On August 29, I had the pleasure of participating in the fifth government-industry forum of the Li-Bridge project at Argonne National Laboratory outside Chicago. The forum sought to collect information and opinions from leading private companies and government agencies on various schemes that have been proposed to track and trace the contents and performance attributes of high capacity lithium-based batteries over their lifetime use in commerce. The best known of those schemes, which the forum discussed extensively, was the EU’s Battery Passport.
Representatives from more than 50 companies and government agencies participated in the forum. The participants represented the entire breadth of the lithium battery supply chain in the United States. Avicenne Energy US and Ricardo Strategic Consulting North America led and facilitated the various forum sessions.
The forum has not yet published its final report. That report will be subject to further discussion and debate among the forum’s participants. I hope to be able to announce the publication of a final report in this column within the next few weeks.
The principal take-away for me from the forum is that there is an appetite in both industry and government for some sort of track and trace scheme for high capacity lithium batteries in the United States. It is unclear whether the scheme should be mandatory or optional, or possibly both. But the forum identified four categories of value that a track and trace scheme could create that might justify the cost of its creation.
The first value is the creation of measurable data that will allow the government and those in industry to understand better the state and stability of the lithium battery supply chain. This data is already needed to evidence qualification for Section 30D tax credits. But the data collected has an even more important utility. To truly understand a supply chain, you must be able to measure it. And to protect and build a supply chain, you have to fully understand it. China launched just such an initiative in January of this year. The Industrial Internet Identification and Analysis System ‘Thorough’ Action Plan (2024-2026), sometimes referred to as the 3-3-1 strategy, seeks to enable precise network coordination across systems, enterprises and regions through the collection of track and trace data. The United States needs a similar resource.
The second value is increasing the efficiency of lithium battery supply chain by lowering data collection costs. Most if not all of the major vehicle OEM’s already collect track and trace data in order to understand their own supply chains. But they collect it in different ways and disclose it, if at all, in different formats. These different data formats require suppliers and downstream users of battery materials to be able to work in and master multiple different formats of battery data. This increases cost and often results in certain downstream users (e.g., recyclers) not being able efficiently to get the information they need. Having battery data reported consistently throughout the supply chain would reduce system costs and ultimately reduce the cost of batteries.
The third value is reliable and consistent reporting of battery state of health to consumers. Vehicle OEM’s and battery manufacturers already have the ability to judge battery state of health and report it to consumers. Providing that information to consumers is a good business opportunity. But there is no way that consumers can really compare battery state of health across different brands and battery systems. It is important to consumers buying a vehicle that they be able to compare apples to apples. There is, perhaps, a role for government to play in facilitating that ability to compare.
Finally, there may be a role for government to play in facilitating the communication of ESG information from vehicle and battery makers to consumers. A large part of the EU’s Battery Passport is devoted to collecting information on carbon content, responsible sourcing, recycled content and other ESG topics, which the EU uses to establish minimum requirement for manufacturers to sell high capacity batteries in the EU. Among the industry participants in the forum, there was not much enthusiasm for making minimum standards of ESG compliance a requirement to sell batteries or vehicles in the United States. But there was a recognition that there might be value in providing that information to consumers on a consistent basis across brands, allowing consumers to compare apples to apples. It was noted that there might be benefit to adopting the ESG measurement systems already developed by the EU in its Battery Passport systems in the United States, albeit on a voluntary basis, rather than reinventing the ESG wheel.
Li-Bridge will work to finalize its recommendations with respect to tracking and tracing battery data. Those recommendations will then be considered by government regulators and policy makers, who will ultimately control what track and trace scheme for batteries the United States eventually adopts.
In developing a final battery track and trace scheme, however, it will be important to proceed with caution. There is a lot of very interesting data that can be collected from batteries. And there are a lot of very cool ways to collect it. As such there will be no shortage of advocates for battery data collection.
We need to keep in mind, however, that data itself is not an asset. It is a cost. How you use data is what can make it an asset. In deciding what battery data to collect and how, regulators and policy makers must be very careful to make sure that the value of how we use the data collected always exceeds the cost of its collection. This will require a highly disciplined approach to developing a suitable track and trace scheme for lithium batteries in the United States.