Harvard University

Tackling pollution from the transport sector continues to be a challenging issue for many countries, especially in places where many rely heavily on private transportation. Full transition to Electric Vehicles (EVs) remains testing for many planners.

This is because EVs, at the moment, cannot happen without lithium and according to research by International Energy Agency (IEA), we would need to mine almost 42 times as much lithium as was mined in 2020 if we would meet the climate goals set by the Paris Agreement.

With this, we then need to understand that existing mines and projects under construction would meet only half the demand for lithium in 2030. Demand currently outstripped supply by far, which explained the rise in metal prices and the pressure might not fall before 2024.

In addition to that, some lithium rich areas fall into the areas bordering several territories. The race to secure lithium might add additional pressure to the already tense situation along these borders, further complicating the current geopolitical situation.   

Already, many are shifting their attention to several lithium alternatives ranging from hydrogen fuel cells, lithium-sulphur, graphene supercapacitors, redox flow batteries, aluminium-graphite batteries, solar panels, solid-state batteries amongst others.

Others, while planning for the electrical grid of the future, are experimenting with hybrid charging stations for vehicles, in order to mitigate future risks. 

I am arguing that nobody in their right mind, would want to dive 100% into building only pure electric charging stations for vehicles.

Why? 

Let’s say you have the political will, government machinery, financial prowess and with all these, the support of the private sector, to secure all the required EVs and lithium-related products/ infrastructure in your jurisdiction.

On one hand, you are ahead in the EV race. On the other hand, the entire situation might drown into a spiral whereby there is not enough lithium to go around for the rest of the world so eventually the price simply becomes too high for the rest to adopt.  

If the price of EVs goes beyond what consumers could afford, it might result in insufficient demand for EVs, thereby prompting the private sector to diversify production to other types of vehicles. No matter what, it is relatively easier for the private sector to make changes compared to public sector’s commitment to large infrastructure projects.  

Plus, the supply of lithium currently depends heavily on the mining industry, a sector that is fraught with a myriad of ESG issues ranging from destruction to natural habitat, degradation of geotechnical profiles, disruptions to nearby communities, illegal discharges to nearby water bodies and the list goes on. 

There is a good chance that the supply of lithium through mining, would still continue but the price of the metal would escalate because of Environment, Social and Governance (ESG) considerations, certifications, ratings, operational restructuring, asset investments and so on. 

Apart from these, the narrative about decarbonization seems to be electrifying everything; aircrafts, trains, trams, trains, three-wheelers, motorbikes, etc. With so many competing interests, the current and future inflationary pressure on this metal is simply too high. 

So, when two hands meet, the rest of the world is finally going to wake up to the issue of limited lithium, and might eventually decide that it could be more sustainable and cost-effective  to diversify into hydrogen fuel cells, bio-fuels, etc or maybe even continuing with traditional gas/ petrol. 

In fact, a few have already acknowledged the situation, and are shifting their attention to building capabilities to reconfigure internal combustion engines to run on bio-fuel. Others are starting to experiment with hybrid charging stations that has solar PV panels and able to store natural gases as well. 

Recycling efficiency of lithium is not 100% but the technology powering the battery recycling business is promising. Even though that may be the case, the eco-system should be flexible enough to cater to any future disruptions. In the scenario where there is not enough lithium to produce new cars, the societal machinery could still continue to function reasonably well and not be held ransom to a single type of vehicle.

For this, I like to think that it is a zero-sum game which is why we need to adopt an eco-system approach to the game. Finite amount of lithium means that there would be limited supply of EVs. Most likely, the ones who can own this limited supply of EVs,  are the ones who can afford to. Yet, it should not end up in a situation where there are a few “winners” at the expense of the rest.

Transitioning to a decarbonized future depends to a large extent on creating a win-win situation resting on strong partnerships fostered through open and transparent collaborations among countries and tight coordination between the public and private sector. 

This brings us to my original point, that is, while planning for the electrical grid of the future, it is very important to build flexibility into the planning and be open to experimenting with hybrid charging stations for vehicles, in order to mitigate any future risks.

Copyright © 2022 Zeng Han-Jun. All Rights Reserved.