Germany's Circular Economy

Germany's battery recycling industry

The European car industry is undergoing rapid technological transformation. Sales of battery electric vehicles (BEVs) and plug-in electric vehicles (PHEVs) have grown significantly. BEV and PHEV share of total vehicle sales will continue to rise and is expected to reach over 50 percent by 2030.

While EV sales figures are strongly increasing, the end-of-life treatment of lithium-ion EV batteries is still at an early stage. The materials inside lithium-ion EV batteries – including cobalt, nickel, manganese, and lithium – are finite resources currently only being produced by a handful of nations. Electric vehicle growth will see mining producers struggle to meet demand over the next two decades. Recycling the same materials from end-of life batteries can help the EV industry to address raw material shortages while creating a sustainable circular battery supply chain that promotes environmental sustainability in Europe.

Battery recycling market drivers

EU battery regulation

With comprehensive legislation covering the entire battery life cycle, the new EU battery regulation promotes a circular economy and fuels the demand for battery recycling in Germany. Measures foreseen include:

• A digital battery passport for light means of transport (LMT) batteries, industrial batteries and EV batteries 
• Stricter waste collection targets: portable batteries 45 percent by 2023, 63 percent by 2027 and 73 percent by 2030; LMT batteries 51 percent by 2028 and 61 percent by 2031 
• Minimum levels of materials recovered from waste batteries: lithium 50 percent by 2027 and 80 percent by 2031; cobalt, copper, lead and nickel 90 percent by 2027 and 95 percent by 2031
• Minimum levels of recycled content for new batteries: cobalt 16 percent, lead 85 percent, lithium 6 percent, nickel 6 percent by 2031; cobalt 26  percent, lead 85 percent, lithium 12 percent, nickel 15 percent by 2036

Raw materials sourcing market Germany

For battery recyclers, securing raw material supplies will be one of the most critical factors for battery recycling operations. Given difficulty and costs to transport end-of life batteries and scrap materials, close proximity to input markets is a key factor for battery recyclers. Currently the two main input sources constitute: production scrap materials (short-to medium-term, until 2030) and end of life batteries (long-term, from 2030 onwards). 

In the short-term, Germany’s battery production ramp up, with announced gigafactory capacities of around 500 GWh until 2035 is projected to offer battery recyclers the largest European market to source cell production scrap material. In the long-term, Germany’s large existing stock of EVs and rapid BEV diffusion are projected to offer one of the largest markets to source of end-of-life EV batteries in Europe.

Opportunities for international companies in Germany

International investors can benefit from new opportunities in the German battery recycling market. The market offers numerous investment opportunities including the acquisition of existing recycling companies, establishing joint ventures with German partners and starting new businesses.

Lithium-ion battery recycling

Pre-treament facilities: build up of decentralized pre-processing plants where end-of-life batteries and production scrap materials are discharged, dismantled and further processed into black mass - usually by mechanical or thermal pre-treatment. Germany’s existing network of OEMs and gigafactories  provides unique market opportunities for companies that provide the required technology.

Hydrometallurgical and pyrometallurgical recycling plants: describes a production plant where the black mass is further processed to maximally remove impurities and recover critical battery materials including copper, nickel manganese and lithium. Germany’s large chemical park infrastructure with over 35 chemical parks offers investors cost-efficient and unique investment locations with excellent infrastructure, chemical raw materials via pipelines, gases and steam via pipelines, and a stable and secure energy supply.

Battery re-use

Potential business models include second-life concepts such as remanufacturing or repurposing before subsequent recycling of obsolete traction batteries. The re-use of traction batteries may include some updating in the form of remanufacturing which requires industrial recovery standards. Such processes contain at least a partial disassembling and exchange of some components such as the weakest battery modules within a battery pack to regain full functionality.

Using remanufactured batteries as spare parts in the after-sales business can be of interest for original equipment manufacturers (OEMs). These business options can be performed best by OEMs or battery suppliers, but where he battery management system (BMS) is accessible to all stakeholders, independent remanufactures can also enter the market.

Germany Trade & Invest Success Story

The Australian based company Neometals Ltd. started a joint venture with the SMS group in Germany to demonstrate and commercialize an innovative lithium battery recycling process. The flagship project, Primobius, includes the construction of a showcase demonstration plant. Germany Trade & Invest provided investor support and site selection services to Neometals. 

GTAI spoke to Jeremy McManus, General Manager, Commercial and Investor Relations of Neometals about market outlooks and the company's decision to start operations in Germany.

Read the full interview here.

Key facts on Germany's waste management and recycling market

In Germany, the waste management & recycling market revenues have been steadily increasing since 2017. While revenues peaked in the years 2022 with around EUR 62 billion the market is projected to reach more than EUR 70 billion revenues by 2024.

Demographic changes, new lifestyles (including the increase of one- and two-person households), and an ageing society have led to a constant increase in waste material supply in Germany. In 2020, construction & demolition waste accounted for the largest share of total waste volumes followed by municipal waste and waste from waste treatment facilities.

In recent years, the rapid growth of waste material production has however generated an equally growing demand for waste management in Germany, which has created an opportunity for foreign investors to handle the increasing amounts of waste volume and tap into its market potential.

What drives the market for waste management and recycling in Germany

Several factors drive the market for waste management and recycling in Germany. 

FIrst of all, Germany has introduced a range of policies and regulations to encourage waste reduction and recycling, including deposit schemes for plastic and glass bottles, landfill taxes, and packaging regulations. These policies provide a strong framework for waste management and recycling, and help to ensure that the market operates efficiently and effectively.

The provisions of the German Waste Management Act (KrWG) are the backbone of Germany’s leading waste management & recycling market. The KrWG enshrines the concept of product responsibility by defining responsibilities along the product life cycle and offering incentives to manufacture durable products. The act seeks to turn a waste management culture into a resource management culture - minimizing waste generation and maximizing reuse and recycling.

A central principle of the law is the five-stage waste hierarchy. Its key regulations include:

1. Avoidance
2. Re-use
3. Recycling
4. Energy recovery
5. Disposal

Opportunities for foreign companies in Germany

In 2020, around 70 percent of total waste volumes were recycled in Germany. Highest share was in construction and demolition waste (88 percent), followed by municipal waste (67 percent).

Nevertheless considerable waste volumes still end up being disposed through landfill incineration or energetic recovery, leaving considerable amounts of waste materials available for recycling. There are also multiple material flows requiring further recycling process improvements, above all, aircrafts, packaging, plastics, textiles, wind turbines, EV batteries, construction waste, and CFK/GFK.