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As lithium demand is expected to rise driven by the global shift towards transport electrification and energy storage systems, key questions emerge: What are the key trends shaping the lithium market? What are the environmental challenges associated with lithium production and how can they be mitigated? In this paper, T&E answers these questions and provides policy recommendations to advance sustainable practices in lithium production.
The key developments shaping the global and European lithium markets are:
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As a critical element in all lithium-ion battery chemistries, whether NMC, LFP or other, lithium will be needed in batteries for a long time, with global lithium demand projected to more than double to 2.5 Mt LCE (lithium carbonate equivalent) by 2030.
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Chile, Australia, Argentina and China account for 80% of the known global lithium reserves. The EU is a net importer of lithium, sourcing lithium carbonate and hydroxide largely from Chile, China and the US.
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While Australia, China and Chile currently dominate lithium extraction and the processing is concentrated in China, by 2030, other countries in the Americas, Africa and Europe will increasingly play a role in the market (accounting for 37% of global mined production and 24% of refined production in 2030).
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However, with 28 mining, refining and integrated projects in the pipeline, Europe could reduce its import reliance by 2030, meeting 53% of demand with mined output and potentially achieving self-sufficiency in processed lithium.
Lithium production comes with carbon and water footprints, depending on source, region and process deployed. A recent life cycle assessment (LCA) by Minviro, commissioned by T&E, examined the carbon and water intensity of lithium hydroxide monohydrate production for nickel-based lithium-ion batteries. The study analysed six distinct production operations - existing and prospective - across Germany, Portugal, Australia and China. Some of the key findings are:
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Direct Lithium Extraction (DLE) from geothermal brine in Germany stands out as the most environmentally friendly, generating 83% fewer emissions than the most carbon-intensive method, lithium extraction from Chinese hard rock mica. Spodumene-based production in Australia and Portugal have a moderate impact, due to energy-intensive processes, though Portugal fares better owing to a cleaner energy mix.
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German mica production and DLE from geothermal brine have relatively low direct water use, which is further supported by Germany's low water scarcity factor. When comparing brines, DLE is 50% less water-intensive than Chilean brine. The water intensity of the Portuguese spodumene route is exacerbated by Portugal’s higher water scarcity factor and reagent use (e.g. sulfuric acid). Chinese mica production has the highest water use among the routes analysed, being 4 times higher than the German mica route and nearly 3 times higher than the DLE route.
While the LCA highlights the complexity of environmental impacts across various lithium production routes, there are solutions that can mitigate them. Carbon footprints can be reduced through renewable energy, innovation and process efficiency, while water impacts can be addressed by implementing new technologies such as DLE, recovery and recycling technologies, closed loop systems and tailings dewatering techniques. In arid coastal regions, desalination could be an option if combined with energy-efficient technologies and best waste management practices.
To scale domestic lithium production sustainably, the European Commission should back Strategic Projects under its Critical Raw Materials Act that employ innovative technologies and adhere to best emissions, water, waste management and biodiversity practices. As part of the EU taxonomy for sustainable activities, the European Commission should set “low emission” lithium thresholds to attract private capital, i.e. T&E recommends 10 kg CO2e/kg lithium hydroxide monohydrate by 2030. Governments and businesses should also accelerate investments in energy-efficient, water-saving technologies, which can be exported globally.
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