India had 96.7% grid connectivity in 2020, up from 67% about a decade ago. Part of this scale-up was the increase in renewables capacity of the nation. However, growth in renewables is dependent on energy transition materials, which include a wide range of minerals and metals, that are playing a crucial role in the energy industry and the energy economy.
The paradigm shifters in the energy transition in terms of technology, eco-friendliness, and economic viability are startups that carry a multitude of visions and produce a wide diversity of innovations.
In a challenging geo-eco-politico environment that has seen a pandemic, two major wars erupt, and recession dragging its heels not far behind, a majority share of our energy is still derived from archaic coal.
In India, this stands at an 80% share in the energy mix as of January 2024, positioning India as the second largest coal user, highlighting reports published on Reuters. This is because energy transition materials have an irregular supply, and the main suppliers are consolidated under a small distribution of nations.
This not only slows down renewables, emissions reduction, or industrial decarbonisation technologies, but also advanced manufacturing, defence technologies, and more facets connected to energy and future technologies.
Key Economic & Geopolitical Riska
Consequently, the energy sector remains exposed to various economic and geopolitical risks that can affect the availability, affordability, and sustainability of energy supply, echoed by the lack of 24/7 uninterrupted availability of electricity in most developing nations as of 2024.
In 2024, coal’s share in the global energy mix continued its decline, dropping from 26% in 2020 to 24% in 2023, and is projected to further decrease to 22% by 2025. Oil and natural gas have maintained a stable presence, contributing around 31% and 22% respectively, with no significant change expected in the near future, according to the IEA.
Renewable energy sources have seen a notable increase, rising from 14% in 2020 to an estimated 16% in 2023, and are anticipated to reach 18% by 2025. The growth in renewables is predominantly driven by advancements in solar and wind energy technologies available through startup-led or startup-saturated markets worldwide.
Mitigating Energy Risks
Some additional risks faced by energy include market volatility, limited natural resources, natural disasters caused by climate change, and policy uncertainty due to the dilemma of exploiting fossil fuel reserves in nations that have access to or depend on them.
However, renewable energy sources, such as solar, wind, hydro, nuclear, and bio-energy, have been growing rapidly in recent years, driven by innovation, cost reduction, and policy support. Battery recycling has now reached 95% and above efficiency and is capable of producing 99.5% pure materials.
Building energy transition material circularity through LiB battery recycling and repurposing startups mitigates various economic and geopolitical risks. Material circularity can reduce the exposure of the energy sector to fluctuations in the prices and demand of battery materials, which are influenced by various factors, such as supply disruptions, trade policies, and consumer preferences.
Circularised material ecosystems can insulate nations against the pressure on the finite and unevenly distributed resources of battery materials, which are expected to soar in the coming years driven by the exponent demand for electric vehicles and battery energy storage systems.
Startups can thus ensure energy security and economic risks by championing new and innovative circular business models, creating sector-wide collaborative partnerships that build the ecosystem as a whole, pooling expertise and resources.
Startups in all areas of recycling can contribute to the mitigation of climate change by reducing greenhouse gas emissions and various costs associated with the extraction, processing, and transportation of material.
These costs can be economically, environmentally, and geopolitically significant and may even determine the future of nations, depending on the source of procurement and the method of production.
Encouraging Continued Innovation In Material Circularity
Continued innovation in material circularity can greatly reduce the vulnerability of the energy sector to the potential conflicts and instabilities arising from competition and dependence on the supply of fossil fuels as well as battery materials.
Raw material circularity and regionalisation are two effective strategies that can enhance the sustainability and resilience of the energy sector by minimising the use of virgin materials, maximising the reuse and recycling of materials, and optimising the local and regional production and consumption of energy.
An example of the measures for raw material circularity and regionalisation in the energy sector is India’s Battery Waste Management Rules (BWMR 2022) that mandate the collection, refurbishing or repurposing, and recycling of end-of-life batteries, a framework for Extended Producer Responsibility(EPR).
The fulfilment of these EPR obligations is predominantly met by sector partnerships with recycling, refurbishing, and repurposing startups in the ecosystem.
Key Initiatives Taken At International Level
In the United States, the Inflation Reduction Act also provides tax incentives and support to startups that bolster the US battery supply chain and reduce reliance on foreign sources, aiming to de-risk investment in battery supply chains and increase the deployment of electric vehicles by reshaping the US battery market’s economics and geopolitics.
Similarly in the European Union, The EU Battery Rules are a set of regulations aimed at ensuring the sustainability of batteries throughout their entire life cycle. The EU Battery Regulation 2023/1542 extensively regulates how batteries are produced, used, and disposed of within the EU.
Additionally, a non-regulatory body, The European Battery Alliance, aims to create a market worth €250 billion per year by 2025, generate 4 million jobs, and reduce greenhouse gas emissions by 170 million tonnes per year.
The International Solar Alliance aims to mobilise finance, technology, and capacity building to accelerate the deployment of solar energy in 121 member countries.
The African Circular Economy Alliance facilitates the exchange of knowledge, best practices, and policy recommendations among African countries and stakeholders, and mobilises resources and partnerships to implement circular economy projects and initiatives.
Additionally, the Asia-Pacific Renewable Energy Assessment (APREA) assesses the potential and benefits of renewable energy in the Asia-Pacific region, which accounts for more than half of the global energy demand and emissions.
In Conclusion
All these frameworks create a significantly favourable environment for startups that innovate and deliver material circularity. Startups are increasingly combining models and reaching across sectors leading to the diversification of the economy and accelerating the adoption of new technologies.
The measures for collaborative regionalisation and circularity of materials recommended by these initiatives have brought on many boons for energy and electrification.
The Cambridge Institute for Sustainability Leadership (CISL) launched a report on Critical Raw Materials and Circularity at the European Parliament, which calls for a coordinated and aligned strategy involving all stakeholders and beneficiaries.
The report highlighted that an overall materials circularity strategy must be paired with a case-by-case approach to implement incentives & support schemes to ensure faster the commercial viability of a shift towards green technologies.
This is keeping in mind that different critical material ecosystems pose varied challenges and opportunities for the successful implementation of circular ecosystems that, by design, mitigate economic and geopolitical risks.
If all the stakeholders involved in the supply of energy acted in unison, various global economic or geopolitical problems could be solved through circularity and localised, decentralised supply chains powered by startup innovation.
These include increasing the share of renewable energy in the energy mix, reducing GHG emissions and the environmental impact of the energy sector, improving the economic & social welfare of people and communities, and insulation against global geo-eco-political undercurrents.
