The shift towards net zero relies significantly on the abundance of materials, particularly those that enable higher levels of sustainability without compromising on performance. Global legislation is putting considerable pressure on manufacturers, and consumer demand is now aligning with this trajectory. According to BCG, the demand for sustainable raw materials could exceed supply by as much as 133 million tons by 2030.
Green premiums for environmentally friendly commodities are becoming more noticeable. Producers, while primarily concentrating on the CO2 intensity of these commodities for emission reduction goals, are increasingly recognizing the importance of other dimensions such as water consumption and the impact on local communities and biodiversity. The automotive industry is particularly affected by this transition. Projections suggest that the European Union (EU) will contribute a substantial 17% to the global battery supply by 2030. A noteworthy development in this arena is the recent battery regulation, effective since August 2023, emphasizing that battery raw materials should primarily originate from Europe and follow ethical sourcing practices.
Battery manufacturers grapple with two major hurdles:
- ensuring the security of the supply chain and
- maintaining affordability.
A key player in this challenge is graphite, the largest single material by volume in batteries. Graphite, a critical raw material in Europe, the USA, Korea and Japan, is mainly produced via unsustainable methods. Adding to the complexity, the price of conventional graphite has dropped significantly in the last years – it was around twice as expensive.
In this light, the pressing question is whether battery manufacturers are ready to pay the price of sustainability?
As CO2-grown graphite suppliers, we see the bigger picture. We stand by sustainable raw materials which are the baseline for sustainable production. Our goal is to empower 4 million car batteries with green graphite by 2030, and what makes it even cooler is that we’re sourcing the graphite from CO2 emissions. This carbon supply has the potential to meet roughly 20% of the annual carbon requirements for the electric vehicle (EV) battery market in Europe. The price volatility of green products is just a temporary phenomenon, as supply increases the price will stabilize. But those who manage to secure their supply first will benefit the most.
The current market price for natural graphite stands at a range of 5 to 8 euros per kilogram, whereas synthetic graphite is priced higher, ranging from 8 to 20 euros per kilogram. Our calculations at UP Catalyst suggest that, upon scaling up production and optimising manufacturing processes, we can realistically align with the market’s average graphite price by as early as 2026. This could potentially transform the whole battery raw material industry.
Manufacturers have a golden opportunity to steer the future of batteries towards sustainability, positioning themselves at the forefront of this crucial movement. Currently, the regulatory landscape is still relatively lenient, providing manufacturers with an opportunity to gradually modify their supply chains.
However, the game is about to change in 2025 when the EU battery regulation will be updated with measurable targets, covering raw materials, recycling, and sourcing. Opting for green products is not just a choice; it’s becoming a necessity.
Sticking to unsustainable supply chains is a risky business that will inevitably cost more in the long run. The countdown has begun, and the time for action is now!