As the planet becomes increasingly inhospitable for humans, we face both a crisis and an opportunity. Canada is a large country with a small population, and we rely on international trade to fund our well-being. Exports represent almost a third of our national economy, and nearly 25% of all exported goods, representing $538 billion, come from the energy sector. One in five Canadian jobs stems from goods-producing industries, including manufacturing, resources and agriculture. It’s critical that building a more sustainable nation include lowering emissions while protecting the livelihoods of seven and a half million Canadians. This represents not just an opportunity for Canada to lead but an opportunity to prosper.

There are three big levers we can pull to get there.

The first and most obvious is to lower Canada’s industrial emissions. We already have a national strategy, the Pan-Canadian Framework on Clean Growth and Climate Change (adopted in late 2016), including a Canada-wide carbon price. However, Canada is on track to fall short of its 2030 Paris Agreement targets by about a third. While the Trudeau government continues to tease its detailed plan to reach net-zero emissions by 2050, Canada (like many other countries) has a track record of missing its ambitious climate targets.

That leads to the second lever: helping other nations reduce emissions while reaping the economic rewards. One way to do this is to focus on growing Canada’s innovative low-carbon exports, an area in which we have some existing advantages.

The Canadian labour force can rightly claim deep expertise in engineering, research, design, business and financial services from our long history as a resource-heavy economy. We also enjoy a vast and accessible market for exports to our southern neighbour (Canada exported approximately US$337 billion of goods in 2019 to the U.S.), which is predicted to improve as Biden moves into office and enforces his Build Back Better economic recovery plan.

As governments and multinational corporations continue to announce net-zero commitments, the market pull for low-carbon innovation is white-hot. Canada can take advantage of this trend by doubling down on support for innovation at home while exporting technologies that reduce our economy’s greenhouse gas intensity. For example, Canada is home to the Quest carbon capture and storage facility, which has captured five million tonnes of C02 for an Alberta oil refinery in the last five years, equal to the annual emissions from 1.25 million cars. Exporting the technological innovation that allows projects like Quest to succeed will support other nations in meeting their climate targets using low-carbon Canadian innovations.

Another example of low-carbon export opportunities is in C02-based materials and products. “Carbontech” is an emerging sector in which materials typically manufactured using fossil fuels are instead made by recycling existing C02 emissions. A vast array of materials can be manufactured using this method, including concrete, jet fuel, paints, plastics, fertilizer, carbon fibre, even synthetic protein and food. Making these materials from recycled C02 emissions could reduce seven billion tonnes of C02 by 2030, representing roughly 15% of annual global C02 emissions, according to estimates by the Global C02 Initiative at the University of Michigan.

Though this innovative sector is still in its infancy, it’s not hard to map a pathway to a future in which Canada is a leader in emerging technology. In fact, 40% of the teams participating in the NRG COSIA Carbon XPRIZE, a $20 million prize for the development of new and emerging C02 conversion technologies, are Canadian technologies. British Columbia’s Carbon Engineering is already pulling C02 from the air and turning it into fuel, and Calgary’s Carbon Upcycling Technologies’ materials are used to manufacture everything from consumer goods to C02-based plastics. The estimated total addressable market for C02-based materials already exceeds $8 trillion.

The third lever is also perhaps the most controversial. It involves Canada exporting products where most reduction occurs through use. One hotly debated route is exporting natural gas as a replacement for coal-fuelled power. According to studies by MIT and Johns Hopkins University, natural gas, if done right, can reduce comparative coal emissions by half. Natural gas is not, however, a climate panacea. As the American National Academies of Science, Engineering, and Medicine has pointed out, uncontrolled methane leaks from natural gas can undo all the positive effects of lowering the carbon footprint.

Using carbon-based fuels, like natural gas, as a bridge to a green transition is a complex topic; the details of execution matter. We owe it to current and future generations to lean in to this topic’s nuances, challenges and opportunities as we plan for the future.

The global conversation around fighting the climate crisis and decarbonizing our global economies is starting to move beyond hope and into practical policies and business plans. Getting this right is not automatic and will take work, capital and planning, but the opportunity for Canada is there, so let’s seize it.

Marcius Extavour leads climate, energy and environment work at XPRIZE. His work includes the $20 million NRG COSIA Carbon XPRIZE, a global competition to recycle C02 into valuable products as a way to decarbonize our economy and avoid dangerous climate change.

Dan Zilnik is the president of AFARA. His firm works on the math, science and economics of sustainability, focusing on energy systems and the economics of the circular economy.

The post Canada can punch above its weight by helping other nations lower emissions appeared first on Corporate Knights.

The economic crisis resulting from the pandemic has forced corporations and governments to deviate from their standard operating procedures, opening up an opportunity for innovation and creativity, said Michael Sabia, who was recently appointed by the federal government to head up the infrastructure bank.

“We need to seize this moment to be creative about how we reposition the national economy for a world that is going to be different, and a very important part of that [effort] is repositioning our economy to be a significantly lower carbon economy,” Sabia told a virtual roundtable hosted by Corporate Knights.

Sabia said that there is plenty of potential for the Canada Infrastructure Bank (CIB) to participate in clean energy projects but that the federal Crown corporation has underperformed to date.

The CIB has a mandate to invest $35 billion in federal funding by 2027/28 but has been criticized for its slow start.

Sabia said the bank should focus less on traditional infrastructure like roads and ports and more on stimulus projects that accelerate the energy transition, including renewable power, interprovincial transmission, low-carbon transportation and digitalization efforts to ensure all Canadians have access to high-speed internet.

The Corporate Knights roundtable was part of its seven-part Building Back Better project that urged the Liberal government to ensure that any economic recovery plan have a climate-change focus.

Addressing the roundtable, Industry Minister Navdeep Bains said Canada will have to be innovative in responding to the COVID-19 pandemic and the climate crisis.

He said hundreds of Canadian businesses have responded to the need for medical equipment by changing their operations to produce new products. “That’s the same mindset we have to have when it comes to confronting the climate crisis.”

In a white paper released Wednesday, authors Ralph Torrie, Céline Bak and Toby Heaps said the federal government should allocate $106 billion over the next 10 years for a host of clean energy projects that would create the equivalent of 670,000 full-time jobs per year. More than a third of the federal government investment, $40 billion, would be frontloaded in the first two years (with half dedicated to grants to finance a green renovation wave). Over 10 years, the white paper estimates, the federal investment and complementary policies would crowd in a further $730 billion in mostly private sector investment.

All told, the investments would reduce greenhouse (GHG) emissions by 236 megatonnes annually by 2030, from 2018 levels of 729 megatonnes. That scale of GHG reductions would put the country on track to meet the Liberal government’s target of net-zero emissions by 2050, Bak told the roundtable.

Proposals have included support for a major retrofit program to improve energy efficiency in buildings, planting an additional 800 million trees a year for 10 years, and investments in coast-to-coast electric-vehicle (EV) infrastructure, as well as interprovincial transmission lines to deliver low-carbon electricity and a $40 billion Energy and EV Innovation Fund to help create Canadian champions in fast-growing low-carbon markets where Canada has strong assets, including bitumen-derived carbon fibres, green hydrogen, renewable jet fuels, batteries and EVs.

Other speakers suggested that a green stimulus plan should have goals beyond job creation and emission reductions.

Canadians are now confronting a triple whammy of the COVID-19 pandemic, the climate crisis and the vivid reminder of the systemic racism embedded in the country’s attitudes and institutions, said Catherine Abreu, executive director of Climate Action Network Canada.

Any green stimulus programs must be based on a “just recovery” Abreu said. Her group was one of 150 civil society organizations that released a document this week proposing “Six Principles for a Just Recovery” for a more equitable and sustainable future.

“This moment is forcing us into confrontation with the vulnerabilities that are built into our economic and social systems,” she said. “There are ongoing crises that lurk behind the current health and economic emergencies . . . So if we are going to tackle issues like climate change, we have to come at them fundamentally as a fight for justice.”

The federal government can pursue reconciliation with Indigenous communities by partnering with them on clean energy projects that deliver health, economic and social benefits to the people, said Terri Lynn Morrison of the Indigenous Clean Energy network.

Morrison said Indigenous people are already major developers and partners in clean energy projects across the country. “They’re ready to seize the opportunity,” she added.

Some economists have questioned whether stimulus spending on clean energy infrastructure is the optimal way to respond to an economic slump precipitated by a health crisis that has forced Canadians into social isolation. Sectors like retail, restaurants and tourism have been hit hardest with job losses, and it’s not clear they would benefit from traditional – or even non-traditional – stimulus spending.

In a blog post last month, economists Dale Beugin and Mike Moffatt argued that green stimulus spending should target areas such as infrastructure, while government should continue to rely on regulation and carbon price to drive climate policy.

Trying to meet the requirements of both recovery and emissions reductions would result in an approach that fails to do either efficiently, they argued.

“Climate considerations should be less constraint and more a radar to help identify non-traditional but job-rich investment opportunities, such as deep retrofits and flood protection for homes and workplaces,” Heaps said via email. “Climate can also be a tiebreaker where two recovery options offer similar economic benefits.”

“In addition to the large investments in green infrastructure, the ‘shecovery’ will likely require significant investments in eldercare and childcare,” he added.

During the roundtable, Ivey Foundation president Bruce Lourie noted that countries like Germany and South Korea have succeeded in providing support for key clean energy sectors. The refrain that “governments shouldn’t pick winners” is a “tired and misguided refrain for us to be using,” he said.

As an example, he cited the promising opportunities for Canada to be a global leader in the emerging market for hydrogen-powered buses and trucks.

Environmental economist David Sawyer said proponents of green stimulus plans should emphasize “co-benefits” that come with investment in emission-reduction projects. They can include not only more jobs but also health benefits from reduced fossil-fuel pollution and greater resiliency to withstand the severe weather impacts of the climate crisis.

Dianne Saxe, Ontario’s former environment commissioner, said Canada needs to find a way to maintain long-term climate-change policies so businesses and consumers have confidence that investments made today are not undermined tomorrow.

“The biggest challenge is how to have stable policies that survive government changes,” she told the roundtable. Canadians need to be active, she said. “Fundamentally, to get durable public policy, we need strong, loud public demand for it.”

The post Final roundtable: Clean economy projects could create 670,000 jobs per year appeared first on Corporate Knights.

Since our first report was launched in the summer of 2016 a great deal has changed in the world.

Larry Fink, the CEO of the largest investment firm in the world, shook up Wall Street this January stating that we are “on the edge of a fundamental reshaping of finance” with climate change as a defining feature, that “climate risk in investing risk…in the near future – and sooner than most anticipate – there will be a significant reallocation of capital.”

In between Fink’s letter, Greta Thunberg’s call for a radical change acceleration on the pace of climate action took over the agenda at Davos during the World Economic Forum, where a new manifesto proclaimed stakeholder capitalism and ESG define the new economy and Larry Fink was spotted wearing a rare-edition 2 degrees scarf around his neck.

Another inflection point in the popular culture realm occurred during halftime at Superbowl 2020, where the company that once “killed the electric car” purchased a prime advertising slot to showcase their new electric Hummer with LeBron James as the pitchman.

The fundamental story is that march from high carbon energy to clean energy is only quickening driven mainly by economics, risk, and increasingly supported by other social forces from Greta to Pope Francis; from Extinction Rebellion to The European Central Bank.

Investors have awoken to this trend, which helps to account for the anomalous direction of oil prices and oil stock values in 2019. Brent Crude Oil prices rose 28% and WTI oil prices rose 30% last year, while the energy sector placed dead last in the Standard & Poor’s 500 index, posting a 7.3% gain, while the index as a whole rose 29% for the year.

Financial markets are driven by two powerful emotions: greed and fear.

As the outgoing governor of the Bank of England, Mark Carney, puts it, “Companies that don’t adapt [to the low-carbon economy] – including companies in the financial system – will go bankrupt without question. [But] there will be great fortunes made along this path aligned with what society wants.”

To wit: the top five coal companies in the U.S. have all declared bankruptcy since 2016, and Apple is now bigger than all the oil and gas companies on the S&P 500 combined, in large part because they have earned negative returns over the last decade, even after accounting for dividends.

Carbon-intensive companies are suffering because the alternatives are not just cleaner but cheaper. Around two-thirds of the world’s population now live in countries in which wind or solar are the lowest-cost ways of generating power. Renewables are now cheaper than coal in two-thirds of the world’s countries, according to Bloomberg New Energy Finance. BNP Paribas estimates that oil needs to come down to US$10 a barrel to be competitive with electricity-driven transport. This does not mean fossil fuels are going away tomorrow, but it does kill the growth story and leads to questions about demand assumptions on big oil’s economic forecast. For oil investors, the market’s realization of this inevitable decline could make the coal horror show look like Mary Poppins.

This increasing speed of the energy transition is part of the reason why investors representing US$12 trillion in assets have made public their divestment from fossil fuels.

Perhaps more telling is that beyond these public declarations, many of the biggest investors in the world are selling off their fossil fuel holdings and loading up on green assets. For example, without any fanfare the C$200 billion Ontario Teachers’ Pension Plan has dialed down its fossil-fuel equity holdings to just 1%. On the upside, the C$306 billion Caisse de dépôt et placement du Québec (CDPQ) has grown its green investment book to C$30 billion, earning commercial returns along the way, according to outgoing chief executive Michael Sabia.

While economics are shifting in favor of clean energy investing, so is public sentiment. Call it the Greta effect if you like, but most people are no longer comfortable with the idea that their retirement investments may be helping to set the world on fire and we are seeing this especially in millennials and women.

Andreas Utermann, chief executive of Allianz Global Investors, which manages US$600 billion, says, “Clients have changed their tune. They have said we need to take this more seriously, and that has sharpened the minds of asset managers.”

With all this action, we hope that the Clean200 can to do two things:

• provide a useful North star for investors looking to pinpoint the companies leading the way to a clean energy future.
• to dispel the myth that clean investing is about sacrificing returns.

Efficient market theorists caution that if you add any non-financial considerations to portfolio selection, you are at a financial disadvantage. The trouble with this theory is that investing in a time of transition is like hitting a curveball. Putting on a clean energy lens gives the batter a better sense of the ball’s trajectory and increases the chance of making solid contact.

To make things easier, Corporate Knights and As You Sow are proud to present the latest edition of the Clean200.

While we’re not promising any home runs, we are happy to report that the Clean200 now has more than a three-year track record of outperforming its high-carbon global counterparts.

Clean 200 returns

Since inception (July 1, 2016), the Clean200 has generally been ahead of the MSCI ACWI Energy Index.

Source: S&P IQ Capital, Corporate Knights

Overall, the model presented in the form of the Clean200 continues to indicate that demand and market forces are driving growth for low carbon companies. Since its inception two and a half years ago, the Clean200 has generally outperformed the MSCI ACWI Energy Index. It will be interesting to see how the trends unfold over the next few months.

The Clean200 list 

For full results, including last year’s Clean 200 companies that didn’t make the cut this year, this year’s new entrants and companies excluded from our 2020 list, click here:

Clean 200_2020_Download.

THE CLEAN200 Methodology

The Clean200 are the largest 200 public companies ranked by green energy revenues. It was first calculated on July 1, 2016 and publicly released on August 15, 2016 by Corporate Knights and As You Sow. The current list has been updated with data through the end of 2019 (December 31, 2019).

The Clean200 companies are listed by their estimated green revenues in USD. The dataset is developed by multiplying a company’s most recent year-end revenues by its clean revenue estimate, primarily sourced from Corporate Knights Research. In order to be eligible, a company must have USD revenue of at least $1 billion (most recent available fiscal year end data) and earn more than 10% of total revenues from clean sources.

The Clean200 uses negative screens. It excludes all oil and gas companies and utilities that generate less than 50 percent of their power from green sources, the top 100 coal companies measured by reserves, the top 100 oil & gas companies as measured by reserves, as well as all fossil fuel companies, majority fossil-fired utilities, pipeline and oil field services companies, and other fossil fuel-related companies screened on As You Sow’s Fossil Free Funds. In addition, the Clean200 excludes weapons companies including major military arms manufacturers found on the SIPRI Top 100 arms-producing and military services list, as well cluster munitions, nuclear weapons, and civilian firearm manufacturers screened on As You Sow’s Weapon Free Funds. The Clean200 also excludes palm oil, paper/pulp, rubber, timber, beef, and soy producers that are screened on As You Sow’s Deforestation Free Funds, companies using child or forced labor, and companies who engage in negative climate lobbying are not included. The full list of exclusionary screens is provided below.

The post The Carbon Clean200: Leading the transition to a clean energy future appeared first on Corporate Knights.

The brawny marketing stunts carried a simple message: electric cars aren’t just for tree-hugging Leaf, Prius and Bolt lovers anymore. The message is timely, with global leaders (including Prime Minister Justin Trudeau) committing to carbon pollution targets of “net zero” by 2050, tough new emissions standards coming out of Europe, and a smattering of governments following Norway’s early lead on banning gas-powered-car sales as soon as 2025. For the vast majority of automakers that have cautiously dipped their toes in the EV market, the race to net zero is officially on. But environmental and human rights advocates, along with international heavyweights at the World Bank and World Economic Forum, say there’s an elephant in the showroom. The EV revolution has been racking up a whole supply chain of trouble around the globe (including a recent lawsuit) related to an onslaught of often-contentious new mines opening to meet surging battery-metal demand, not to mention the coming tide of e-waste from old batteries.

If we want to fix this before e-cars take over the roads (30% of car sales should be electric across the EU and North America by 2030, analysts forecast), the time to ensure it’s done right is now. A handful of companies are trying to get out ahead of looming environmental and social risks. So who will be the first to develop a fully ethical battery, and can car companies ensure the EV revolution is green from end to end?

Lithium mines in Chile, Open Commons

The clean-energy mining boom

The transport sector is currently the fastest-growing contributor to the climate crisis, according to the World Resources Institute (with road, rail, air and marine transport accounting for 24% of global CO2 emissions in 2016). Electrified transport – powered by low-carbon grids – could help clear deadly air pollution and cut millions of tonnes of greenhouse gas emissions per year. In the shift from burning planet-cooking fossil fuels to generating and storing clean energy in batteries for our cars and, increasingly, our homes, one thing is certain: batteries are driving demand for more minerals in the low-carbon transition.

Bloomberg New Energy Finance predicts that by decade’s end the battery market will be worth $116 billion annually (not including investments in supply chains), up from $14.6 billion in 2017. Trailblazing EV manufacturer Tesla and others have warned that underinvestment in the mineral supply chain will lead to a shortage of nickel and other EV battery minerals down the road. In its 2017 report The Growing Role of Minerals and Metals for a Low Carbon Future, the World Bank forecasted that global demand for low-carbon-economy minerals such as lithium, graphite and nickel will skyrocket by 965%, 383% and 108% respectively by 2050. But two years later, as the World Bank noted that growing demand for minerals offers an “opportunity for mineral-rich developing countries to develop,” it cautioned that “significant challenges will likely emerge if the climate-driven clean energy transition is not managed responsibly and sustainably.”
But those challenges were already lurking.

Cobalt mining, Congo. Image courtesy of Amnesty International

The dark side of green minerals

Amnesty International first thrust the dark side of mining for car- and smartphone-battery minerals into the spotlight in 2016 with a damning investigation into the child labour-plagued cobalt mines of war-torn Congo (home to 60% of global cobalt reserves). Then in late 2019, the issue hit the front pages again when a landmark lawsuit was launched against Tesla and a handful of tech giants on behalf of 14 Congolese families who say their children were seriously injured or killed working in cobalt mines earlier in the year.

With cobalt dubbed the “blood diamond of batteries,” Tesla and others have been slashing their use of the controversial mineral and replacing it with nickel in a move that’s said to prolong range per change. Not that cutting and running from the Congo will help those mining in poverty, say activists, and without tough responsible mining standards in place, other EV minerals end up being called out for bad behaviour, too. The Washington Post recently reported that nickel mines in Indonesia are turning the oceans there red. The draining of water reserves for vast lithium mines in the salt plains of Latin America has been fingered for fuelling water wars, social unrest and mine strikes in Chile, Bolivia and Argentina. And a new frontier of destructive deep-sea mining for several green economy minerals has prompted the nation of Fiji, along with Greenpeace and others, to call for an immediate moratorium on the nascent practice.

At a MiningWatch conference in Ottawa in November, the human and environmental implications of this new extractive rush were front and centre. Representatives from Chile, Peru, Papua New Guinea, Congo and northern Canada took the stage one by one, concerned about the green transition being used as justification for running roughshod over their ecosystems and human rights. “The floor is dropping on standards in Peru,” said Ana Leyva Valera, executive director of CooperAcción, through a translator. With increased demand for green technology minerals, she said, “we have to make sure there are not more sacrifice zones.”

The International Institute for Sustainable Development (IISD) has studied what it calls “green conflict minerals” (cobalt, nickel, lithium, rare earths and aluminum). The problem with green economy minerals, says IISD analyst Clare Church, is that they’re often found in countries with fragile governments, making their extraction prone to violence, conflict and human rights abuses. But like nearly every other speaker at the conference, Church goes out of her way to make one point clear: “This is not to say the transition [to a clean economy] can’t happen – it must happen.”

The question, say the IISD and others, is whether green economy minerals – and the companies that source them – can help fuel thriving, peaceful and sustainable development in communities with key mineral reserves – rather than exacerbating local unrest.

It’s a challenge Amnesty threw at carmakers at an EV summit in Norway last spring: can the auto industry develop the world’s first fully ethical battery within five years? In a statement, Amnesty’s secretary general, Kumi Naidoo, said car companies “have the resources and expertise to create energy solutions that are truly clean and fair.”

Perhaps because cars need such a large volume of minerals compared to, say, a smartphone (EV batteries weigh in at roughly 500 kilos per car), and perhaps because EV owners tend to be a fairly conscientious bunch, EVs – and the companies that make them – are now driving demand for more ethical mineral sources.

CAR COMPANIES (FINALLY) BET BIG ON EVS

A Reuters analysis found that global automakers plan to spend a combined US$300 billion on EVs over the next decade. In the last year, carmakers made some major cash commitments:

Audi is accelerating EV spending to €12 billion by 2024 and plans to offer 30 electrified (20 fully electric) vehicles by 2025.

BMW is funnelling €10 billion into new battery-cell contracts for its upcoming electric cars. It hadn’t launched a new all-electric car in seven years, but three new ones are coming online by 2021.

Hyundai just committed US$17 billion for electric and driverless cars by 2025 (less than half of that will go to EVs, so roughly US$8 billion).

Fiat Chrysler has committed to investing €9 billion to launch more than 30 electrified cars by 2022.

Volkswagen plans to spend €60 billion on rolling out 75 fully electric models and 60 hybrid vehicles over the next five years.

GM announced a US$2.3 billion joint venture with South Korea’s LG Chem to build an EV battery factory, in addition to spending US$3 billion to build an electric pickup factory in Detroit as part of its plan to add 20 new battery-electric and fuel-cell vehicles by 2023.

Ford in 2018, said it plans to spend US$11 billion by 2022 to produce 40 new electrified cars.

Nissan is pumping US$9 billion into China alone to bring more EVs to that country and plans to introduce more than 20 electric models by 2022.

Toyota earlier in 2019, said that by 2025 all models will have electrified versions. It’s spending US$2 billion on developing EVs in Indonesia alone through 2023.

Daimler in 2018, announced plans to buy €20 billion worth of battery cells for its EVs by 2030. Its entire Mercedes product range will be electrified by 2022.

Volvo will launch a new electric car every year through 2025, when it will phase out gas-only car sales entirely. Volvo told Corporate Knights it doesn’t disclose its spending on EVs.

So, which car companies are coming clean?

One route to cleaner EVs involves boosting transparency. A few leading car companies – BMW, Daimler and Renault, as well as Samsung and Apple – have started publishing supply chain data. (While Tesla doesn’t disclose cobalt suppliers, it does publish lists of its tungsten, tantalum and tin suppliers, as mandated by California law regarding officially designated conflict minerals.)

Supplier disclosure is an important first step in shedding light on shadowy supply chains – something leading sneaker and clothing brands started doing years ago in response to sweatshop scandals.

Following the unveiling of Volvo’s first fully electric car, the XC40 Recharge, this past fall, the Swedish carmaker announced that it will begin using a blockchain platform (essentially a decentralized digital ledger) to trace its cobalt. Volvo Canada’s Matt Girgis tells Corporate Knights that while Volvo has long been marketed as the safest car in the world, it’s now trying to position itself as the safest car for the planet. Making sure its minerals are “clear and safe from unethical issues,” as its blockchain partner put it, is particularly pressing now that, as of 2020, all new Volvo models will be hybrids or plug-ins, with gas-only vehicles phased out by 2025.

It’s a sign of the times that the world’s largest cobalt miner, Glencore, announced in December that it too will start using blockchain for better traceability (days before it was named as the main supplier in the Congolese lawsuit). Glencore and Fiat Chrysler are now the newest members of the Responsible Sourcing Blockchain Network, joining Volvo, VW and Ford.

Not that blockchain alone will solve human rights or environmental violations. “Blockchain is a powerful tool for tracking,” says Aimee Boulanger, executive director of the Initiative for Responsible Mining Assurance (IRMA), “but only if the information going in is quality” – that is, independently verified so that responsible practices are met throughout the supply chain.

There’s a hustle right now to show we can do this right, with mines that better respect communities and the environment near those mines.

–Aimee Boulanger, IRMA

Up-and-coming IRMA positions itself as the most rigorous third-party mining standard to emerge. It aims to do for mining what Forest Stewardship Council certification has done for forestry by creating a trusted standard for sustainable paper and wood products. Microsoft, Tiffany and Anglo American are already IRMA members; BMW is the first carmaker to sign up. To date, most mine certifiers have been industry-run and/or lacked teeth. Case in point: the World Bank’s recently launched Climate-Smart Mining Facility fund was slammed by a coalition of more than 50 NGOs (including Earthworks, Greenpeace and IndustriALL Global Union) for having weak performance standards and minimal oversight.

IRMA is just coming online, so don’t expect to see a car with 100% IRMA-certified battery minerals any time soon, says Boulanger. “There’s a backlog of demand for responsible mining materials,” she says. “There’s a hustle right now to show we can do this right, with mines that better respect communities and the environment near those mines.”

First world problems: bringing battery production home

In the race to ramp up EV production, a growing number of companies are looking to lock down a steady and sustainable battery supply by wresting production away from coal-heavy China – which currently dominates global battery manufacturing – and bringing production home. Literally.

Swedish battery developer Northvolt’s ambition has been to build a battery industry on European turf – from mining and refining to manufacturing and recycling. “Our mission,” it says, “is to build the greenest battery in the world with a minimal carbon footprint and the highest ambitions for recycling to enable the European transition to renewable energy.” Northvolt has teamed with Volkswagen to create the European Battery Union (EBU). BMW is also an investor.

They’re not alone. A separate 200-member European Battery Alliance (EBA) just announced that its seven EU states would contribute €3.2 billion to finance a supra-national farm-to-fork-style initiative – but for minerals – with new pilot plants to be built in each country. Estimates by the European Institute of Innovation and Technology suggest the entire battery value chain in Europe – mining, refining, cell manufacturing, battery packs and recycling – will be worth €250 billion by 2025. Northvolt predicts that by 2030 Europe will be home to at least 10 gigawatt-scale battery production plants.

Industry players say Natural Resources Canada has been aggressively laying the groundwork for a comparable boom on Canadian soil. Last summer, the feds launched a $4.5 million Impact Canada challenge aimed at accelerating made-in-Canada battery innovation. The Canadian CEO of one leading cathode supplier to EV battery producers around the world, BASF Canada’s Marcelo Lu, says that Canada has all the right ingredients to become a major battery hub: “Canada is one of the few countries that has all the elements to produce a lithium-ion battery for electric vehicles.” For instance, he says, Canadian nickel, like that found in Sudbury, is naturally rich in cobalt (Canada has 3% of known cobalt reserves).

Refining those minerals locally in provinces with low-carbon grids and shifting more mining, refining, manufacturing and recycling to Canada is on the vision board for many. But activists are quick to point out that Canadian mines aren’t beyond reproach. At the MiningWatch conference, residents and Indigenous leaders flagged water contamination and concerns about Indigenous consent in regard to various proposals in northern Quebec and around the country.

Which is why the secret to unlocking the EV revolution’s greenest potential may lie not in mine shafts but under the floorboards of aging cars.

Tesla launching closed-loop battery recycling at its Gigafactory in Nevada. Photo: Planet Labs, Inc.

Can the transition economy join the circular economy?

The International Energy Agency, which has perennially underestimated the march of green technology, estimates that annual EV sales will reach 23 to 43 million by 2030, and there should be up to 250 million electric passenger vehicles on the road, up from just five million today. As millions of EVs near retirement age, with that will come a flood of e-waste. As little as 5% of lithium-ion batteries are currently recycled, but tapping into the half tonne of metals and minerals in each and every EV battery will be key to breaking away from a linear (mine it, make it, trash it) value chain to a greener and, ideally, cheaper circular one. Refurbishing and reusing aging car batteries as energy storage packs for solar panels is one exciting innovation (after eight to 10 years of use, most batteries retain 80% of their capacity), and some are finding new life providing off-grid power to homes, businesses, streetlamps, stadiums, factories – you name it.

Recycling insiders say they’d rather see old batteries increasingly recycled into new batteries. Though, at this point, Nissan has been refurbishing its LEAF batteries rather than recycling them because it’s just plain cheaper.

A recent study in the journal Nature, by researchers at the University of Birmingham, says that car companies need to start designing batteries for easy disassembly, reuse and recycling. The EU and China already require battery makers to finance the costs of collecting, treating and recycling used batteries. Ontario is finalizing similar regulations.

So far, Tesla, Toyota and European car companies have taken an early lead on recycling. In its 2019 environmental-impact statement, Tesla announced that it will stop outsourcing recycling and will soon launch a closed-loop battery recycling process at its Gigafactory 1 in Nevada.

Keeping battery recycling close to home is one way to minimize the human rights and environmental hazards that have dogged e-waste recycling overseas. One Canadian start-up co-founded by a University of Toronto engineering grad has figured out a way to recover 80 to 100% of all lithium-ion battery components. After a $2.7 million injection from the Canadian government, Li-Cycle is now recycling batteries for several major car companies at its plant just outside Toronto. Lithion Recycling, a Quebec start-up with $3.8 million in federal backing, says it will be able to recycle 95% of a battery’s components at its Montreal pilot factory by early 2020.

However, even if recycling and reuse are mandated, academics say, there won’t be enough minerals above ground in old EVs to make fully recycled batteries for years to come.

NGOs say that we can take pressure off the planet’s scarce mineral resources if we prioritize investments in electric-powered public-transit infrastructure over pushing everyone to buy a new electric car.

Regardless, stringent standards ensuring that batteries are socially and environmentally responsible – from mining to manufacturing to end of life – need to be nailed down. The World Economic Forum’s Global Battery Alliance – a coalition of car companies, battery makers such as BASF and organizations such as the World Bank and UNICEF – is meeting in Davos in January to firm up strategies. BASF’s chair, Martin Brudermüller, issued a statement ahead of the meeting: “The time to change the trajectory of the value chain is now.”

In 20 years, will fair-certified cars with recycled-content logos be as commonplace as fair-trade coffee and Forest Stewardship Council–certified paper, scrutinized by third-party auditors and stamped with sustainable seals of approval? With so many batteries driving the clean energy transition, it’s hard to see how we can have a sustainable electric future unless it’s ethical to its core.

The post The EV revolution will take batteries, but are they ethical? appeared first on Corporate Knights.

Source: Bloomberg, Corporate Knights

 

Overall, the model presented in the form of the Clean200 continues to indicate that demand and market forces are driving growth for low carbon companies. Since its inception two and a half years ago, the Clean200 has outperformed by 3.78 percent against the S&P Global 1200 Energy Index. The Clean200 ex-China which returned 20.4 percent since inception beats the S&P Global 1200 Index by 0.73 percent over the same time period. It will be very interesting to see how the trends unfold over the next few months.

 

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