The American Energy Storage Association releases policy guidelines for sustainable energy storage supply chains.
China Energy Storage Network News: According to foreign media reports, the Energy Storage Association (ESA) of the United States recently released a sustainable energy storage supply chain policy guide for building energy storage supply chain policies that comply with ESG (Environmental, Social, and Governance).
Lithium ion batteries are mainly deployed in electric vehicles and fixed grid connected battery energy storage systems, but are under review due to potential ESG risks related to labor conditions and environmental impacts in their supply chain.
The American Energy Storage Association cited a study by the Electric Power Research Institute (EPRI), which defined three main issues faced in the lithium-ion battery supply chain:
Overall, 50% of the global cobalt supply comes from Congo. 15% to 30% of cobalt comes from small mines with harsh working conditions and threats to personal safety.
The mining and processing of lithium ore have a significant impact on the environment.
The extraction, processing, transportation, and manufacturing stages of lithium-ion battery production generate a large amount of greenhouse gases.
The guidelines released by the American Energy Storage Association focus on establishing supply chain policy objectives, developing evaluation methods, assessing policy options, compiling and implementing supply chain policies, and measuring and communicating progress towards objectives.
Establish supply chain policy objectives
The American Energy Storage Association states that energy storage system integrators or developers who do not comply with ESG policies need to cover a range of ESG topics to establish their supply chain policy objectives. Energy storage companies that have already established some ESG policies can establish supply chain goals by applying their existing ESG policies to their suppliers.
The guide states that energy storage companies with more targeted ESG goals can extend their goals into the supply chain to maintain consistency, and these companies can also extend their ESG obligations to their suppliers.
Develop evaluation methods
After setting ESG goals, energy storage companies must develop methods to evaluate progress towards achieving these goals. The scope and rigor of supply chain analysis depend on the nature of the target and the position of energy storage companies in the value chain.
Directly observing and evaluating the supply chain of energy storage companies can provide important information, but may require more resources to effectively complete.
On the other hand, energy storage companies relying on reports from intermediate suppliers can reduce the resource burden of evaluating progress towards goals, but it will limit their visibility into the supply chain. However, energy storage companies with robust, reliable, and responsible supply chain policies can enhance the value of responsible supply chain policies throughout the entire supply chain system. These policies rely on internationally recognized established standards and audit protocols, which can simplify the implementation process and reduce the cost of implementing responsible supply chain policies.
Develop and implement responsible supply chain policies
In order to effectively implement responsible supply chain policies, energy storage companies and their internal stakeholders must embed policies into their daily management processes, rather than occasionally referencing or considering them afterwards. They must inform external stakeholders such as suppliers of their policies. These companies should also fulfill their commitments to avoid or reduce the adverse consequences of supplier behavior.
The American Energy Storage Association stated that energy storage manufacturers can also provide a code of conduct for suppliers when dealing with procurement companies, and should include implementation details in the RFP and contract, which are omitted in the commitment and code of conduct. Policy implementation should also include a process of regular or ongoing reconsideration and updating of policies.
Progress in achieving communication goals
Most large listed companies report their ESG progress in their annual reports. However, these reports are intended for ESG investors and may not provide detailed information on compliance with supply chain policy objectives. Responsible supply chain policies that address labor working conditions and local environmental impacts have qualitative results that do not change every year and have low relevance in the annual report format. However, the supply chain changes over time, and supply chain policies should adapt to market changes. Therefore, regular monitoring and reporting are necessary.
Responsible supply chain policies are commonplace in the field of energy storage, but not widespread. Energy storage manufacturers should develop responsible supply chain policies to enhance the safety and sustainability of the energy storage industry and reflect their corporate goals.
Wood Mackenzie stated in a report that the United States installed a record 3.51GWh energy storage system in the third quarter of 2021.
According to a survey report released by Lawrence Berkeley National Laboratory, by the end of 2020, the cumulative installed capacity of solar power facilities deployed in the United States was approximately 460GW. Among them, 34% of solar power facilities (160GW) were equipped with battery energy storage systems.
