelihoods and feeding of the inhabitants of the place by contaminating rice fields and decimating fish stocks. The refining of nickel requires intensive use of energy, driven mainly by coal, and generates large amounts of carbon emissions and waste.