Design of battery supply chains under consideration of environmental and socio-economic criteria

Abstract

The demand for electric vehicles is increasing worldwide, leading to a high demand for lithium-ion batteries, whose supply chains are associated with high environmental and socio-economic impacts. Therefore, legal regulations, such as the EU Battery Regulation, force battery manufacturers to use secondary materials, comply with CO2-limits and ensure social conditions along their supply chains. These circumstances make it necessary to assess battery supply chains in terms of their environmental, economic, and social impacts. For this purpose, the life cycle sustainability assessment approach can be used. However, the results of this approach often lead to conflicting goals between and within sustainability dimensions, making it challenging to derive recommendations for more sustainable battery supply chain designs. One approach to solving this problem is to use optimization models that take the three sustainability dimensions into account.To this end, this study aims to combine the results of a Life Cycle Sustainability Assessment of battery supply chains with a decision support model to derive recommendations for action for the design of more sustainable battery supply chains. For this purpose, different spatial-differentiated activities are assessed and included in a decision support model that aims at minimizing the costs of a German battery pack manufacturer, considering environmental, social, and legal restrictions. The decision support model is implemented in Python and solved using Gurobi. The results of the decision support model are compared with the current state of battery supply chains as a benchmark. The result of the study shows that in many of the scenarios studied, the cost, as well as the environmental and social impacts, can be significantly reduced compared to the benchmark. However, if the environmental and social impacts were to be reduced strictly, this would lead to higher costs compared to the benchmark. Furthermore, the results show that a European-centric supply chain would emerge for more environmentally friendly supply chains, while for a more socially friendly supply chain, the focus would be on Japan.