Canada’s advantage in the global battery supply chain: leading the world in energy transition innovation
In the global race to reach net-zero and decarbonize, Canada should be the bookie’s favorite. Long renowned as a nation of both abundant natural resources, but also resourcefulness with a storied history of energy leadership, the folks up north are poised to lead the energy transition. Yet it still feels like Canada is on the starting line waiting for the gunshot.
There’s growing interest in both public and private opportunities and investment, especially pertaining to critical minerals, but is it accelerating enough to make Canada competitive on a global scale? But with the race far from over what will it take to put Canada in pole position?
The transition to a low-carbon economy is unlikely to be a gentle affair, and like all ‘wicked’ problems it’s one that faces many challenges. As we speed towards 2030, with lofty climate goals to reach, efforts in decarbonization are accelerating. As they speed up, we’ll need stewards to keep the car on the track.
Changing the lens on energy transition
The energy transition requires more than just technological advancement. It involves a multi-faceted approach that recognizes the complexities between our social systems and our energy system. As a convenor, connector, and catalyzer of innovative energy system initiatives and solutions, the Energy Futures Lab supports change-makers in collaboratively exploring how to leverage Canada’s assets and innovation capacity to accelerate an inclusive and equitable transition to a prosperous net-zero future.
As with all complex challenges, there’s no simple answer but the actions being taken today have a tangible impact on the energy system of the future. As Canada’s minister of Natural Resources, Jonathan Wilkinson, boldly stated recently “there is no energy transition without critical minerals, and this is why critical mineral supply chain resilience is an increasing priority for advanced economies.”
Lithium’s role in a net-zero future
In today’s global energy and climate reality everyone is speaking about energy security. What does that mean for Alberta and Canada? The answer lies in the opportunities before us. It will mean developing net-zero energy sources that are close to home, reliable, and predictable in cost. There’s no shortage of homegrown opportunities when it comes to producing products for emerging markets such as battery metals. Innovative technologies are poised to turn raw resources into the commercially-viable reserves required to create a national, or north-American supply chain for critical minerals like lithium.
The discovery of lithium isn’t new, but our relationship with lithium is rapidly changing. Canada has set ambitious zero emission vehicle (ZEV) targets and the demand for electric vehicles (EVs) is reaching critical mass. Scientists began working on lithium-ion batteries in the 1970s, but the first commercial lithium-ion battery didn’t hit the market until 1991. Fast-forward thirty years and batteries are set to play an integral role in the transition to net-zero by midcentury. Thanks to factors including improved battery technology, policy support and a wider availability of charging infrastructure EV sales are surging.
The Alberta advantage
The need for responsibly-sourced lithium has never been greater. Most lithium today originates from either Australia’s hard rock deposits or South America’s salt flats. Alberta’s oil fields hold abundant, yet low-grade deposits of lithium in subsurface brine, but so far it’s been overlooked as industrial waste. With new processing technologies and growing concerns about the security of global supplies, this is set to change.
In 2017, few people knew about this untapped opportunity. It took individuals like Liz Lappin, who joined the Energy Futures Lab Fellowship, to help spread the word. Lappin was well aware of Alberta’s potential having joined E3 Lithium during their start-up phase. The company was proposing a creative solution to a long-standing challenge, setting out to demonstrate how Alberta could lean on its existing oil and gas industry to support the creation of a globally-competitive, and less environmentally-intensive lithium industry. The need for an industry organization to champion responsible development of a Canadian value chain emerged from a series of workshops hosted by the Energy Futures Lab. A group of first-movers combined resources and eventually sparked the formation of the Battery Metals Association of Canada (BMAC), which developed rapidly in collaboration with the Energy Futures Lab team and Fellowship.
Today, Lappin is the current President of BMAC and firmly believes that this technology is on the cusp of market viability, “Extraction from existing wells in lithium-rich formations can put Canada on the map. With a number of projects in development, several with later-stage TRL technology, Alberta lithium could supply domestic battery producers and Canadian lithium producers can benefit from preferred trade partnerships to export to European markets”. When asked what’s needed to get there, Lappin acknowledged that “commitment from both the private sector and government will be needed along with the deployment of policy instruments. There’s a perception that this technology won’t be commercial until after 2030, but piloting is expected well in advance of that timeframe and there are already a number of companies bringing it closer to viability”. Mentioning investments from Alberta Innovates and the Government of Canada in piloting lithium technology as a solid starting point, Lappin was disappointed in the recent exclusion of brine-produced lithium from Canada’s Critical Minerals Exploration Tax Credit but has plans to advocate for its inclusion.
The case for Canada’s battery value chain
To truly grow this industry, however, Canada needs to move beyond its comfort zone. Rather than produce lithium as yet another raw-commodity export, Canadians should be pushing to develop the entire value chain, including manufacturing end products, such as cathodes, anodes, and batteries, for the electrified economy. BMAC has recently released a living ecosystem map showing the volume of activities already underway and outlining the opportunity for a robust domestic value chain.
Canada must aim for a larger piece of the supply chain. According to a recent clean competitiveness roadmap report produced by BMAC, Energy Futures Lab, Transition Accelerator and Accelerate Alliance, automotive parts and vehicles are the second biggest Canadian export behind oil and gas which makes for a clear economic imperative to develop an EV ecosystem in Canada. Given that the internal combustion engine (ICE) and the oil and gas industry will be disrupted by the energy transition, Canada needs to act fast to replace the value these exports bring to our economy. Developing an EV ecosystem is a once-in-a generation opportunity to support long-term prosperity in Canada. The report, A Roadmap for Canada’s Battery Value Chain, outlines priority actions in a national industrial strategy to get the ball rolling and position Canada as a global competitor. The race is truly on to forge a homegrown ecosystem — one that integrates seamlessly into the North American auto sector.
Paving the way
To capitalize on this opportunity however, the government must step up the way they did a generation ago for the oilsands. “Canada will have to go from producing a few thousands EVs to producing 1.3 million EVs in 8 years and 2.3 million EVs in 19 years. To provide a supply chain that meets these objectives will require mining and processing of approximately 200 kilotonnes per annum (ktpa) of elemental lithium” writes the report’s lead author, Bentley Allan.
Despite the compelling long-term economics of lithium for batteries, some industry investors need help to balance the risks of pioneering a nascent industry. One of the calls to action from the report is the creation of public-private-Indigenous partnerships. The Energy Futures Lab held a series of working groups with the BMAC community, which according to Allan, validated “the industry believes we can achieve these battery and EV supply chain goals — and industry is ready to work in partnership with the government, Indigenous communities, civil society, and finance”.
In light of recent supply and demand issues, North American lithium-battery suppliers should be looking to reliable, local sources. The moment is at hand for Alberta and Canada to capture the abundant economic opportunities of lithium and battery metals in the clean-energy future.
Future-fit hydrocarbons in the energy transition
That future looks promising, but it’s contingent on securing the right catalytic investments, and getting the right policy levers in place. Alberta’s energy industry faces significant challenges relating to global investment due to the growing emphasis on transition investment opportunities. To address this challenge, the Energy Futures Lab is exploring opportunities for financing future-fit hydrocarbons — products and industries that build on Canada’s hydrocarbon assets in a way compatible with meeting climate targets such as battery metals, but also technologies like clean hydrogen, bitumen beyond combustion, geothermal energy and carbon capture utilization and storage (CCUS).
Along with an array of partners, the Lab has created and shared a set of guiding criteria that establish a starting point for collaborative future-fit hydrocarbon development for a net-zero world and attracting sustainable investment through their Energy Futures Policy Collaborative (EFPC).
The EFPC framework identifies strategic areas where governments need to align and accelerate policy development to amplify climate action while continuing to reap the economic benefits of hydrocarbon activity. These proposals can support the sector as a whole — not just companies — to attract investment to projects aligned with net-zero emissions goals, as well as meet evolving expectations for energy development. Focusing on Alberta, it’s an approach that views new development as a source of future growth, job creation and community resilience. Viewing the full picture helps to put the opportunities into perspective, and viewing opportunities beyond the emerging technological innovations requires us to look with the lens of social innovation. What is needed to remove the remaining barriers to an evolution in energy already underway in the province?
The global energy transition offers a huge opportunity for Alberta but capturing this requires careful coordination and navigation of provincial, federal, Indigenous, municipal, and other stakeholders to ensure the energy system of the future can benefit a wide array of interests. The ambition of growing future-fit hydrocarbon industries, such as battery metals, has the potential to bridge a number of these divides, in that it acknowledges a new reality for the energy sector stands as an invitation for those connected with resource development to imagine new possibilities; efforts are underway to ensure that battery metals contribute to Canada’s prosperity and the global supply required to advance the energy transition.
