The U.S. Department of Energy (DOE) continues to support the growth of the country’s battery supply chain as efforts to combat climate change grow. At the tail-end of 2023, the DOE announced up to $3.5 billion in funding for companies that produce batteries—the most dominant type being Lithium Ion (Li-ion) batteries. Li-ion batteries are the primary battery type for both electric vehicles (EVs) and clean electricity storage. Though the end goal of this push is to reduce pollution that contributes to climate change, Li-ion batteries still pose significant environmental risks, the predominant of which being fire risks. Fire risks are present in both the production and recycling of Li-ion batteries, and as these types of plants continue to emerge across the U.S with the government’s support, it’s important to understand the different hazards associated with these operations. 

Wherever Li-ion batteries are being manufactured, used, charged, stored, repaired or maintained, the following risks are present:

• Defective or damaged cells within a battery pack can spontaneously ignite into intense, self-sustaining fires, which can spread to other battery cells/packs, or nearby flammable items and building materials.
• Li-ion battery fire debris, residual, and extinguishing fluids can contaminate surface soils and surface waters with metals, perfluorinated compounds and combustion-related polyaromatic hydrocarbons (PAHs).
• Smoke damages, particularly for fires inside buildings.

Many of the potential risks, contaminants and mitigation measures are the same or similar to conventional fossil fuel fire risks. However, incidents involving Li-ion batteries also impose the added risk of the release of potentially toxic gases due to the chemicals that compose these batteries. According to the National Library of Medicine, though the fire itself and the heat it generates are a serious threat in and of itself, the risks associated with gas and smoke emissions from malfunctioning lithium-ion batteries pose a potentially larger threat—especially in confined environments where people are present. Additionally, with Li-ion batteries being a newer technology, local fire departments often have less experience extinguishing battery fires, which could potentially exacerbate conditions and increase costs. 

BESS are installed for two main purposes:

1. Electric grid energy storage and distribution, and
2. On-site temporary back-up power

Electric grid energy storage BESS—and other storage methods—are a key part of renewable energies relying on intermittent sources, like wind and solar. BESS store electricity when electricity demand/price is low (e.g. midday) and sell electricity to utilities when electricity demand/prices are high (e.g. evening). They operate similarly to fossil-fuel “peaker” power plants, helping to balance the grid and providing grid resiliency to disruptions from natural events. BESS typically have built-in fire detection and suppression systems. When possible, they’re installed with buffers from surrounding structures to further reduce fire risk. 

Lithium Iron Phosphate (LFP) is a specific type of Li-ion battery preferred for BESS applications. LFP battery components have a lower flashpoint, and therefore lower risk of spontaneous ignition than other common Li-ion battery types. LFP batteries are common in newer BESS installations, however some BESS still use other Li-ion battery types that are a higher fire risk, so it is important to confirm the specific Li-ion battery type with your insured. 

While U.S.-based battery recycling operations have traditionally been uncommon and smaller scale, the industry is expected to grow with the rising demand for battery raw materials and the government’s support in securing domestic resources. Just this past April, Green Li-ion, a lithium-ion battery recycling technology company, opened its first commercial-scale plant in Atoka, Oklahoma. Meanwhile, construction continues on another $65 million Li-ion battery recycling facility by SK ecoplant and Ascend Elements. As we see more of these recycling plants being developed to support the growth of Li-ion battery production in the U.S., it is crucial to know the environmental risks that come with it.

Li-ion battery recycling operations face similar fire risks as those that come with the production of these batteries. However, they also carry additional risks related to chemicals and waste streams associated with breaking down cells and separating valuable elements. Batteries for recycling are first de-energized by discharge in a safe, controlled manner. The fire risk is high during this initial battery storage and de-energizing. After the batteries are deenergized, the fire risk is lowered, but the recycling process introduces other chemical risks.

De-energized batteries are physically or chemically broken down into a material called black mass, which contains a mixture of Lithium, Nickel, Cobalt, and other metals. The black mass is processed with various chemicals to extract/separate the valuable metals at a high purity for use in new batteries. These extraction and separation processes typically generate various wastes and emissions, including municipal waste, federal RCRA solid wastes, wastewaters requiring treatment, permitted discharges to sanitary sewers or streams, and permitted air emissions. 

With all things considered, fire, smoke, debris, and extinguishing fluid run-off are significant environmental concerns when it comes to Li-ion batteries. Great American’s Environmental Division has the underwriting technical knowledge and claims expertise to provide pollution liability coverage for your client’s BESS, Li-ion manufacturing, and recycling facilities—from construction through operation of the facilities. Policies typically include coverage for clean-up costs of pollution conditions on and beyond the covered location. In the event a pollution condition impacts third parties, the policy typically provides bodily injury and property damage coverage. Understandably, incurring large costs and down-time due to a pollution event would impact the bottom line of any company. To address this, Great American’s coverage also includes business interruption protection, which helps the business recover from a pollution event that causes a suspension of operations. 

Along with the pollution liability coverage, Great American Environmental provides policyholders easy access to our Response & React Program. This program is designed to help policyholders quickly and efficiently navigate a pollution incident response plan from the moment a fire or spill occurs to the final site approval.

Randy Copenhaver is a Senior Loss Prevention Consultant for Great American Insurance’s Environmental Division. In his role, Randy utilizes his specialization in site remediation to provide expertise in environmental evaluation. Additionally, he supports underwriters in risk identification while crafting policies. Accumulating over 18 years of geology, environmental consulting and project management experience, Randy brings valuable experience to our team. He is based out of our Exton, Pennsylvania main office. 

Patrick Mahoney is a Divisional Vice President of Underwriting for Great American Environmental Division. In his role, Patrick specializes in underwriting Contractors pollution, Pollution and Professional Premises Pollution Liability policies while working directly with the national underwriting team as a referral resource for all of the division’s products. He is based out of the Exton, Pennsylvania office. 

References: 

1.   Ecotoxicity Evaluation of Fire-Extinguishing Water from Large-Scale Battery and Battery Electric Vehicle Fire Tests, by Maria Quant, Ola Willstrand, Tove Mallin, and Jonna Hynynen,  Department of Fire and Safety, RISE Research Institutes of Sweden, March 13, 2023. Link: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10061927/

2.  4 Benefits of LFP Batteries, by Tessa Di Grandi, Visual Capitalist, May 29, 2023. Link: https://www.visualcapitalist.com/sp/4-benefits-of-lfp-batteries/ 

3.  US Department of Energy Alternative Fuels Data Center website, various publications. (https://afdc.energy.gov/fuels/electricity_basics.html )

4.  Toxic fluoride gas emissions from lithium-ion battery fires (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5577247/) 

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