Decarbonisation Pathways - Cobalt Institute

Cobalt powers the world around us, and demand is expected to remain high over the coming decades.

Since 2019, demand for cobalt has grown by 10% per annum, driven by a greater need for the batteries inside electric vehicles and handheld devices. This growth is expected to continue, with demand near tripling by 2050. Since 2019, growth in the demand for cobalt has led to a 58% increase in the industry’s carbon footprint, most of which is Scope 3 emissions.

Cobalt has the potential to facilitate massive levels of decarbonisation.

In a do-nothing scenario, cobalt industry emissions could reach 4.8 – 7.6 Mt of CO₂e by 2050, but there is opportunity to abate cobalt industry emissions by around 80% in that time. If this is done, residual emissions could be as low as 1.3 Mt of CO₂e by 2050. In addition, cobalt has the potential to support technologies that abate 3.6 GT of CO₂e by 2050.

There is clear potential for the cobalt industry to decarbonise over the coming decades.

30% of emissions can be successfully abated by 2030, 47% by 2040, and 80% by 2050. Such abatement would be achieved through the increased use of renewable energy, biofuels, and carbon capture of industrial process emissions, as well as further electrification of mobile equipment, the decarbonisation of heating processes, and more sustainable logistics and procurement.

Decarbonisation will lead to significant OPEX savings over time.

This decarbonisation will also lead to significant operational expenditure (OPEX) savings in the long run. Although the 80% abatement potential by 2050 requires $1.6 - $2.1 billion in capital expenditure (CAPEX) for cobalt specific supply chains, by 2050, the OPEX associated with decarbonisation will be almost cost-neutral.

Policy makers and financial actors in the EU and other major economies can take important steps to facilitate decarbonisation.

These include: (i) the creation of regulatory frameworks that incentivise decarbonisation; (ii) support for innovation and a circular cobalt economy, (iii) deployment of financial instruments to facilitate the just transition, and; (iv) investment in technologies required to achieve a decarbonised cobalt industry.

Regulatory support for cobalt decarbonisation requires focusing on several interconnected areas.

These include an increase in collection capacity for end-of-life batteries, higher generation of green electricity, and investment in infrastructure to move production and raw materials from and to cobalt operations.

A significant increase in batteries reaching end-of-life offers an opportunity to access a new strategic source of cobalt.

To capitalise on this opportunity, policy makers should consider incentives for collecting end-of-life batteries, investments in recycling capacity, and the imposition of an ‘ultimate producer responsibility’ scheme. If implemented correctly, end-of-life EV batteries could meet up to 39% of cobalt demand by 2050.

Governments have differing – but vital – roles to play in decarbonising the cobalt industry.

Producing countries like the DRC and Indonesia can invest in energy infrastructure and renewable sources of energy. China, the world’s largest refiner, has huge capacity to contribute to cobalt industry decarbonisation through the phase out of natural gas. Recycled material will also be important to decarbonisation: By 2040, the EU will have a 20% share in the battery recycling market, and China 42%, highlighting the importance of investment in domestic recycling capacity to valorise this low-carbon source of material.

A just transition lens must be applied to the process of decarbonisation.

Companies should extend their existing responsibility to respect human rights, aligned with international frameworks, to assess the environmental and social risks brought about by decarbonisation. This includes potential impacts on workers and communities in both their own operations and in the supply chains of abatement measures.