Economic Feasibility and Climate Effectiveness of Lithium-ion Battery Recycling in Europe

Lithium-ion batteries (LIBs) are central to Europe’s expanding electric vehicle (EV) market and renewable energy storage systems, yet questions persist about raw material supply security and the environmental footprint of battery production. This thesis evaluates four commercially practiced recycling routes—Conventional Hydrometallurgy, Combined Pyro-Hydrometallurgy (two variants), and Direct Recycling—to determine their economic viability and climate effectiveness from 2020 to 2035 under evolving EU regulations. At the micro level, the analysis reverse-engineers each pathway’s cost and resource demands using an aggregate techno-economic (TEA) and life-cycle (LCA) model. Results show that for nickel- and cobalt-rich chemistries (NMC, NCA), hydrometallurgy and direct recycling meet mandated recovery rates and achieve positive margins, whereas pyro-hydro processes often incur losses and yield lower greenhouse gas (GHG) reductions. For lower-value LFP batteries, all existing processes remain unprofitable, although direct recycling narrows losses and offers higher GHG savings than alternatives. At the macro level, a scenario-based analysis of end-of-life (EoL) LIB stocks in the EU indicates a significant shortfall in LFP recycling capacity by 2035, potentially undermining new regulatory targets. Policy interventions—particularly targeted subsidies for LFP recycling or R&D support for direct recycling—could resolve this gap. Additionally, standardizing battery design and digital traceability via “battery passports” would enhance the scalability of direct recycling. Overall, the findings highlight a strong interplay between technology selection, policy mechanisms, and market dynamics, emphasizing direct recycling’s long-term promise for both profitability and emissions mitigation in Europe’s emerging circular battery economy.