The Future of Industrial Truck Batteries and ESG Compliance

Battery manufacturers are under pressure to ensure ESG compliance in their supply chains due to greenhouse gas emissions. Learn more about how the battery passport will impact the future of industrial truck EV batteries in this article by UgoWork.

25042023 Uw Sdce Article Visual 01 Energy Experts

*This article is sponsored by UgoWork*

Companies face increasing pressure to reduce their greenhouse gas (GHG) emissions and improve their environmental, social and governance (ESG) targets beyond the flashy marketing and social media messaging. Customers, partners and investors alike are putting their money where their mouths are by maintaining or establishing business relationships with businesses that are taking concrete action for the planet and society.

And no stone in supply chains is being left unturned regarding ESG compliance. For example, consumer EV and industrial truck batteries are currently targets for governments and global initiatives aiming to find more sustainable ways to make them—and recycle, revalorize or dispose of them.

Let’s look into UgoWork’s main line of business, EV batteries for industrial trucks, more closely, and what is at play in this subsector of the global battery landscape.

ESG compliance: A new frontier for battery manufacturers

While many industrial trucks still use natural gas and propane for outdoor applications for Class 4 to 7 trucks, more and more businesses are leaning towards investing in electric vehicles powered by conventional lead-acid batteries or next-generation lithium-ion batteries.

For new fleets, batteries are an essential component of electric industrial vehicles and greatly affect performance, operator experience and usability in various environments. Not all batteries are created equally, from chemistry, available energy, charging power and speed, battery management system, maintenance requirements, lifespan, and price. 

But they are all subject to looming ESG regulations.

The reason? Regardless of their chemical makeup, batteries follow a supply chain journey that begins with raw materials extraction and refining, cell manufacturing, packing into modules and industrial applications. They may continue to a second life (as stationary energy storage, for example) or recycling and disposal. Each of those supply chain touchpoints has a ripple effect on the climate, the environment, local communities and human rights. Many factors affect the global impact of the battery over its entire lifecycle:

  • The type of critical minerals that are sourced, how they are sourced and where they are sourced
  • Production, processing and transportation methods
  • The origin of the electricity used for charging
  • Reusing, recycling and disposal

That means that the onus is on battery manufacturers to find more sustainable ways to produce their products and prove their compliance with upcoming standards and regulations.

The Battery Passport: Creating a circular battery value chain

The Global Battery Alliance (GBA) is an organization that is working with hundreds of industry members to create the Battery Passport, a digital record that will follow a battery throughout its entire lifecycle, from mine to disposal—and everything in between.

This passport will provide detailed information about the battery's composition, origin, and processing history, making identifying and recovering valuable materials easier. By enabling better tracking and transparency of battery production and recycling, the Battery Passport will facilitate a more circular battery value chain and substantially the environmental and social impacts of battery production.

What is a circular battery value chain? In the past, a battery’s lifecycle was very linear, as shown in the figure below:

Lithium-ion battery linear value chain representation.Lithium-ion battery linear value chain representation.

The GPA hopes to create a system that fosters a circular battery economy by introducing loops, as shown here:

  1. The first loop concerns the use of the product itself and it’s about maximizing the useful life by finding ways to use it longer, intensifying the use and minimizing waste
  2. The second loop is about second life applications. For example, if the lithium cells of a battery used in a material handling application cannot sustain the intensity of the application, they can be used in less demanding applications like power walls
  3. Another aspect of circularity is to take old products and refurbishing or remanufacturing them, it is the third loop
  4. And finally, recycling is an important part of a circular economy. It is the fourth and final loop
  5. Circular economy applied to the lithium-ion batteries value chain.Circular economy applied to the lithium-ion batteries value chain.

Because the passport will be a digitized representation of an EV battery, it will include lots of details about its entire history, from mine to vehicle and beyond. This implies that stakeholders and auditors can get real-time information and complete traceability on how the battery was created, where the metals and other materials originated from, performance levels, maintenance work and more, at any point along the value chain.

The data gleaned by the passport will enable decision-makers to determine if, at the end of its useful life, the battery can be reused for applications that require lower performance levels, such as stationary energy storage systems.

In addition, low-CO₂ processes can extract valuable minerals and metals for recycling—either to make new batteries or other products. A good example is the lithium recovered from lithium-ion batteries. Lithium can only be found in certain parts of the world. Not all mines and processors are as committed to the environment and human rights as others. If manufacturers can responsibly source their lithium and work with end-of-life partners to draw out lithium for new applications, both actions contribute to the GBA’s main goals.

In the end, the Battery Passport will provide a standardized method to track and validate battery information from cradle to grave, improve end-to-end transparency, and offer a wealth of information for benchmarking and setting standards.

New regulations on the horizon

On top of the GBA’s Battery Passport, many countries are vying on overhauling regulations and battery directors from years past as part of a multi-pronged strategy to meet the Paris Agreement’s climate change objective of staying below 1.5 °C of global warming and slashing emissions by approximately 50% by 2030. This is a sum of each country's nationally determined contributions.

According to the World Economic Forum, sustainable batteries are the best prospect for meeting the Paris Agreement’s climate goals. The organization estimates that battery technology will enable the transport and power sectors to reduce emissions by 30%. Experts also indicate that the right investments and a “concerted effort towards circular and just value chains” will also have a positive impact.

McKinsey and Company also purports that the entire battery industry can become more sustainable and resilient through circularity.

The European Union passed new rules, which require companies selling batteries to comply with new ESG regulations and circular standards. These regulations state that products sold in the EU must be recyclable, can be revalorized, and include recycled material.

Similar laws will undoubtedly be passed in the US and Canada sooner rather than later. Battery Council International brings together leading battery manufacturers in North America and from elsewhere around the globe to create and maintain a circular economy for batteries, starting with lead-acid batteries and expanding to other technologies, like lithium-ion, in the near future.

In conclusion, battery circular strategies, thanks to tools, such as the Battery Passport, and the commitment of supply chain stakeholders and nations, will increase the resilience of battery value chains, mitigate the harmful effects of batteries on the planet, and open new business opportunities for reusing, recycling and sustainable disposal. However, it's important to note that not all battery companies approach energy management in the same way. UgoWork is one of the pioneering companies driving the industry forward with innovative and sustainable practices. By partnering with us, you will embark into a partnership towards a sustainable energy management approach that benefits both your business and the planet. Don't hesitate to get in touch and discover how our energy experts can help move your business towards a more sustainable future.