How to Charge Up Canada’s Battery Supply Chain
Canada is in the early stages of developing its battery supply chain, as is most of the developed world. Climate change and the invasion of Ukraine by Russia along with domestic access to essential products during the COVID-19 pandemic has changed thinking about national security, supply chains, and the need for localization.
Why Must Canada Build Up Its Battery Supply Chain?
Currently, Canada accounts for a very small fraction of worldwide battery production and the supply chain that feeds it. However, Canada has access to an abundant supply of the critical minerals, other battery inputs and renewable energy needed for battery production. We have a well-developed and responsible mining industry, refining and processing know-how, a well-educated workforce, globally recognized academic and industrial R&D, and a very large customer right next door: the United States. As such, European, Korean and Japanese companies are committing to Canada through investments and partnerships.
Over 90% of the world’s lithium-ion batteries are currently being produced in China and it is a priority of national security to reduce this dependence while incentivizing economic development in Canada and the reduction of GHG emissions related to transportation. As we create a new supply chain and stand up a new industry, Canada and other like-minded jurisdictions need to be innovative, nimble, responsible, and forward-looking as they design the supply chain, transportation and energy storage systems for the next century and beyond.
If we do this right, we will achieve some laudable goals:
- Help address climate change.
- Establish safe, secure, and reliable access to energy.
- Create good-paying jobs here at home.
- Differentiate ourselves from the established markets through environmental stewardship, innovative supply chains, and cost.
The State of Canada’s Battery Supply Chain Ecosystem
Canada has been working quietly behind the scenes for decades on the lithium-ion battery (and other clean technologies such as hydrogen fuel cells) in anticipation of an energy transition to a net-zero economy. For example, researchers in Québec helped create and commercialize a key type of cathode active material (CAM) for lithium-ion batteries called Lithium Iron Phosphate (LFP) 20 years ago.
North America was not ready to use it yet and like many other supply chain decisions, moved the production of LFP to China, where it flourished. Benefitting from cheaper labour, more lax environmental requirements, and not having paid intellectual property rights to use the technology, China managed to establish itself as a near monopoly in a record amount of time. As the Western world develops domestically-focused EV and battery supply chains, there is a need to be innovative and bold.
“The challenge is nurturing these companies so they mature in Canada and keep their intellectual property in the country while becoming leaders globally.”
Canada is blessed with world-leading research programs and an ecosystem with many late-stage, pre-commercial companies that are addressing a large appetite for technological solutions. The challenge is nurturing these companies so they mature in Canada and keep their intellectual property in the country while becoming leaders globally.
Challenges and Opportunities in Our Battery Supply Chain
Canada and all other jurisdictions, including China, need to be ready to tackle the underbelly of the battery sector. There is a need to reduce water usage, cut manufacturing emissions, drive down energy intensity, and eliminate wasteful hard-to-permit byproducts, such as sodium sulphate. Net-zero will require hundreds of terrawatt-hours of batteries and hundreds of millions of tons of battery materials that we must learn to produce and recycle without generating billions of tons of waste and without squandering our precious water and renewable energy resources. Governments at the national and sub-national levels along with an array of companies across the supply chain are coming together, as we have not seen in decades, to address these once-in-a-generation challenges.
“The federal government must collaborate with the provinces rather than compete with them, contributing where each jurisdiction is strongest.”
1. The Government’s Role
Governments are setting challenging but important targets to transition vehicle drivetrains from combustion to electric within the next decade. They are investing time and money to catalyze and drive change. Canada is in an enviable position to capture an outsized portion of the battery minerals and materials production market and to do so, the federal government must collaborate with the provinces rather than compete with them, contributing where each jurisdiction is strongest. There must be anchor investments from multinational companies but there must also be a commitment from the government to support, nurture and grow the Canadian battery supply chain ecosystem so that it can stand on its own by responding to large government programs in the United States such as the Inflation Reduction Act and new initiatives out of the EU.
2. An Industrial Strategy
Canada needs to continue to prioritize its industrial strategy for the battery supply chain, including policies to promote the adoption of electric vehicles, the integration of renewables into the grid, and the development of a skilled workforce. Finally, Canada needs to work collaboratively within its borders and with other countries to address the challenges and opportunities in the battery supply chain to secure a stable supply of critical minerals and battery inputs, develop sustainable recycling technologies, and promote responsible sourcing.
3. Understanding the Societal Impact
The energy transition will not come easily and the costs will certainly be scrutinized, so it is of utmost importance that Canadians see and commit to the long-term societal benefits knowing they are setting the stage for a secure and environmentally balanced future for generations to come. We need to be realistic about how much people can afford when they purchase a new vehicle, pay for charging, or heat and cool their home. We need to ensure there are good-paying jobs, career opportunities, and programs that help all regions of Canada to embrace the benefits of this energy transition, and we must ensure that Indigenous people are meaningful partners in resource extraction, science, technology, manufacturing, legal frameworks, and ESG initiatives.
The Future of Canada’s Battery Supply Chain Ecosystem
Canada has clean energy assets, responsibly sourced critical minerals and a rich history in battery and battery material technology development. By investing in these assets and supporting innovation, Canada can create a resilient value-added domestic battery supply chain in a collaborative and environmentally minded ecosystem that can readily serve markets in North America and beyond. There is a need to move quickly now that the North American opportunity is coming into focus.
“This is an opportunity to make the country stronger, more independent, and more united once everyone sees and enjoys the benefits of the energy transition.”
The scale of the transition we are going through, both environmentally and technologically, is unprecedented. Canada is blessed with many of the ingredients to make it a success, but the window of opportunity will not remain wide open forever and we need to make sure we act quickly to come out of it not only as a reliable mining jurisdiction, clean energy provider, and strong manufacturing hub, but also as an innovator bringing solutions the climate crisis. I see this as an opportunity to make the country stronger, more independent, and more united once everyone sees and enjoys the benefits of the energy transition.
Other images courtesy of Nano One Materials