This short-term assignment illustrates the insights that policymakers can gain by taking a "strategic inventory management" perspective for assessing the potential of circular strategies in managing critical resource risks and impacts at the regional macroeconomic level. The future economic and environmental potential of a Flemish Circularity Hub for lithium-ion batteries (LIB) from electric vehicles (EVs) was examined using this methodology as a case study with high policy relevance.
An initial qualitative analysis of current LIB value chains for EV and stationary energy storage (SES) demonstrates that Flanders' role in the supply chain of these products is currently limited, with some notable exceptions in battery material production and EV LIB assembly activities. Here, Flemish industrial activity has a key role in the further development of circular EV LIB value chains. However, the main strategic strength for Flanders is in the stages of the value chain after the use phase: collection, disassembly, remanufacturing and recycling. As the Flemish value chain is firmly embedded in a broader European and even global context, this strategic strength will only be leveraged if the right conditions are created for companies to choose to invest in materials production and recycling in Flanders rather than in other European regions. These conditions also relate to the continued evolution of battery legislation, innovation support for remanufacturing and recycling, and the positioning of EV manufacturers as regards ownership of EV batteries at the end of their first life.
Using a quantitative future scenario analysis, several possible future developments are examined for the supply of EV LIB for remanufacturing or recycling, as well as for stationary energy storage demand in Flanders. The results of an initial scenario analysis indicate that the differences in the growth rate of the EV market and the SES market will be crucial in determining the potential for EV LIB remanufacturing in Flanders. If the market demand for SES rises too rapidly, a slower-moving inflow of EV LIB for remanufacturing will saturate the SES market with SES LIB from primary materials. These LIB need to be imported and create relatively low local added value. If the future pans out this way, a focus on stimulating recycling activities for EV (and SES) LIB in Flanders is the best way to keep as much of the material value embedded in Flemish LIB stocks in the local economy as possible.
In a second stage, two Circularity Hub scenarios are developed: one in which EV LIB are recycled, and one in which EV LIB are remanufactured to meet SES demand. These scenarios were applied to a possible future in which the SES market does not develop (too) rapidly in Flanders, and the supply of EV LIB does increase rapidly. The analysis shows that in such a scenario, developing local remanufacturing capacity for EV LIB would provide clear economic and environmental benefits. From an economic perspective, remanufacturing creates local added value, while EV LIB are produced from primary materials elsewhere. Remanufactured EV LIB also have a much higher intrinsic value compared to the residual material value when these LIB are recycled.
Although remanufacturing would delay the inflow of EV LIB to recycling over time, the material composition of remanufactured EV LIB is economically more interesting for the recycling business case than that of new SES LIB. In addition, a remanufacturing hub has significant potential to create net environmental benefits compared to recycling alone, by avoiding production of SES LIB from primary materials.
Finally, the report considers the limitations of the static approach to the analysis made and argues that a strategic monitoring capacity be introduced for (selected) product and material inventory developments in Flanders. This approach should ideally include (semi-)continuous data collection, consistent and robust stock-flow modelling and trend analysis, and policy-supporting reporting. Above all in the context of the circular economy, in which constantly evolving customer demand must be met based on an equally constantly evolving supply of resources from previously created inventories, strategic resource monitoring would ensure much stronger policy support than isolated, one-off static analyses.
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