The importance of lithium in achieving a low-carbon future: opportunities galore, but coupled with key challenges for legal professionals

If the world has any chance of effectively addressing climate change, an essential factor will be the rapid development and deployment of lithium batteries to store electricity generated by renewable sources as well as to power electric vehicles. And yet a key question exists: is the legal profession prepared to facilitate this important transition?

The growth in demand trajectory for lithium cannot be understated. During the final years of the 2010s, the demand for lithium rose exponentially. Michael Schmidt, analyst at the German Federal Institute for Geosciences and Natural Resources, has attributed this growth to ‘the global e-mobility drive and the mounting storage of renewable energy, like solar and wind’.¹ To put the demand growth into more perspective, Schmidt has said:

Back in 2015, global demand for lithium metal content exceeded 30,000 tons or 150,000 tons of lithium carbonate, to use the more common compound. If you look at the current projections, the world will need between 600,000 tons to 1 million tons of lithium carbonate annually by 2025, depending on the development of e-mobility technology.²

A recent United States Geological Survey (USGS) report supports Schmidt’s assertion. ‘Lithium has been listed as one of the critical or near-critical elements in various recent studies based largely on its importance in green technologies,’ the USGS said, adding, ‘Battery manufacturing has the largest growth potential of any sector of the lithium industry.’³

Meanwhile, German publisher Deutsche Welle has reported, ‘As the world shifts to renewables, more and more sectors are to be electrified, and demand for lithium is expected to double by 2025.’⁴ Bloomberg New Energy Finance has reported that while in 2018 two million electric vehicles (EVs) were purchased, ‘We expect annual passenger EV sales to rise to 10 million in 2025, 28 million in 2030 and 56 million by 2040.’⁵ A key reason that EVs will be sold in ever-greater numbers relates to the drop in battery prices. ‘We expect price parity between EVs and internal combustion vehicles (ICE) by the mid-2020s,’ Bloomberg said.⁶

The shift was underscored in a late 2018 announcement wherein ACI Systems, a German-owned firm, publicised an agreement with the government of Bolivia to develop lithium resources for use in German-built EVs.⁷ However, the ongoing stability of this agreement is now questionable based on ACI’s late 2019 announcement that the Bolivian government may have repealed the joint venture.⁸

The importance of lithium batteries for EVs, and resulting decrease in carbon emissions, can be illustrated in the context of automobiles. Today, an average gasoline-powered automobile, which has travelled 150,000 miles, will emit more than 63,000 kilograms of carbon dioxide. In comparison, in the ‘best case scenario, where the battery is recharged from renewable hydroelectric, wind, tidal, or solar power, the carbon dioxide output (beyond infrastructure costs) is negligible’.⁹ Governmental push towards EVs is demonstrated in California, which estimates that four out of ten new vehicles ‘must be zero-emission vehicles by 2030 (up from five percent in 2017)’ if the state is to achieve its 2030 emissions target.¹⁰

While lithium can be found around the world, deposits in the Latin American ‘lithium triangle’ – Argentina, Bolivia and Chile – ‘stand out because of the abundance of lithium and the low cost of extraction’.¹¹ These deposits take the form of ‘mineral-rich brines’, which do not ‘produce piles of sterile rock or toxic tailings, nor [do they] require high fossil fuel use or explosives’.¹² On the other hand, ‘More costly deposits of lithium are found in rocks … in China, Australia and elsewhere, and experiments are underway to extract it from hectorite clay’.¹³

In response to the enormous interest in batteries, the World Economic Forum (WEF) has established the Global Battery Alliance (GBA). ‘Mobile technology and a low-carbon future are unthinkable without batteries, a core technological enabler of the Fourth Industrial Revolution,’ the WEF has said, adding, ‘As a global collaboration platform, [the alliance] will catalyze and accelerate actions towards a socially responsible, environmentally sustainable and innovative battery value chain to power the Fourth Industrial Revolution.’¹⁴ One of the GBA’s first accomplishments was the September 2019 publication of A Vision for a Sustainable Battery Value Chain in 2030: Unlocking the Full Potential to Power Sustainable Development and Climate Change Mitigation.¹⁵ According to the report,

With the right conditions in place, batteries are a systemic enabler of a major shift to bring transportation and power to greenhouse gas neutrality by coupling both sectors for the first time in history and transforming renewable energy from an alternative source to a reliable base.¹⁶

Bearing all of this in mind, among the lithium mining/extraction issues that are certain to be on the near-term horizon:

• ‘As global lithium consumption rises during the next few decades … environmental issues related to the production, routine daily use, and disposal of lithium products will warrant additional research.’¹⁷

• Latin American communities in the ‘lithium triangle’:

    living near salt flats [where brine deposits are found] worry about the impacts on water, as the evaporation process [used in production] is removing water from the world’s driest ecosystem. Little scientific information about this is available, and that which does exist has been produced by the companies that operate there, thus raising questions of trust and credibility.¹⁸

• Is lithium the ‘new oil’ or ‘white gold’? Or is it ‘a simple source of income [for countries where it is mined] or something far worse – the source of a new resource curse’?¹⁹

• Will states in the Latin American ‘lithium triangle’ adopt policies ‘in which the state plays an active role in the economy by investing in science, technology, and new industries’ and instead of exporting ‘lithium as a raw material … will produce goods with “value added”’?²⁰

• How should the ‘tension’ be managed between ‘a global public good (the move to a low-carbon society) … while seeking to ensure respect for local environmental justice (for the indigenous communities whose lands lithium is located on)’?²¹

In closing, the observations of highly respected mining lawyer Florencia Heredia of Buenos Aries put the challenges and opportunities in context:

The importance of lithium extraction/mining will particularly be key to lawyers acting in the mining sector since they will have a crucial role to help define and develop the business relationships that will underpin this effort. The introduction and acceptance of an exponential number of electric vehicles will increase the demand for lithium, and the role that lawyers will play in ensuring the development is done in environmental and business-sensible ways provides great opportunities as well as challenges. As lawyers, we need to begin to focus on this potentially revolutionary business.

This issue’s contents

The first issue of the decade of the 2020s begins with a thought-provoking article from Kaisa Huhta titled ‘Smartening up while keeping safe? Advances in smart metering and data protection under EU law’. The second article, written by Allan Ingelson, is titled ‘Technological innovation to enhance security of tenure for mineral claim holders’. The next article, ‘Hydraulic fracturing and groundwater contamination in India: evaluating the need for precautionary action’, is written by Shashikant Yadav, Gopal K Sarangi and MP Ram Mohan. The fourth article, written by Daniel Benrath, is ‘Applicable law to hydrogen pipelines for energy purposes in Germany’. This issue’s article section concludes with ‘The achievement of regulatory excellence in the oil and gas industry in Nigeria: the 2017 National Oil and Gas Policy’, by Chilenye Nwapi.

In addition, this issue includes a review of Extractives Industry Law in Africa by Oyeniyi Abe.

Looking ahead

As this editorial has described, there are a multitude of issues ahead with respect to lithium development and deployment. We shall be following this matter closely throughout 2020 and expect to publish some of the first major legally oriented pieces about it during the year. If this is a subject that you or someone you know would like to potentially contribute to, please don’t hesitate to contact me.

Notes

1 ‘Germany Hopes to Mine Lithium, the White Gold of e-Mobility’ (DW Top Stories/Business, 19 August 2019) www.dw.com/en/germany-hopes-to-mine-lithium-the-white-gold-of-e-mobility/a-50073822 last accessed 24 January 2020.

2 Ibid.

3 ‘Lithium, Chapter K of Critical Mineral Resources of the United States – Economic and Environmental Geology and Prospects for Future Supply’ (Professional Paper 1802-K, US Department of the Interior, US Geological Survey, 2017) K2 https://pubs.usgs.gov/pp/1802/k/pp1802k.pdf last accessed 24 January 2020.

4 ‘Chile’s Lithium – Blessing or Curse?’ (DW, 11 May 2018) www.dw.com/en/chiles-lithium-blessing-or-curse/a-43721539 last accessed 24 January 2020.

5 ‘Electric Vehicle Outlook 2019’ (Bloomberg New Energy Finance, 15 May 2019) 1 https://about.bnef.com/electric-vehicle-outlook/#toc-download last accessed 24 January 2020.

6 Ibid, 2.

7 ‘Germany Shores up Lithium Supply with Landmark Bolivia Deal’ (DW, 12 December 2018) www.dw.com/en/germany-shores-up-lithium-supply-with-landmark-bolivia-deal/a-46708512 last accessed 24 January 2020.

8 ‘Statement of ACI Systems Alemania GmbH on the ACISA Project in Bolivia’ (ACI Systems, 4 November 2019) www.acisa.de/news/detail/statement-of-aci-systems-alemania-gmbh-on-the-acisa-project-in-bolivia last accessed 24 January 2020.

9 See n 3 above at K16.

10 Samuel L Brown and Lauren A Bachtel, ‘A Decarbonized Economy: Risks and Opportunities’ (2019) 34 Nat Resources & Env’t 50.

11 Javiera Barandiarán, ‘Lithium and Development Imaginaries in Chile, Argentina and Bolivia’ (2019) 113 World Development 381–382 www.sciencedirect.com/science/article/abs/pii/S0305750X18303516 last accessed 24 January 2020.

12 Ibid, 382.

13 Ibid.

14 ‘Global Battery Alliance’ (World Economic Forum) www.weforum.org/projects/global-battery-alliance last accessed 24 January 2020.

15 World Economic Forum, A Vision for a Sustainable Battery Value Chain in 2030: Unlocking the Full Potential to Power Sustainable Development and Climate Change Mitigation (September 2019) www3.weforum.org/docs/WEF_A_Vision_for_a_Sustainable_Battery_Value_Chain_in_2030_Report.pdf last accessed 24 January 2020.

16 Ibid, 5 www3.weforum.org/docs/WEF_A_Vision_for_a_Sustainable_Battery_Value_Chain_in_2030_Report.pdf last accessed 24 January 2020.

17 See n 3 above at K17.

18 See n 11 above at 382.

19 Ibid, 381.

20 Ibid, 389.

21 Pia Marchegiani, Elisa Morgera and Louisa Parks, ‘Indigenous Peoples’ Rights to Natural Resources in Argentina: The Challenges of Impact Assessment, Consent and Fair and Equitable Benefit-Sharing in Case of Lithium Mining’ (2019) BENELEX Working Paper No 19, University of Strathclyde Centre for Environmental Law and Governance https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3317375 last accessed 24 January 2020.