Used Lead Acid Battery Solutions: Business Model Solutions for Lead Acid Batteries in the e-mobility sector in Bangladesh

The lead acid battery is among the oldest and cheapest battery technologies available today which makes them very suitable for use in developing countries such as Bangladesh. In Bangladesh, the use of the lead acid battery is growing, driven by growth in the three-wheeler e-rickshaw and renewable energy generation sectors, in turn leading to a growing demand for refined lead to recondition batteries.  Import taxes on battery imports contribute factor to the widespread use (and re-use) of poor quality batteries and lack of regulatory controls in the sector result in a small industry opportunity for the estimate 1000+ informal recyclers in the country. Smelting of battery lead parts takes place in open fire pits in the ground without any environmental protection, which results in direct lead exposure in the soil. Health and safety issues are numerous as lead is a potent neurotoxin and environmental contaminant and child labour is prevalent in the breaking, sorting and furnace-preparing activities. Children are also more susceptible to deleterious effects of lead pollution. As a result of this widespread practice, Bangladesh is one of the countries most affected by lead pollution worldwide. Initial SMEP-funded stakeholder outreach and consultations have confirmed public sector concern regarding both the seriousness of the threat to the environment and public health as well as the substantial challenges which need to be overcome to reform the battery manufacturing and recycling industry in Bangladesh to address these issues.  (Refer to a synopsis on this issue undertaken by Pure Earth in 2021).

SMEP is supporting Pure Earth, who are working in close collaboration with Georgetown University and the Bangladesh University of Engineering and Technology, with research funding to better understand the underlying factors contributing to the widespread use of low quality batteries over more energy efficient options and to identify solutions to address this problem.

The SMEP funding enables the delivery of empirical research and testing of a business model and micro-finance solutions that will enable a more efficient battery return and recycling model and divert battery recycling from the informal sector to the formal sector.  Ultimately the objective is to also encourage policy and regulatory shifts that support the stronger uptake of better quality lead batteries and high-quality lithium (Li) batteries. The researchers will be testing a business model amongst the garages that rent out the 3-wheeler easy bikes – a primary user group of the lead batteries – and vehicle owners.  The model is designed to encourage the uptake of good quality batteries, promote practices to ensure better battery lifespan and strengthen formal buy-back systems. The business model is to be tested through randomised control trials and will be supported by a model for policy interventions.

For successful uptake, the business model would require policy support and dialogues with relevant government departments.

To achieve the objectives of the project, the following phases of work are planned:

1. Exploratory work and development of economic models: Data will be collected on the existing new and used battery supply chains, including price points for batteries and lead at different parts of the supply chain, the manufacturing and marketing process of counterfeit brands and the lead inputs in them, the existing tax environment for formal businesses in the supply chain and so on. The research team will develop theory-based economic models (supported by this data) for feasible private sector incentives and policy changes to reduce informal battery recycling and create a circular economy for batteries.
2. Piloting the business model to extend battery life and reduce informal recycling: This will be done as part of an ongoing randomised control trial (RCT) study through the provision of microfinance loans for the purchase of quality-assured batteries for credit-worthy garage owners (who rent their vehicles) and a programme to incentivise best practices in prolonging battery life. As part of the business model, batteries will be collected through a formal buy-back process, and diverted to formal recyclers. Better battery performance and longer battery life will lower the long-run cost associated with using the batteries, which in turn will reduce liquidity constraints faced by battery users in the future.
3. Dissemination of findings from the research to broader stakeholder groups and select most promising solutions for further development: This phase of work is expected to inform policy decisions and the development of government-led projects, development of technology-based solutions, and adoption of solutions by businesses.

Once user and business willingness to work with this system is tested, a policy brief will be developed to inform engagement with relevant ministries.

Photo Credit: PureEarth