Canada had big EV battery recycling plans, but without regulations it's the 'Wild West,' expert warns

A few years ago, Li-Cycle was one of the biggest players in electric vehicle battery recycling in North America, providing a roadmap to a circular, sustainable economy for electric vehicles.

But just last month, the Toronto-based company filed for bankruptcy protection in the U.S. and Canada after years of struggling to get a facility off the ground in Rochester, N.Y. The company said the planned hub would have been able to extract lithium and other critical minerals from recycled material to actually build new EV batteries — a crucial step that North American recyclers haven't achieved on a commercial scale yet.

The bankruptcy is a sign, some experts say, that the market can't sustain the industry without proper government regulation providing incentives and structure.

EV batteries wear out over time, and with more than 600,000 EVs on the road in Canada, keeping those batteries out of landfills — and recovering the valuable critical minerals they contain — will be essential in the near future. But regulation around EV battery recycling is virtually nonexistent in Canada, and industry and policy experts say without it, we won't be ready when the waves of EV batteries hit the market.

"There really is no regulatory or policy regime around this in North America," said Mark Winfield, a professor of environmental and urban change at Toronto's York University and co-chair of the school's Sustainable Energy Initiative.

"It's a Wild West," he told CBC News. "The drivers that would generally … provide the sort of stability and the foundation for that kind of business just aren't there."

Recent reports from the International Energy Association (IEA) and the World Economic Forum also emphasize the importance of establishing government regulation to track and ensure demand for recycled materials in EV batteries.

Canada's federal government has laid out a plan to achieve 100 per cent zero-emission sales for passenger cars by 2035, but there's no national framework for EV batteries once they're too old to power a car. There are also no federal regulations around EV battery recycling, and B.C., the only province that had announced impending regulation, now says it's backing away from that plan.

Meanwhile, EV sales are continuing to climb in Canada, with EVs making up 17 per cent of all new cars sold in 2024. Last year, more than 270,000 new vehicle registrations in Canada were battery-powered EVs or hybrid plug-in EVs.

"Every EV that's sold is eventually going to turn into an end-of-consumer-life battery," Winfield said, adding that in a decade, there will be "tens of millions" of end-of-life EV batteries globally.

The European Union set regulations in 2023 that Canada could use as a model, Winfield says, including requirements for recycled materials in new batteries starting in 2031, and expanded responsibilities for producers to monitor the lifespan of batteries.

In a November 2024 report on how to scale up critical mineral recycling, the IEA recommended providing clear, long-term regulations which it noted are "crucial for instilling confidence in investors and recycling companies."

Maria Kelleher, an environmental consultant who previously worked with Environment and Climate Change Canada on managing EV battery recycling, noted certain regulations would spur investment and help fledging projects scale up commercially in Canada and North America.

"If the government says you have to have recycled content [in new batteries], it provides the recyclers with certainty, because the companies buying the product have to buy their product," she said.

"So it does drive the market."

Recycling lithium-ion batteries that power EVs happens in two stages. First, batteries are shredded into a substance called black mass, which contains critical minerals like cobalt, nickel and lithium. Then, minerals are extracted from black mass, refined and sold to make new batteries.

This step is where Kelleher says recycling can become truly lucrative

"The key is to sell into the battery supply chain," she said, noting that the recycled material extracted from black mass needs to be consistently high-quality for manufacturers to use it. "If you can do it, it's fantastic."

Lithion Technologies in Quebec and B.C.'s RecycLiCo Battery Materials Inc. are among the recycling facilities in Canada that have started producing black mass from EV batteries in recent years.

And Ontario-based Electra Battery Materials has been operating a successful recycling trial since 2022, but hasn't reached commercial production yet. They're aiming to build a new plant in a joint venture with Three Fires Group in northern Ontario that they say could begin recycling EV batteries in 2027.

But extracting minerals from black mass to make new batteries is mostly concentrated overseas, especially in China and south-east Asia where the EV battery recycling industry has grown up alongside manufacturing.

Kelleher believes there's still plenty of time for the market to find its footing before regulation is needed in Canada.

EV batteries were originally predicted to last eight years, but now, they have an estimated 12 to 15 year lifespan in vehicles. They also retain 80 per cent of their capacity after use in vehicles, and can last up to 10 more years when repurposed for a second-life, according to industry reports and experts.

That's what Vancouver-based Moment Energy is trying to achieve by partnering with automakers and dealerships to repurpose old EV batteries for use in energy storage systems.

Samreen Rattan, Moment Energy's co-founder and chief operating officer, told CBC News they're already seeing demand for repurposing ramp up, and expect the first peak to start in 2030.

"In order for this to truly be streamlined, I think having a federal policy would go a long way," Rattan said, adding that guidelines are necessary so the repurposing step isn't skipped.

Ultimately, Kelleher says regulations aren't necessarily needed until the EV battery recycling market develops a more secure supply, something she says "won't happen until you have scale, until you have enough batteries at end-of-life."

But Winfield argues we need to move now in order to have the infrastructure to deal with the spent batteries poised to enter the recycling market in waves.

Based on yearly new vehicle registrations of EVs in Canada since 2011, and assuming a 12-year lifespan within a vehicle and a 10-year secondary use lifespan, there will be at least 93,000 EV batteries that require recycling by 2040, with a further 500,000 ready between 2040 and 2045.

"I don't think there's any excuse for not getting ahead of this," Winfield said. "It would be a monumental lack of foresight."

Environment and Climate Change Canada (ECCC) told CBC News in an emailed statement that managing EV batteries at their end-of-life is up to provinces and territories.

ECCC pointed to B.C.'s 2021 announcement that it would add EV batteries to its extended producer responsibility program by 2026, which would require EV automakers to arrange for their batteries to be recycled or reused.

Except B.C. told CBC News that it will no longer be adding EV batteries to the program by 2026.

The provincial Ministry of Environment and Parks said the change came after consultation "with industry and other impacted parties" and in light of "significant global changes in the rapidly evolving electric vehicle (EV) battery market." It also said it "may explore further consultation," but did not provide a new timeline for when regulation might be considered.

WATCH | Canada's push to figure out what to do with EV batteries after they die:

There's a push in Quebec to find new technology that could help recycle materials found in rechargeable batteries, like those in electric cars and e-bikes.

ECCC also pointed to a voluntary battery recovery program initiated in Quebec in 2023. This program allows consumers to reach out to partnering automakers that will pick up drained batteries and arrange next steps.

Quebec considered adding EV batteries to an extended producer responsibility program in 2021, but after receiving feedback from the industry, the province said it dropped the idea. The province also held two workshops in 2023 and 2024 to explore "whether and how this sector should be regulated," according to an emailed statement.

Ontario, which has one of the highest rates of EV adoption in Canada told CBC News it doesn't have plans to include EV batteries in its producer requirements because they're "diverted from landfills through voluntary initiatives." The province's Ministry of the Environment, Conservation and Parks said it would "continue to monitor the management activities" to see if regulations should be introduced in the future.

Automakers and industry players in Canada say they are already arranging recycling on their own — most offer country-wide recovery of EV batteries, and many have partnered with recycling plants for battery shredding. However, without oversight, the success of these initiatives is unclear.

Winfield says the government responses are "really quite shocking," and show that the situation is even worse than it was in 2023, when he first worked on a report assessing the lack of regulation.

He wants to see Canada follow the lead of the European Union, which in 2023 added requirements for a carbon footprint declaration for EV batteries, expanded producer responsibilities and introduced a "battery passport" to establish a transparent digital record for the life cycle of every single battery.

It also imposed minimum requirements starting in 2031 for how much recycled content must be included in new batteries.

"That provides a framework of stability for the sector, a set of rules that say, 'Yes, there's going to be a need for these kinds of services, there are going to be rules around them,' " Winfield said.

"Without a regulatory framework around this, there is no viable business model."