Canada has moved to the top of the list in an annual ranking of countries’ preparedness to build out their supply chains for lithium-ion battery manufacturing.
The fourth annual assessment by BloombergNEF “marks the first time China has not claimed the number one position,” BNEF writes. It attributes the shift to Canadian advances in manufacturing and production and (relatively) strong performance on environment, social, and governance (ESG) criteria.
“While China still has the strongest established supply chain, the increasing importance of sustainability across the life cycle of lithium-ion batteries means the region must take a more proactive approach to tackle ESG issues to benefit its supply chain in the long term,” the release states. “Overall, North America’s supply chain has been excelling due to strong policy commitment and implementation, with Canada and the U.S. claiming two of the top three positions” and Mexico improving nine points to 19th among 30 countries.
While “Canada produces barely any batteries today,” Bloomberg still “singled it out as the best placed of the 30 countries it monitors to participate in future global battery supply chains” over the next six to 10 years, the Globe and Mail explains. That assessment was based on recent, major investments by auto or battery manufacturers Ford, Stellantis, Volkswagen, LG Energy Solutions, and Umicore, powered by tens of billions of dollars in federal or provincial subsidies.
“Strong integration with the U.S. automotive sector means Canada is also a big winner of the ‘friendshoring’ ambitions of the Inflation Reduction Act,” BNEF adds. “The country’s position in BNEF’s ranking is propelled by policy commitment at both the provincial and federal level.”
The Globe says the BENF ranking is based on five criteria of interest to global investors: raw material stocks, production capacity for battery cells and components, battery demand from local markets and “friendly” foreign customers, innovation and infrastructure, and ESG credentials.
Electric Autonomy Canada says the country’s sixth-place ranking for ESG makes it the only North American country in the top 10 for that criterion. “Canada also has the potential to move up in the ranking if it increases the federal carbon tax and focuses on better ecosystem management.”
This year’s assessment “doesn’t mean that Canada is better overall than China,” BloombergNEF’s head of metals and mining, Kwasi Ampofo, told the Globe. “What we’re saying is that within the lens of 2023, Canada performed better than China.”
By that same token, he said the rankings could change in future years. “Across all the metrics, it’s a race where in a year where you decided to do nothing, other people bypass you.”
Electric Autonomy says the assessment identifies some vulnerabilities for Canada, including low battery prices and the need for even more financial support to make projects more cost-competitive.