What is the real situation with emissions?

A 2021 life cycle analysis of UK road vehicles by Richardo Energy & Environment estimated that a typical electric car on the market there will achieve a reduction in greenhouse gas emissions of around 76 per cent by 2030, and possibly up to 81 per cent by 2050, compared to an equivalent petrol car, thanks to advances in battery technology and a cleaner UK electricity grid. On the other hand, however, it should be pointed out that the production of lithium batteries for electric cars is not as green as it may first appear. In particular, emissions from the production of electric cars were around 50 per cent higher than petrol cars in 2020 because of batteries. They could approach comparable levels by 2050.

Mineral extraction is also a problem

Lithium is an essential part of battery production for electric vehicles and other technologies that rely on lithium batteries. Did you know that the global lithium-ion battery market was valued at $52 billion in 2022 and is expected to grow to $194 billion by 2030? Australia is the largest producer of lithium, accounting for 49 percent of global production. Chile ranks second with a 30 per cent share of production. It is there that the largest deposits of the mineral are found. But lithium mining leads to contamination of ecosystems and pollution of water bodies, which can lead to them becoming unsafe for life.

Drought as a side effect

It takes 1.9 million litres of water to extract one metric tonne of lithium. In Chile, lithium mining has gobbled up 65 per cent of the water supply, which has had a drastic impact on farmers in the surrounding area who now have to import water. it and one of the driest cities on Earth.

Poor conditions for workers

The negative impact of mining on the land is one thing. But conditions for workers are also less than ideal, as can be seen in the case of cobalt mines in the Congo, where almost half of the world's cobalt deposits are located, which are also used in the production of lithium-ion batteries. As stated in a report by Amnesty International published earlier this year, the people affected by mining have not been compensated in any way. Meanwhile, the mining areas are said to be controlled by soldiers who allegedly harass and assault the workers. According to several human rights organisations, there are evictions from homes and farms, inhumane treatment of workers and even children are forced to work there.

Demand for lithium-ion batteries increased nearly 12-fold between 2016 and 2022. Tesla is the leader in electric vehicles, with 1.31 million EVs delivered in 2022. That compares to over 367,000 deliveries in 2019 before the Covid pandemic. Tesla's market capitalization as of December 7, 2023, was $750 billion. It is followed by Vietnam-based Vinfast Auto at US$40 billion, China's Li Auto at US$39 billion and California-based Rivian at US$22 billion. Another Chinese manufacturer, NIO, rounds out the top five with US$18 billion. Other global automakers such as Mercedes, Nissan, Toyota, Ford and many others, formerly dominant in fossil fuels, are also trying to adapt to the market and are moving forward with their own models of electric or hybrid vehicles.

The European Union promises several changes

The European Union has approved a new battery regulation that introduces new requirements for the sustainability and safety of batteries and battery-converted products. The regulation contains several articles with different effective dates, affecting the supply chain. Key sustainability areas include, for example, design requirements, substance restrictions, carbon footprint, recycled content and increased producer responsibility, among others. It also brings changes in battery categories, but also, environmentally hazardous substances, recycled content, performance and other areas.

There is still a long way to go

Getting rid of dependence on fossil fuels is an important goal in the agenda of several world leaders or corporations to reduce greenhouse gas emissions. At the same time, however, it is also their task to ensure that the environmental impact does not just shift to developing countries. The road ahead is still long and the solution will not be easy. It is also the responsibility of the companies concerned to do their best to select suppliers in a way that respects the principles of human rights and environmental impact.

Olivia Lacenova, principal analyst at Wonderinterest Trading Ltd.