U.S. Battery Recycling Investment Soars Amid Green Transition

The U.S. battery recycling investment is growing rapidly to recover critical minerals and reduce waste, aiming to boost the battery supply chain and tackle China’s dominance. The world is increasingly relying on lithium-ion batteries to power electrical devices, green technologies, and electric vehicles (EV), with demand only expected to grow. The production of these batteries relies heavily on the mining of finite metals and minerals, such as lithium and cobalt. Many countries worldwide are now beginning to invest in battery recycling operations to recover critical minerals and reduce waste. Nevertheless, China currently dominates both the battery production and recycling market, and major investment is needed to develop other countries’ battery industries to boost global battery supply chains.

China Dominates Battery Recycling

 Currently, China manages the bulk of the world’s EV battery recycling, with other countries only recently beginning to invest in developing their recycling industries. The EV battery recycling industry is expected to grow dramatically in the coming years, from a value of $11 billion in 2022 to $18 billion by 2028. In addition, there is optimism about the potential to recover critical minerals in the recycling process. The lithium, cobalt, and nickel found in EV batteries are worth between $1,100 to $2,100 per car alone.

As the demand for critical minerals continues to increase, there are rising concerns about the supply of these minerals. While some countries are investing heavily in the development of mining operations, others are looking to battery recycling activities to meet the growing demand. 

Biden Administration Funding

In the U.S., the Biden administration is investing heavily in battery recycling, in the hopes of recovering critical minerals and tackling China’s global industry dominance. In March 2024, the Department of Energy (DoE) announced $62 million in funding for 17 projects to boost consumer participation in electronics battery recycling and improve the economics of battery recycling. This will be funded by the Bipartisan Infrastructure Law. 

In July this year, the DoE announced $14 million in funding for the establishment of 1,000 collection points across the country for end-of-life batteries from consumer products, providing consumers with easy access to recycling. 

A clause in the Inflation Reduction Act (IRA) has also boosted U.S. battery recycling in recent years. The IRA regards EV battery materials recycled in the U.S. as ‘American-made’ for subsidies, regardless of their origin. This means that automakers that use U.S.-recycled batteries qualify for EV production incentives. In recent years, EV sales have risen significantly, with the U.S. achieving an all-time sales high of 1.4 million EVs in 2023. Based on the rise in demand, the lithium battery market is expected to increase by around ten-fold by 2030. 

The U.S. Secretary of Energy Jennifer Granholm explained, “Capturing the full battery supply chain—from sourcing critical materials to manufacturing to recycling—puts the U.S. in the driver’s seat as we build our clean energy economy.” Granholm added, “With the historic support in President Biden’s Investing in America agenda, we are creating a sustainable, circular supply chain that lowers costs for consumers and boosts our manufacturing global competitive edge.”

Addressing the Metals and Minerals Shortage

The EV battery recycling market has grown significantly in recent years alongside the growth in demand for critical minerals. By 2023, at least 80 companies were conducting EV battery recycling activities, with 50 startups having attracted at least $2.7 billion over the six years prior. Investors are increasingly seeing the value in battery recycling, as it becomes clear just how difficult it will be to match the critical minerals supply with the demand.

Automakers have previously voiced concerns over the performance of recycled batteries, worried that they would have a shorter lifespan than new batteries. However, recent studies show that innovations in recycling methods mean that recycled lithium-ion batteries may perform better than new ones. Recycling the crystal cathode in the batteries – the most expensive component and the key to supplying the correct voltage – can be highly effective and reduce waste. 

Battery recycling is expected to be crucial to achieving a green transition, as the number of end-of-life batteries is expected to rise sharply in the coming years, which could lead to a major waste problem and result in the loss of critical minerals if not dealt with appropriately. The question now is whether the EV industry is ready to recycle. 

Even though the U.S. had very minimal battery recycling capabilities until recently, financial incentives from climate policies have helped grow the industry significantly in a short time. The battery recycling pipeline is promising, with many facilities being established in regions where EV and lithium-ion battery production sites are already located. 

 By the end of 2022, the U.S. had a recycling capacity of 105,150 tons of minerals a year, enough to produce around 220,300 EV batteries annually. However, if the 2023 battery recycling facility project pipeline goes ahead, the U.S. could be capable of processing 652,293 tons of critical minerals a year by 2030, handling around 1.3 million end-of-life electric EV batteries annually. This could contribute greatly to the establishment of a circular regional supply chain and encourage greater participation in the industry.

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