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Decade of the Battery: Sustainable Batteries Represent the Best Prospect for Meeting Paris Climate Goals

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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.

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Structural Reforms Needed to Put Tunisia on Path to Sustainable Growth

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Decisive structural reforms and an improved business climate are essential to put Tunisia’s economy on a more sustainable path, create jobs for the growing youth population and better manage the country’s debt burden, according to the Winter 2021 Edition of the World Bank’s Tunisia Economic Monitor.

Titled “Economic Reforms to Navigate out of the Crisis” (in French, “Réformes économiques pour sortir de la crise”), the report estimates a slow economic recovery from COVID-19, with projected growth of 3% in 2021. Weighing on this recovery is rising unemployment, which increased from 15.1% to 18.4% in the third quarter of 2021, affecting the youth and people in the western regions hardest.

The report outlines how the weak recovery puts pressure on Tunisia’s already strained public finances, with the budget deficit still elevated at 7.6% in 2021, despite a small contraction from 9.4% in 2020.  The budget deficit is projected to gradually decline, reaching 5% to 7% of GDP in 2022-23, helped by lower health-related expenditures and provided that the moderately positive trajectory of spending and revenue are maintained. However, Tunisia’s rising public debt will be hard to finance without decisive public finance and economic reforms, the report noted.

“Just like everywhere else, COVID-19 has adversely affected Tunisia’s economy and the report strongly highlights the need to address longstanding challenges to sustainable growth, including improving the business environment,” said Alexandre Arrobbio, World Bank Country Manager for Tunisia. “To emerge from this crisis, Tunisia needs to adopt decisive reforms to promote private sector development, boost competitiveness and create more jobs, especially for women and youth.”

The first chapter of the report analyzes potential reasons behind Tunisia’s slow economic recovery and highlights two specific factors: the country’s reliance on tourism and transport services; and the rigidity of the business climate, including restrictions on investments and competition which constrain the reallocation of resources in the economy.

The second chapter elaborates on key barriers to competition, arguing that Tunisia’s current regulatory environment restricts competition and discourages the development of new businesses. Looking ahead, the report recommends that policy reforms to ensure a level playing field in every sector are essential in order to boost employment for Tunisians and to increase purchasing power.  

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Lebanon’s Crisis: Great Denial in the Deliberate Depression

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The scale and scope of Lebanon’s deliberate depression are leading to the disintegration of key pillars of Lebanon’s post-civil war political economy. This is being manifested by a collapse of the most basic public services; persistent and debilitating internal political discord; and mass brain drain. Meanwhile, the poor and the middle class, who were never well served under this model in the first place, are carrying the main burden of the crisis.

According to the World Bank Lebanon Economic Monitor (LEM) Fall 2021 “The Great Denial”, Lebanon’s deliberate depression is orchestrated by the country’s elite that has long captured the state and lived off its economic rents.  This capture persists despite the severity of the crisis –one of the top ten, possibly top three most severe economic collapses worldwide since the 1850s; it has come to threaten the country’s long-term stability and social peace. The country’s post-war economic development model which thrived on large capital inflows and international support in return for promises of reforms is bankrupt. In addition, the collapse is occurring in a highly unstable geo-political environment making the urgency of addressing the dire crisis even more pressing.

The LEM estimates real GDP to decline by 10.5 percent in 2021, on the back of a 21.4 contraction in 2020. In fact, Lebanon’s GDP plummeted from close to US$52 billion in 2019 to a projected US$21.8 billion in 2021, marking a 58.1 percent contraction—the highest contraction in a list of 193 countries.

Monetary and financial turmoil continue to drive crisis conditions, under a multiple exchange rate system which poses valuable challenges on the economy. The sharp deterioration in the Lebanese Lira persisted in 2021, with the US$ banknote rate and the World Bank Average Exchange rate depreciating by 211 and 219 percent (year-on-year), respectively, over the first 11 months of the year. Exchange rate pass through effects on prices have resulted in surging inflation, estimated to average 145 percent in 2021—ranking 3rd globally after Venezuela and Sudan. Inflation is a highly regressive tax, disproportionally affecting the poor and vulnerable, and more generally, people living on fixed income like pensioners. Food inflation remains concerning as it forms a larger proportion of the expenses incurred by poorer households who are struggling to make ends meet with their deteriorating purchasing power.

Government revenues are estimated to almost halve in 2021 to reach 6.6 percent of GDP, marking the 3rd lowest ratio globally after Somalia and Yemen. The expenditure contraction was even more pronounced, led partially by drastic cutbacks in primary spending, which has reinforced the economic spiral. Meanwhile, gross debt is estimated to reach 183 percent of GDP in 2021, taking Lebanon to the 4th highest ratio in the world preceded only by Japan, Sudan and Greece.

A rare relative bright spot in 2021 has been tourism, which helped hold the current account deficit-to-GDP ratio steady.

Starting Spring 2021, a disorderly termination of the foreign exchange (FX) subsidy commenced and was in full force by the summer. The path authorities followed to the subsidy removal was opaque, inadequately coordinated and lacked timely pro-poor alleviation measures. As a result, subsidy removal mostly benefited importers and smugglers while precious and scarce FX resources were drained.

“Deliberate denial during deliberate depression is creating long-lasting scars on the economy and society. Over two years into the financial crisis, Lebanon has yet to identify, least of all embark upon, a credible path toward economic and financial recovery,” said Saroj Kumar Jha, World Bank Mashreq Regional Director. “The Government of Lebanon urgently needs to move forward with the adoption of a credible, comprehensive and equitable macro-financial stabilization and recovery plan and accelerate its implementation if it is to avoid a complete destruction of its social and economic networks and immediately stop irreversible loss of human capital. The World Bank reconfirms its readiness to continue to support Lebanon in addressing the pressing needs of its people and challenges affecting their livelihoods.”

As detailed and called for in previous issues of the LEM, this strategy would be based on: (i) a new monetary policy framework that would regain confidence and stability in the exchange rate; (ii) a debt restructuring program that would achieve short-term fiscal space and medium-term debt sustainability; (iii) a comprehensive restructuring of the financial sector to regain solvency of the banking sector; (iv) a phased, equitable, fiscal adjustment to regain confidence in fiscal policy; (v) growth enhancing reforms; and (vi) enhanced social protection.

Particularly, initiating a comprehensive, well-structured and swift reform of the electricity sector is critical to address the long-standing and compounding challenges of this sector which is at the center of Lebanon’s economic and social recovery. In addition, Lebanon needs to step-up efforts to ensure efficient and prompt delivery of social protection assistance to the poor and vulnerable households struggling under the continuing economic crisis.

The Special Focus section of the LEM “Searching for the External Lift in the Deliberate Depression” examines the reasons for the weaker than expected increase in exports considering the Lebanese Lira’s sharp depreciation; it analyzes the failure thus far for the external sector to sufficiently benefit from increased price competitiveness and become a more robust driver of growth. The Special Focus finds that Lebanon’s exports are inhibited by three factors (outside of the crisis itself): (i) (pre crisis) economic fundamentals; (ii) global conditions; and (iii) political/institutional environment.

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Nearly half of City GDP at Risk of Disruption from Nature Loss

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Cities contribute 80% to global GDP – but they also account for 75% of global greenhouse gas emissions. Integrating nature-positive solutions can help protect cities from growing risks associated with extreme weather while driving sustainable economic growth.

In collaboration with the Alexander von Humboldt Institute and Government of Colombia, the World Economic Forum’s BiodiverCities by 2030 Initiative published a report addressing the urgency of cities’ untenable relationship with nature. The Initiative’s goal is to reverse this existential global threat and move forward with a plan that will result in cities and nature co-existing in harmony by the end of the decade.

The report is a call for multistakeholder action to integrate nature as infrastructure into the built environment. In making the economic case for BiodiverCities, Nature-based Solutions (NbS) for infrastructure and land-sparing are found to be cost-effective ways for cities to innovate and meet current challenges. Spending $583 billion on NbS for infrastructure and on interventions that release land to nature could create more than 59 million jobs by 2030, including 21 million livelihood-enhancing jobs dedicated to restoring and protecting natural ecosystems.

“In the conventional paradigm, urban development and environmental health are like oil and water,” said Akanksha Khatri, Head of Nature and Biodiversity, World Economic Forum. “This report shows that this does not have to be the case. Nature can be the backbone of urban development. By recognizing cities as living systems, we can support conditions for the health of people, planet and economy in urban areas.”

The report finds that by incentivizing investments in natural capital, cities can unlock the benefits of nature. Nature-based Solutions are on average 50% more cost-effective than man-made alternatives and deliver 28% more added value. This capitalization, in turn, instils and nurtures nature-positive values and fosters bio-inspired innovations that will ultimately optimize economic competitiveness and prosperity.

“As cities think about building for the post-pandemic future, they have a priority to provide their citizens with a more equitable and prosperous quality of life by protecting their natural resources,” said Mauricio Rodas, Co-Chair of the Global Commission on BiodiverCities by 2030 and former mayor of Quito, Ecuador. “In this report, we offer actionable solutions to heal the relationship between cities and nature. We need all stakeholders to invest in urban nature.”

“Cities don’t need to be concrete jungles in conflict with nature in and outside their boundaries,” said Jo da Silva, Arup Global Sustainable Development Leader. “They should be places where all people and nature co-exist and thrive together. Nature-based solutions offer wider benefits than traditional engineered ‘grey’ solutions – such as improving resilience, increasing citizens health and wellbeing and moving cities to net zero. Using powerful new digital mapping tools to help us understand cities as complex systems, we are increasingly adopting nature-based solutions in our projects – this needs to be accelerated on a global scale.”

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