36 Centre for Economics and Business Research 6. Non-monetised impacts The proposed bans are driven by the desire to demonstrate and make an effective contribution to the tackling of widely held global and domestic environmental concerns. The use of DfT values for GHG and air quality emissions conveniently summarises the government’s assumptions on the implied environmental and health impacts of the proposed bans. In contrast, there are a wide range of costs, over and above those assessed in monetary terms above, that are much more challenging to capture and summarise. These are now considered below. These would all serve to further adversely impact the benefit-cost ratio of the proposed bans. However, it is important to distinguish between emissions deriving from the process of driving and direct production and those emerging from other areas. Whilst we account for production emissions, there is also other environmental degradation and human welfare losses as those who work in mines are often treated poorly and work in in oppressive conditions. They serve to further worsen the value for money of the proposed ban. Impact of international demand for raw materials and the associated environmental damage. The main raw metals used in the production of electric vehicles are lithium, nickel, and cobalt. Analysts believe there is a potential shortfall in the global mining capacity required to extract these minerals to manufacture sufficient batteries to meet projected EV demand.45 Industry forecasters expect a very substantial growth in the mining of graphite, lithium, nickel, and cobalt. An additional 384 new mines may be needed by 2035 to supply all those new EVs assesses industry forecaster Benchmark Minerals46. In early March 2022, the price of nickel hit headlines as prices quoted on the London Metal Exchange (LME) surged to over $100,000 a ton on fears over constricted Russian supply and the wider consequences of the war in Ukraine. According to industry research company by Benchmarking Mineral Intelligence, since January 2020, lithium prices have increased by over 700%, nickel by 250% and cobalt by 100%. The rising cost of raw materials needed for batteries such as lithium and nickel has prompted cell suppliers to push up prices to car makers, which are then passing on costs to buyers. 47 Sam Jaffe, who is a vice president of battery solutions at E Source, a research firm in Boulder, Colorado argued that “the tsunami of demand is coming…I don’t think the battery industry is ready for it”, predicting that EV battery costs could spike by 22% by 2026 as raw material shortages drag on. 48 In such a scenario, EV vehicles could remain significantly more expensive than equivalent ICE vehicles. Moreover, the increased demand for these materials 45 https://www.linklaters.com/en/insights/thought-leadership/electric-vehicle-batteries/powering-the-future/sourcing-rawmaterials#:~:text=Lithium%2C%20nickel%20and%20cobalt%20are,used%20to%20make%20EV%20batteries. 46 Dig This: The Shift To EVs Requires A Massive Expansion Of Battery Metal Mining (forbes.com) 47 https://www.autocar.co.uk/car-news/business-tech%2C-development-and-manufacturing/how-global-raw-materials-costs-are-affecting 48 https://www.cnbc.com/2022/05/18/ev-battery-costs-set-to-spike-as-raw-material-shortages-drags-on.html
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