Recycling helps recover valuable materials, cut waste, and support clean energy. With stricter sustainability rules, governments are pushing for greener solutions. EV companies are also focusing on battery recycling. This helps lower supply chain emissions and cut their carbon footprint.
Thus, battery recycling has become essential for a greener future. We have studied the Lithium-ion battery recycling report by the Chemical Abstracts Service aka CAS (a division of the American Chemical Society) and Deloitte. It provides insights into key growth drivers, emissions impact, and the current and future outlook of the market. Let’s dive in!
What’s Driving the EV Battery Recycling Market?
EV batteries have valuable metals, such as lithium, cobalt, and nickel. However, getting rid of them is difficult and this is where recycling comes in use. Thus, the rising need for these energy metals is the key driver for the EV battery recycling market.
This approach reduces waste, conserves resources, and supports a more sustainable supply chain. As demand for EVs grows, so does the need for efficient battery recycling to lessen reliance on mining.
Notably, strict environmental rules are also driving manufacturers to adopt greener practices. Advancements in recycling technology are helping recover more metal. This makes the process cheaper and better for businesses. On a global scale, many countries are promoting a circular economy.
Supply and demand gap for critical minerals
Asia-Pacific Leads in Battery Recycling
In 2023, Asia-Pacific led the battery recycling market. High EV adoption in China, Japan, and South Korea increased demand for recycling. The region produces many end-of-life batteries as a major EV and battery manufacturer.
Strong government support, incentives, and environmental awareness are driving growth. Investments in recycling technology and infrastructure further strengthen the region’s lead. This is evident from more patents than research papers.
Geographical distribution of publications in the field of lithium-ion battery (LIB) recycling
The Top Player: Brunp Recycling Technology
China’s Brunp Recycling Technology, a subsidiary of CATL, is a top player in battery recycling. The company focuses on four major areas of battery material development:
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Ultra-High Nickel: Increases nickel content while reducing cobalt to boost battery capacity.
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High Voltage: Raises the charging voltage limit while maintaining safety and performance.
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Intelligent Management: Uses digital tools and smart systems for efficient operations.
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Emerging Materials: Develop new materials for various applications, continuously improving energy density.
These advancements help improve battery performance, efficiency, and sustainability. Notably, Japan’s Sumitomo Metal Mining follows as another key company in this field.
Global Regulations Powering Battery Recycling
Governments are tightening laws to improve battery recycling. Policies like Extended Producer Responsibility (EPR) require manufacturers to handle waste management. EPR makes producers responsible for collecting and recycling their lithium-ion batteries. This encourages sustainable manufacturing and proper disposal.
New rules in the EU, U.S., and Asia are shaping the industry:
China’s Leadership
China introduced key recycling laws as early as 2016. In 2018, the Ministry of Industry and Information Technology (MIIT) set strict rules for battery handling, recycling traceability, and technical standards. The 2020 Solid Waste Pollution Law stopped waste imports and boosted recycling. Also, the Circular Economy Development Plan (2021-2025) prioritizes battery reuse. In 2024, MIIT suggested new standards for recycling waste batteries. They are now being reviewed.
EU Regulations
In 2023, the EU launched New Battery Regulations. These rules address the whole lifecycle of batteries, from design to end-of-life. By 2027, manufacturers must recover 50% of lithium from old batteries and 80% by 2031. Companies need to track their batteries’ carbon footprint and meet recycling content targets by 2025. Additionally, by 2027, a digital battery passport will improve transparency and traceability.
U.S. Policies
The Environmental Protection Agency (EPA) regulates lithium-ion battery (LIB) recycling under the Resource Conservation and Recovery Act (RCRA). In 2023, the U.S. issued federal guidelines clarifying how hazardous waste laws apply to LIBs. The EPA plans to introduce a dedicated LIB recycling policy by mid-2025.
India and South Korea are working on policies to support LIB recycling.
Making EVs Greener: Decarbonizing the Battery Supply Chains
The report has highlighted the most critical information on EVs. EVs have no tailpipe emissions. However, making their batteries does create a lot of carbon emissions.
- Lithium-ion battery production accounts for 40-60% of an EV’s total emissions.
Top automakers are now focusing on sustainable sourcing and recycling. As EV demand rises, battery recycling will be crucial for cutting carbon footprints and securing raw materials. And this is why regulators and investors are also pushing for cleaner supply chains.
Slashing Emissions and Saving Resources
Recycling lithium-ion batteries is much better for the environment than mining new metals. A study from Stanford University, published in Nature Communications, found that recycling creates less than half the emissions of traditional mining. It also uses only one-fourth of the water and energy.
The benefits are even bigger when recycling scrap from manufacturing. Scrap-based recycling created just 19% of the emissions, used 12% of the water, and needed only 11% of the energy compared to mining. Using less energy also means fewer air pollutants. So, battery recycling is a cleaner and smarter choice.
- The study concluded that recycling reduces greenhouse gas emissions by 58–81% and cuts water use by 72–88%.
The CAS report also published a 2023 study by Fraunhofer IWKS that evaluated the life-cycle environmental impact of three major battery recycling methods- Pyrometallurgy, Hydrometallurgy, and Direct recycling. The two significant deductions are:
- Recycling 1 kg of lithium batteries can reduce carbon emissions by 2.7 to 4.6 kg CO₂ equivalent.
- Direct recycling is the most effective method for the environment.
Life-cycle environmental impacts of different recycling routes of LIBs
Making Battery Recycling Profitable
Battery recycling has three phases: high-cost investment, break-even, and strong profits. Initially, recyclers invest heavily to set up facilities and meet regulations.
They can start making money by cutting costs, recovering valuable metals, and reducing waste. Costs depend on transport, labor, battery design, and recycling methods. Recyclers can stay profitable by automating tasks, lowering transport costs, and using advanced technology.
Batteries with valuable metals like cobalt and copper, such as NMC and NCA, offer quick returns. In contrast, LFP batteries provide better long-term benefits when reused before recycling.
Choosing the right recycling method—pyrometallurgy, hydrometallurgy, or direct recycling—can boost efficiency. Studies show recycling offers environmental benefits worth $3 to $11 per kWh. However, this also depends on carbon pricing and market trends.
Net recycling profit comparison
Subsequently, recyclers should focus on improving their processes. They also need to form partnerships to strengthen their business.
The Future of Battery Recycling: Turning Challenges into Opportunities
Battery recycling faces hurdles like high costs, complex processes, and inefficient collection. Various battery designs and hazardous materials add further challenges. New technology, digital tools, and teamwork in the industry are making recycling cheaper and easier.
Polaris Market Research reports the EV battery recycling market was $8.89 billion in 2023. It is set to grow from $11.09 billion in 2024 to $65.71 billion by 2032, with a 24.9% annual growth rate.
Digital Tools Improve Efficiency
Traditional recycling relies on slow, expensive, and unsafe manual processes. Digital tools are transforming this by tracking materials, automating sorting, and improving disassembly. These innovations enhance efficiency and help companies comply with strict regulations, reducing legal risks.
For example, digital twins optimize processes, blockchain ensures traceability and cloud platforms enable real-time tracking. Umicore uses AI and cloud solutions. CATL, on the other hand, uses blockchain to track materials.
Similarly, companies like Redwood Materials, BYD, and Toyota use AI to predict optimal recycling timelines.
The Power of Industry Collaboration
The disrupted supply chain remains a major challenge. In China, only 25% of retired EV batteries go through formal recycling channels. Companies are making batteries easier to recycle. They are also working together in the supply chain to solve this issue.
In October 2023, Stellantis and Orano teamed up to recycle EV batteries and factory scrap in Europe and North America. Such collaborations are driving a more sustainable and scalable battery recycling industry.
Similarly, last December Li-Cycle Holdings Corp. resumed its collaboration with Glencore International AG, (a subsidiary of Glencore plc). Both companies will evaluate the feasibility of building a new Hub facility in Portovesme, Italy that could potentially produce critical battery materials such as lithium, nickel, and cobalt from recycled battery content.
The post Are EVs Truly Green? How Battery Recycling is Powering a Cleaner Future appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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