Battery Strategy (Science and Technology Committee Report)

Lord Lilley Excerpts

Wednesday 23rd November 2022 Grand Committee

[Lord Lilley (Con)]

My Lords, I congratulate the noble Lord, Lord Patel, and his committee on producing a powerful report, which I hope will send an electric shock through the Government and the industry about the need for urgency if we are to move in the direction that they wish and have a sustainable automotive industry in this country with the necessary battery production.

I want to focus on a precondition of that, which is that we have access to sufficient reserves and resources of minerals to produce the batteries if we have the capacity to do so. I draw attention to two documents which highlight this very powerfully. The first is The Role of Critical Minerals in Clean Energy Transitions, produced by the International Energy Authority about a year ago, which paints a fairly disturbing picture of potential shortages of these minerals. It states:

“EVs and battery storage have already displaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040.”


It predicts that lithium demand will grow 40-fold by 2040, even in the IEA’s more moderate sustainable development scenario. That is followed by graphite, where demand will go up 25-fold, cobalt which will go up 21-fold, nickel which will go up 19-fold and rare earths which will go up sevenfold. In less than two years since January 2021, the price of lithium carbonate has risen more than 13-fold, so the shortage is already demonstrating itself.

The IEA states that the expected supply from existing mines and projects under construction is estimated to meet only half of projected world demand for lithium and cobalt by 2030, and its analysis suggests that on average it takes 16 years from the start of a mining project through to first production, so the scope for ramping up production is much less than one might hope—or so it would appear.

The other source I refer to is a report produced for the Finnish geology institute by Professor Michaux. Those of your Lordships who got up at 6.30 am on Friday to listen to his presentation—750 people did, I am told, although I was too late and had to see it on playback—would have been struck by the analysis that he has produced: to make one battery for each vehicle in the global transport fleet, once we transition to electric vehicles, will require 48% of total global nickel reserves and 44% of total global lithium reserves. He concludes, to cut a long story short, that the whole EV battery solution may need to be rethought and a new solution developed that is not so mineral-intensive.

I hope that he is too pessimistic; I am an optimist where resources are concerned. I recall that famous wager between Julian Simon and Paul Ehrlich, in the wake of the Club of Rome and Paul Ehrlich’s book The Population Bomb, in which he forecast that there would be shortages of everything. Julian Simon took him on and said, “Choose a portfolio of minerals or other resources and a period of your own choosing, and I bet you that the price will come down and not go up”. Ehrlich chose five minerals and a period of 10 years. Ten years later, the average of those prices had fallen: three had fallen in absolute terms and all had fallen in real terms.

So the market is quite good at responding to shortages and can develop things, but doing so will be a huge problem if the world is going to move as fast as it is planning—and hoping—to move in the development of electric vehicles in particular and other uses of batteries that are associated with the move to net zero by 2050. I hope that the committee’s recommendations will be followed with greater urgency than the Government and industry seem to have shown so far. I hope too that we will pay attention to the need to develop the sources of minerals and raw materials that will be necessary to make it a reality.