Close to one quarter of global energy-related greenhouse gas emissions are caused by the transport sector and Asia and the Pacific has accounted for the largest share of global transport emissions since 2011. At the same time, the region is a leader in electric mobility (e-mobility), which is considered an essential measure for reducing transport sector emissions. A staggering 95% of all road-based electric vehicles are based in this region.

 Electrification of transport in Asia and the Pacific plays a key role in the greenhouse gas emission reductions required globally to mitigate climate change impacts. The demand for electric vehicles in the region is expected to exponentially grow as governments and industry alike set increasingly ambitious targets for transport sector decarbonization and electrification. 

Batteries are fundamental to electric vehicles, and although the exact raw material requirements of the future’s electric vehicle batteries are not certain due to rapid technology development, the surge in e-mobility is expected to have significant implications on the demand for critical minerals for battery production such as nickel, lithium and graphite.

This can bring significant opportunities for economic growth to resource-rich economies as well as to countries with electric vehicle battery manufacturing in Asia and the Pacific. However, unless robust safeguards are in place, mining and battery manufacturing carry a number of environmental, social and governance risks. 

For example, lithium-ion battery production is energy-intensive and a source of carbon dioxide emissions, whereas the mining of critical minerals can cause local pollution and use large amounts of groundwater, and has been linked with human rights concerns and governance issues.

In addition, production of electric vehicle batteries can be hampered by supply chain vulnerability, gaps in labor market skills, low industry capacity, ability of governments to implement necessary reforms for creating an enabling environment, lack of financing especially in lower- and middle-income countries, and protectionist policies, among other factors.

To address challenges, the following actions should be considered: 

Take a holistic approach.  Sustainability aspects of the battery supply chain need to be perceived in a holistic manner, taking a systemic approach and ensuring collaboration across sectors and entities. It is key that there is a constant dialogue between the public and the private sector for creating a common understanding of the different perspectives, needs and requirements. In addition, strong engagement of affected communities must be assured to secure mining-related human rights, appropriate waste management and biodiversity protection, and other aspects of environmental and social sustainability.

Circularity must be the guiding principle for the battery life cycle. The more raw materials that can be recycled, the fewer critical minerals need to be extracted from the ground through mining. The principle of circularity should permeate both electric vehicle battery manufacturing processes and related policymaking. For example, recyclability should be considered already at design phase in battery manufacturing – and policies should be set to ensure this is the case.

Create an enabling environment with strong safeguards. Governments must set a fair and stable playing field for the private sector working in extractive industries and electric vehicle battery manufacturing.  Medium- and long-term planning plays a key role for developing an enabling environment for sustainable battery manufacturing, and multilateral development banks and other development partners can support governments in this process through the creation of roadmaps. These should set out the regulatory framework and incentives needed to ensure robust environmental and social safeguards, and a market that enables innovation and economic growth.

Leverage financing for emerging ecosystems. Many lower- and middle-income countries are not able to harness their full potential in electric vehicle battery production and related supply chains due to a lack of financing. Multilateral development banks and other development financiers can use their funding strategically to lower the risk for other financiers to invest in this industry.

Capacity building and dialogue. A common language must be developed to discuss sustainability of the battery life cycle across players and sectors. The electric vehicle battery market is dynamic and constantly evolving through technology development, and it is important that all relevant actors have sufficient knowledge and capacities for informed decision-making. Initiatives such as the E-Mobility Support and Investment Platform for Asia and the Pacific support dialogue and capacity development across the field in the region.

This blog is based on discussions held during the community meeting of the E-Mobility Support and Investment Platform for Asia and the Pacific, covering insights by Georg Bieker, Senior Researcher at the International Council on Clean Transportation (ICCT), Annika Seiler, Principal Energy Specialist at ADB, Atsumasa Sakai, Senior Energy Specialist at ADB, and Marie Carlsson, Vice President for Electromobility Solutions at Volvo Buses. Senior Advisor Pamela Chiang contributed her expertise to this blog post.