At a glance
Canada’s Ventures to Value Chains: Energy Storage for Transportation, by Francine Harris and Alyssa Kelly. Foresight Canada, Dec. 3, 2024.
Energy storage is crucial to a complete energy transition. It is essential for both decarbonizing transportation, which is responsible for some 22 per cent of global greenhouse gas emissions, as well as integrating renewable energy into grids. This report by Foresight Canada, a cleantech innovation and adoption accelerator, provides a detailed overview of Canada’s energy storage ecosystem for transportation. It says Canada has emerged as a global leader in the lithium-ion battery supply chain, while its adoption rate for zero-emission vehicles (ZEV) is also growing faster than in the United States. The report analyzes 109 companies across the energy storage value chain to identify innovation clusters and trends that highlight Canada’s strengths, while also warning that gaps such as Ontario’s lack of incentives have been slowing ZEV adoption. These insights aim to guide targeted programming, research and development, as well as funding to maintain Canada’s competitive edge. It also offers insights for other countries looking to improve energy storage supply chains and accelerate ZEV adoption.
Key findings
- Canada moves up: Canada surpassed China in 2014 to take the No. 1 spot in BloombergNEF’s lithium-ion battery supply chain ranking, which considers countries’ potential to create a “secure, reliable and sustainable supply chain.” Strong policy support, raw materials and excellent ESG performance were among the factors that placed Canada at the top of the list.
- Strong ZEV adoption: Canada’s market share of ZEVs is increasing more rapidly than in the U.S., driven by robust provincial and federal incentives.
- Quebec leads in ZEV registrations: By early 2024, Quebec accounted for 47.6 per cent of Canada’s new ZEV registrations. The report attributes this to a combination of supportive and effective policies and abundant natural resources.
- Innovation clusters thrive in Ontario, Quebec, and British Columbia: These provinces host 76 per cent of the identified companies. British Columbia excels in hydrogen fuel cells. Ontario leads in charging solutions. Quebec’s strength lies in innovation in battery energy storage for transportation.
- Battery recycling and reuse remain underdeveloped: Although recycling technologies are emerging, only three companies focus on “second life” battery reuse. End-of-life lithium-ion batteries are hazardous waste and expanding recycling options is fundamental as battery demand grows.
- Canada leads in hydrogen fuel cells: Nine Canadian companies are working on hydrogen fuel cells. While adoption lags behind EVs, hydrogen fuel cells offer advantages for heavy-duty, long-distance transport such as longer range and higher energy density. However, limited infrastructure and high costs constrain this technology.
Take a look
Source: Foresight Canada (2024), Canada’s Ventures to Value Chains: Energy Storage for Transportation
Bigger picture
The report maps out 109 companies from across the energy storage value chain for road, marine and rail transport in Canada. The value chain spans midstream (materials and components), downstream (system manufacturing), operations and end-of-life solutions like recycling. While the authors included non-battery energy storage in the research criteria, 96 of the companies focus on batteries, predominantly lithium-ion — the most common form worldwide. The largest representation in the dataset is in system manufacturing (39 companies) and charging and refueling (34). Most companies focus on road transportation, which accounted for 84 per cent of Canada’s transportation emissions and 21 per cent of total emissions in 2019. The report also addresses marine technologies, with potential for growth in battery-powered and hybrid vessels in the hard-to-abate shipping sector. When it comes to rail, which has comparatively much lower emissions, decarbonization will more likely come through efficiency improvements, low-carbon fuels and using overhead wires than from batteries.
Regionally, Quebec leads with the most distributed value chain, abundant natural resources like lithium and nickel and cheap renewable energy. Global stakeholders should take note that the province’s economic development strategy focuses on leveraging minerals, developing manufacturing capacity for components and advancing recycling technologies. However, a substantial reduction in the amount of provincial subsidies available to help cover the cost of buying an EV or hybrid in 2025 could hinder progress. The report notes that Ontario’s lack of provincial incentives has slowed its ZEV uptake, even as the province is working to create a supply chain for EV battery manufacturing.
The report also stresses the importance of circular economy principles, such as battery reuse and recycling, to reduce resource extraction and support grid storage. This has implications beyond the transportation sector that forms the basis of this report. It also underscores the need for coordinated efforts to address gaps in midstream battery manufacturing and explore opportunities in underrepresented areas like marine electrification. It also raises important questions about equitable access to clean transportation technologies, particularly for remote or underserved communities. As demand for clean energy storage rises, the insights and strategies outlined in this report are vital for steering a just and effective global energy transition.
Challenges and opportunities
Key barriers to energy transition progress in energy storage for transportation:
- Midstream production bottlenecks: Canada’s capacity to refine battery-grade materials and produce components is underdeveloped. This is creating critical gaps in the supply chain.
- Limited end-of-life solutions for energy storage systems: Recycling and battery reuse technologies are insufficiently scaled to meet increasing demand driven by ZEV adoption. This has implications for supplying the rare minerals needed for batteries and the environmental impact of battery technologies.
- Uneven regional infrastructure and adoption: Rural and remote areas face significant infrastructure gaps for ZEV charging and energy storage.
- High costs and regulatory barriers for hydrogen: The expensive infrastructure required for hydrogen deployment, combined with underdeveloped regulatory frameworks, hampers its integration into the market.
- Policy uncertainty and incentive reductions: Planned reductions in ZEV incentives, such as those in Quebec, threaten to slow adoption rates and undermine recent progress.
- Technology readiness for niche applications: Emerging battery chemistries and energy storage solutions for marine and rail sectors are still in early development stages. This delays broader commercialization.
To address these challenges, the report recommends:
- Expanding midstream manufacturing capacity: Policymakers and industries should prioritize domestic investments in refining battery materials. They could strengthen midstream capabilities through targeted subsidies and public-private partnerships.
- Enhancing recycling and reuse initiatives: Scaling innovations in automated recycling technologies can improve material recovery rates. Developing extended producer responsibility regulations could incentivize battery recyclers to invest in advanced processing technologies.
- Regional collaboration on innovation hubs: Establishing collaborative hubs that leverage strengths from leading provinces like Quebec and British Columbia can foster innovation in underrepresented regions.
- Supportive policy frameworks for emerging sectors: Clear regulatory environments are essential to harness the potential of hydrogen and non-battery energy storage technology. Introducing funding for hydrogen infrastructure can streamline permitting processes for fuel cell technologies.
- Boosting second-life applications for batteries: Design improvements aimed at facilitating battery reuse could significantly extend the utility of energy storage systems. Moreover, encouraging manufacturers to adopt standards for design-for-reuse can aid this effort.
- Targeted incentives for rural and remote areas: Expanding federal programs like ChargeON to include rural and Indigenous communities can help bridge infrastructure gaps in underserved regions.
- Driving innovation in marine and rail electrification: Grants for research and pilot projects in these niche markets can diversify Canada’s energy storage applications while aligning with global trends.
In their own words
Improving battery recycling technologies not only contributes to meeting raw material needs but also to enabling a more sustainable battery lifecycle, which will be required to support the expected growth in the coming years.
Canada’s Ventures to Value Chains: Energy Storage for Transportation, by Francine
Harris and Alyssa Kelly, Foresight Canada, Dec. 3, 2024.
Final thoughts
The report is significant for revealing the strengths and weaknesses of Canada’s energy storage supply chains and impressive ZEV adoption rate. Its detailed map of the sector is useful for stakeholders in Canada who want to identify weak areas that need support, and strength areas with growth potential. For stakeholders elsewhere, it is a source of information on what ingredients help to build a successful supply chain and encourage ZEV uptake, but also what actions to avoid — such as repealing incentive policies.
The report could have looked at more ways to develop non-battery energy storage technologies, such as pumped hydro and thermal energy storage. The authors could also have included more analysis of social equity impacts, particularly on integrating underserved communities into the transition. A more comprehensive exploration of global supply chain interdependencies, particularly with Asia and Europe, would improve its analysis, as no one country is self-sufficient in battery production. Following the collapse of Europe’s largest battery producer Northvolt, European policymakers should use Canada’s example to design a new, competitive, homegrown battery supply chain that overcomes difficulties such as competing with established players in Asia. Similarly, the U.S. could look to its northern neighbour for pathways to grow domestic ZEV adoption rates, although this is unlikely to be a priority for the incoming administration.
Download the full report originally published by Foresight Canada on Dec. 4, 2024.
