Batteries now worth $17bn to the economy by 2030: FBICRC

Brandon How

The Future Battery Industries Cooperative Research Centre has more than doubled its 2030 forecast for the value of a diversified battery industry to the Australian economy to $16.9 billion, but argues stronger economic alliances will be needed to realise it.

A 2021 report commissioned by the Future Batteries Industries Cooperative Research Centre (FBICRC) had initially forecast gross value-add as only $7.4 billion by 2030. That forecasted value is now more than doubled in its latest ‘Charging Ahead’ report, released on Wednesday.

The growth is largely driven by a 65 per cent increase in expected demand for batteries and a 35 per cent rise in prices on forecasts in last year’s report. It will also coincide with upcoming global supply shortages in minerals like lithium, nickel, cobalt, and graphite.

Based on the new forecasts, produced by Accenture, pursuing a diversified battery industry, which includes downstream processing and manufacturing activities, would generate $55.2 billion in additional GDP.

If Australia remains “focused on capturing opportunities from mining raw battery materials” the report forecasts that $10.4 billion in gross value will be added by 2030 and generate $25.8 billion in additional GDP.

Future Battery Industries Cooperative Research Centre chief executive Shannon O’Rourke.

Battery demand is now expected to grow by 18 times between 2020 and 2030 to 3700GWh per annum due to accelerated adoption of electric vehicles and energy storage systems. In particular, global EV demand in 2030 will be 94 per cent higher than in 2021.

The report recommends six strategic priorities to support battery industry development, including alliances, attracting large anchor tenants to Australia, coordination through government strategies and other policies, regional export partnership with neighboring countries, and increased collaboration between industry and academia.

Growing investment is being driven by international incentives for clean energy projects across the world including the United States, the European Union, South Korea, India, and China. The report notes that expenditure on clean energy projects globally has increased by more than 30 per cent over the last two years.

The report argues that the incentives for ‘energy security and climate change’ activities of the United States’ Inflation Reduction Act, which currently includes US$36 billion in investment per year, means the production cost for cell manufacturing and pack assembly is cheaper than in Australia. It estimates that Australia still has the potential for cheaper lithium hydroxide refining and battery active material production.

Mr O’Rourke hopes that the key takeaway for Industry and Science minister Ed Husic, who is overseeing development of a national battery strategy, will be to develop “true alliances”.

“We need to work with countries like the United States to try and get them to assist us to build the industry here. Australia’s got unique mineral resources, we’ve got fantastic ESG, we’ve got low-cost energy, we’ve got everything we need, and what we need from others is we need to get some investment here in Australia,” he said.

Mr O’Rourke’s hope is that tax credits available through the Inflation Reduction Act could be made available to manufacturers with facilities in Australia producing batteries and refined products destined for the American electric vehicle manufacturing industry.

He described supply chain coordination with the US as a “match made in heaven” and that it is in the interests of the US to integrate the Australia-based diversified battery industry into its supply chains. However, Mr O’Rourke highlighted that recent policy developments in the European Union are not as complementary.

The Critical Raw Minerals Act introduced into the European Commission last week includes targets for 10 per cent of the EU’s critical minerals needs and 40 per cent of critical minerals processing needs be met from within the EU.

“Now those requirements are not positive for Australia and this is why we need to select markets wisely, and choose our partners, and work with them to try and develop more industry here. If governments try and do it all inside their borders, then maybe they’re not great partners. Maybe we should select countries that want to work with us,” Mr O’Rourke said.

Answering questions following his address to the National Press Club on Wednesday, Industry and Science minister Ed Husic said he discussed the potential to link the National Reconstruction Fund and the Inflation Reduction Act with the Biden Administration during his visit to the United States in January.

“They’re very keen to see that work advance, very keen to see how we lean into the various parts of the battery value chain. Not just about mining and refining. The big challenge is obviously in processing and seeing what we can do there,” Mr Husic said.

“Our friends in the US know they can’t do it all, they want to work with people on this… and as you may be aware there’s this concept that they often refer to as friendshoring, which is working with trusted partners on different elements of the value chain and in Australia’s case because we have a trade agreement with the US it gives us entrée straightaway to be able to contribute.”

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