The U.S. federal government and local governments offer several incentives for lithium battery recycling to promote sustainable practices and reduce environmental impact. These incentives often come in the form of grants, tax credits, and regulatory benefits.

1. Federal Incentives:

   • Tax Credits: The federal government provides tax incentives for businesses involved in the recycling of lithium-ion batteries under the Energy Policy Act. These may include investment credits or deductions for equipment and facility expenses related to battery recycling processes.

   • The Inflation Reduction Act (IRA) introduces significant regulations for electric vehicle (EV) battery manufacturing to qualify for federal tax credits. These regulations focus on the sourcing and manufacturing of critical minerals and components within the battery. To qualify for the full tax credit of up to $7,500, EVs must meet specific criteria:

     1. Critical Minerals: A portion of the EV battery's critical minerals—such as lithium, aluminum, and zinc—must be extracted or processed in the U.S. or in countries with which the U.S. has free trade agreements. The threshold for the required percentage of domestically sourced minerals starts at 40% in 2023 and will increase by 10% annually, reaching 80% by 2027.
     2. Battery Components: The components of the battery must be manufactured or assembled in North America. Starting in 2023, at least 50% of the battery components must meet this criterion, with this requirement increasing by 10% each year until it reaches 100% in 2028.
     3. Additionally, from 2024 onwards, no tax credits will be available for EVs using battery components manufactured or assembled by "foreign entities of concern," which will likely include nations like China, currently a dominant player in the EV battery market. These measures are part of a broader strategy to boost local production and reduce dependence on foreign supply chains for critical battery materials

     Conclusion: While the U.S. has some mineral deposits and plans for refining capacity, the global mineral distribution and China's dominance make reliance solely on mining challenging. Fortunately, domestic requirements under the Clean Vehicle credit can also be met by recycling battery materials. Currently, the EV battery recycling industry is nascent, mainly processing production scrap rather than end-of-life batteries. However, with the Inflation Reduction Act potentially putting 37 million EVs on the road by 2032, recycling these batteries will become increasingly critical.

   • Grants and Funding: Agencies like the Environmental Protection Agency (EPA) and the Department of Energy (DOE) often offer grants aimed at advancing recycling technology and infrastructure, which include lithium battery recycling initiatives.

   • Read more: US battery recycling receives a federal boost

   • Biden-Harris Administration Announces $4 Billion in Tax Credits to Build Clean Energy Supply Chain, Drive Investments, and Lower Costs in Energy Communities

   • Battery recycling grants go toward research, collection

2. Local Incentives:
   • State-Specific Programs: Many states have developed their own incentive programs to encourage lithium battery recycling. For example, California’s recycling programs often include additional benefits for recycling lithium batteries due to their hazardous material classifications.
   • Regulatory Benefits: Local regulations sometimes offer faster permitting processes or reduced fees for facilities that recycle hazardous materials, including lithium batteries.
   • Read more: Lithium-ion Battery Reuse and Recycling

Figure 5: Circular Battery Value Chain: Expansion of global battery value chain is unlocking significant economic potential across multiple industries [11]