Advances in the production, use and reuse of batteries mean that the technology could become the most significant intervention to keep global warming within the limits set by the Paris Agreement on climate change between now and 2030, according to a report published today.
The report, which was commissioned by the Global Battery Alliance, a public-private partnership led by the World Economic Forum, says that, with a concerted push to put the right conditions in place, batteries could enable a 30% reduction in carbon emissions in both the transport and power sectors. These two sectors alone collectively account for 40% of all greenhouse gas emissions today.
Such a reduction in emissions would help keep the world within its 2°C Paris Agreement goal, the report finds. It requires immediate action along the battery value chain alongside investments in other technologies such as hydrogen and in other industries. This would also contribute to achieving the more ambitious 1.5° goal of the Paris Agreement’s, the report concludes.
In addition to examining the role batteries could play in helping to tackle climate change, the report finds that wider economic and societal benefits could also be accrued from systemically investing in the entire battery value chain from mining to reuse or recycling. In terms of employment, 10 million high-quality jobs would be created. More than half of these would be in emerging economies. Additionally, 600 million people would be provided with electricity for the first time. This would close the world’s existing energy access gap by 70%.
“Reducing the world’s carbon footprint is the defining challenge of the 21st century. For the next 10 years, modern batteries that are powering the 4th industrial revolution represent the greatest prospect for reducing atmospheric pollution from many of our most energy intensive economic activities,” said Dominic Waughray, Head of the Platform for Global Public Goods and Managing Director at the World Economic Forum.
Scaling up responsibly
Achieving the scale to make these goals achievable requires considerable change, the report finds. Firstly, today’s global battery value chain would have to expand 19 times the size it is today. This would require $550 billion of cumulative investments along the entirety of the value chain over the next 10 years, along with a set of targeted interventions. These could for example increase the productivity with which batteries are used, lower effective battery costs and cut greenhouse gas emissions along the battery value chain by close to 50% putting it on track to achieving net-zero emissions in 2050.
“We need to develop a sustainable, circular and low carbon value chain for batteries to contribute to the implementation of the 2015 Paris Climate Agreement and to reach the UN Sustainable Development Goals. But this task can only be achieved by effective cooperation between businesses, international organizations, governments and civil society,” said Martin Brudermüller, Chairman of the Board of Executive Directors of BASF and Co-Chair of the Global Battery Alliance.
Secondly, it would necessitate a huge expansion in mining: annual extraction of minerals by 2030 would weigh more than 300 Great Pyramids of Giza. Some 120 additional battery state-of-the-art factories would also need to be operational to meet required demand.
Most importantly, a structural shift would be required to make batteries sustainable from an environmental and human perspective. This includes making sure the entire value chain is “circular”, whereby batteries are reused, repurposed or recycled at the end of their life cycle or simply used more efficiently. For example, integrating battery-powered vehicles into the electricity grid at scale could cover 65% of demand for stationary battery storage and enable a higher renewable energy share in power grids globally, the report finds. Moreover, in 2030 recycling could provide 13% of global demand for cobalt, 5% of nickel and 9% of lithium. These shares are expected to grow as the volume of batteries reaching their end of life surge after 2030.
Furthermore, sustainable business operations must be enabled by boosting the share of renewable energy in the value chain. Finally, a more responsible value chain can be created through better business performance on established sustainability norms backed by traceability systems and effective local interventions to protect human rights, reduce and eliminate child or forced labour and boost local economic value creation. To this end, the Global Battery Alliance will publish and begin implementing in 2019 a roadmap of actions to reduce and eradicate child labour over the coming decade.
Course correction required
The potential for batteries to significantly reduce the world’s carbon footprint, create jobs, improve energy access and working conditions for those working in the industry will not be realized if the value chain develops along its current trajectory, the report finds.
While the battery value chain is expected to grow annually by 25% over the next decade, this level of growth will not be sufficient to help meet the Paris Agreement goals. Without focusing on waste and workers, such uncoordinated growth could even place more environmental and societal strain on our world.
To avoid such an outcome, the Global Battery Alliance today calls on all stakeholders to adhere to 10 recommendations aimed at building a circular, sustainable and responsible value chain. The GBA plans to engage all stakeholders to develop an implementation strategy to realize this opportunity.
Analytical support for this report was provided by McKinsey & Company, with additional work carried out on circular economy dimensions by SYSTEMIQ.
What the leaders say
“The vast potential of the global battery sector transcends boundaries across economies, industries and geographies. Harnessed appropriately, it may help meet the 2°C goal of Paris Agreement and create millions of safe jobs but also alleviate poverty and tackle ethical issues in the most vulnerable communities. This opportunity should be seized upon but, as this landmark report highlights, it is only through coordinated, collaborative action that we can achieve our collective global sustainability ambitions,” said Benedikt Sobotka, CEO of Eurasian Resources Group and co-chair of the Global Battery Alliance.
“Cost-efficient and sustainable batteries are one major driver to decarbonize road transportation as automakers will launch more than 300 battery electric vehicle models in the next five years. Around 70 bn USD additional value can be created by designing batteries for the full lifecycle and building businesses around vehicle-to-grid, second use, and recycling. The mobility transition requires new industry coalitions including the regulators – and it needs them now,” said Bernd Heid, Senior Partner, McKinsey & Company, Inc.
“Next to ensuring that the production of batteries protects local population and environments, jointly developing a circular battery value chain is key to maximize their potential for keeping humanity within planetary boundaries. By designing batteries to be used in multiple applications – for example integrating vehicle batteries in energy grids –, reused for further productivity at end of their first life, and efficiently recycled, we can make the most out of them,” said Martin Stuchtey, Co-Founder and Managing Partner, SYSTEMIQ.
“Battery technologies not only contribute to reaching the Paris Agreement,but they are central to achieving a circular economy,” said Guy Éthier, Senior Vice-President, Supply Chain Sustainability, Umicore and Co-Chair of the Global Battery Alliance Executive Board.
“The demand for raw materials to fuel the battery revolution often poses risks such as child and forced labour, unsafe working conditions and pollution. It is critical that all stakeholders come together to take collective action. Increased investments to improve living conditions, tackle the root causes of child labour and to strengthen systems in the communities can ensure that global efforts to reduce the world’s carbon footprint do not create unintended consequences for the world’s most vulnerable populations,” said Charlotte Petri Gornitzka, Deputy Executive Director at the United Nations Children’s Fund (UNICEF).”
“The widespread implementation of battery storage represents a crucial opportunity to successfully meet the commitments under the Paris Agreement and the United Nations Sustainable Development Goals. Battery storage can help to accelerate the penetration of renewable energy in the energy mix, optimize power systems and energy demand, improve the energy access rate and help decarbonize the transport sector, said Riccardo Puliti, Global Director for Energy and Extractives and Regional Director for Infrastructures in Africa at the World Bank Group; and Co-Chair of the Global Battery Alliance Executive Board.
Russia Among Global Top Ten Improvers for Progress Made in Health and Education
Russia is among the top ten countries globally for improvements to human capital development over the last decade, according to the latest update of the World Bank’s Human Capital Index (HCI).
The 2020 Human Capital Index includes health and education data for 174 countries covering 98 percent of the world’s population up to March 2020.
Russia’s improvements were largely in health, reflected in better child and adult survival rates and reduced stunting. Across the Europe and Central Asia region, Russia, along with Azerbaijan, Albania, Montenegro, and Poland, also made the largest gains in increasing expected years of schooling – mainly due to improvements in secondary school and pre-primary enrollments. The report also shows that over the last 10 years Russia has seen a reduction in adult mortality rates. However, absolute values of this indicator remain high in the country with this progress now at risk due to the global Covid-19 pandemic.
“Human capital contributes greatly to improving of economic growth in every country. Investments in knowledge and health that people accumulate during their lives are of paramount concern to governments around the world. Russia is among the top improvers globally in the Index. However, challenges persist and much needs to be done to improve the absolute values of Index indicators,” said Renaud Seligmann, the World Bank Country Director in Russia.
The HCI, first launched in 2018, looks at a child’s trajectory, from birth to age 18, on such critical metrics as child survival (birth to age 5); expected years of primary and secondary education adjusted for quality; child stunting; and adult survival rates. HCI 2020, based on data up to March of this year, provides a crucial pre-pandemic baseline that can help inform health and education policies and investments for the post-pandemic recovery.
Of the 48 countries in Europe and Central Asia included in the 2020 Human Capital Index (HCI), 33 are among the upper-third in the world, and almost all are in the top half. However, there are significant variations within the region.
In Russia, a child born today can expect to achieve 68 percent of the productivity of a fully educated adult in optimal health. It is at the average level for Europe and Central Asia countries and the third result globally among the countries of the same income group. There is a stark contrast between education and health subscales in Russia. While the education outcomes of the country are high and outperform many high-income peers, its health outcomes are below the global average.
Accelerating Mongolia’s Development Requires a Shift “from Mines to Minds”
A new report by the World Bank estimates that out of every dollar in mineral revenues Mongolia has generated over the past 20 years, only one cent has been saved for future generations. The report argues that to break this cycle, Mongolia should use its mineral wealth to invest in people and institutions, while gradually reducing its dependence on the sector.
This is particularly true as demand for key minerals is likely to tumble due to climate change concerns, a shift of investors’ preference toward sustainability, China’s ambitious goal to reduce coal consumption, and persistence of the COVID-19 shock, according to Mongolia’s Mines and Minds, the World Bank’s September 2020 Country Economic Memorandum for Mongolia.
Since the advent of large-scale mining in 2004, Mongolia’s economy has grown at an average rate of 7.2 percent per year, making it one of the fastest-growing economies in the world. Growth has translated to rapid decline – although at times partly reversed – in the incidence of poverty and improved quality of life. The report also notes that Mongolia enjoys relatively strong human capital, and its infrastructure capital has improved for the last few decades, though remains scarce given the size of the country and low population density. This performance has been made partly possible through a generous but inefficient social assistance system and a large public investment program supported by mineral revenues and external borrowing.
However, a number of enduring challenges have grown in the shadow of this success. Mongolia’s rapid growth has been obscured by its extreme macroeconomic volatility and frequent boom and bust cycles. Growth has almost entirely come through capital accumulation and the intensive use of natural capital rather than through sustained productivity growth. Meanwhile, the country has not only consumed almost all its mineral outputs, but has also borrowed heavily against them, bequeathing negative wealth to the next generation.
“Instead of maximizing the benefits of its mineral wealth for diversified and inclusive growth, Mongolia has increasingly become more addicted to it. At the same time, human capital has been underutilized and institutional capital has eroded.” said Andrei Mikhnev, World Bank Country Manager for Mongolia. “Such inability to capitalize on the country’s endowments has resulted in limited diversification of outputs and exports and has further amplified its vulnerability to the swings of the global commodity markets. Breaking this gridlock calls for a fundamental shift in approach that puts investing in minds on an equal footing with mines.”
The report recommends key policy actions to build the foundation of a diversified and sustainably growing economy. These include:
- Implement countercyclical fiscal and monetary policies – supported through transparent fiscal rules, an independent fiscal council, a market-driven exchange rate, and a well-functioning stabilization fund – to smooth consumption over the business cycle rather than maximize current consumption.
- Undertake bold investment climate reforms to enhance competition, secure investor rights, and create a more level playing field that enables productive firms to invest and grow.
- Move away from the mindset of diversifying products to expanding endowments, especially in terms of better utilization of Mongolia’s young and educated, especially female, labor force.
- Accelerate the implementation of fundamental governance reforms (especially on the government effectiveness and control of corruption) to reduce political interference, increase transparency, and improve regulatory quality throughout the economy.
“Fortunately, there are many encouraging signs of improved macroeconomic management in 2017-19, providing the new government an opportunity to advance its reform efforts,” said Jean-Pascal Nganou, World Bank Senior Country Economist and lead author of the report. “Some impressive fiscal outcomes were achieved not by introducing new reforms but by effectively implementing existing ones. They demonstrate that with the right political will and leadership, similar improvements are possible in other areas including monetary and exchange rate policy, the financial sector, the business environment, and the labor market. The new administration has, therefore, an opportunity to institutionalize these reforms and avoid policy regression in the future.”
Nearly 9 in 10 People Globally Want a More Sustainable and Equitable World Post COVID-19
In a new World Economic Forum-Ipsos survey of more than 21,000 adults from 28 countries nearly nine in ten say they are ready for their life and the world to change.
72% would like their own lives to change significantly and 86% want the world to become more sustainable and equitable, rather than going back to how it was before the COVID-19 crisis started. In all countries, those who share this view outnumber those who don’t by a very significant margin (more than 50 percentage points in every country except South Korea). Preference for the world to change in a more sustainable and equitable manner is most prevalent across the Latin America and Middle East-Africa regions as well as in Russia and Malaysia.
Next week’s World Economic Forum Sustainable Development Impact Summit will address the achievement of the sustainable development goals and the appetite for transformation which will drive the “decade of delivery”.
Clear majority ready for a more sustainable and equitable world
Globally, 86% of all adults surveyed agree that, “I want the world to change significantly and become more sustainable and equitable rather than returning to how it was before the COVID-19”. Of those, 46% strongly agree and 41% somewhat agree, while 14% disagree (10% somewhat and 4% strongly).
Russia and Colombia top the list of countries that strongly or somewhat agree with that statement at 94%. They are followed by Peru (93%) Mexico (93%) Chile (93%) Malaysia (92%), South Africa (91%) Argentina (90%) and Saudi Arabia (89%). The countries that are most change averse – disagreeing somewhat or strongly disagreeing with the statement – are South Korea (27%), Germany (22%), Netherlands (21%), US (21%) and Japan (18%).
Dominic Waughray, Managing Director, at the World Economic Forum said, “The Great Reset is the task of overhauling our global systems to become more equitable and sustainable, and it is more urgent than ever as COVID-19 has exposed the world’s critical vulnerabilities. But the technology to transform things tends to outpace the human will to change. In six months, the pandemic has systematically broken down this cultural barrier and we are now at a pivot point where we can use the social momentum of this crisis to avert the next one.”
Ready for significant personal change
Across all 28 countries, 72% want their lives to change significantly rather than returning to what it was like before the COVID-19 crisis (30% strongly and 41% somewhat) while the other 29% disagree (21% strongly and 8% somewhat).
Latin America stands out for its optimism, with Mexico, Colombia and Peru in the top five countries strongly or somewhat agreeing. Agreement is also high South Africa (86%), Saudi Arabia (86%, Malaysia (86%) and India (85%). By contrast, at least two out of five adults in the Netherlands, Germany, South Korea, Japan, Sweden, the US, UK and Canada long for their life to just return to how it was before the pandemic.
MethodologyThese are the results of a 28-country survey conducted by Ipsos on its Global Advisor online platform. Ipsos interviewed a total of 21,104 adults aged 18-74 in United States, Canada, Malaysia, South Africa, and Turkey, and 16-74 in 23 other countries between August 21 and September 4, 2020. Where results do not sum to 100 or the ‘difference’ appears to be +/-1 more/less than the actual, this may be due to rounding, multiple responses or the exclusion of don’t knows or not stated responses.
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