Problem Definition: Bangladesh suffers from massive lead emissions from its circular Lead-Acid Battery (LAB)
industry. Informal smelting of scrap lead from Used Lead-Acid Batteries (ULAB) is especially emission-intensive. Bangladesh has millions of 3-wheeled EVs powered by LAB, which are the dominant source of scrap lead, though LAB have various other uses.
Method and Results: In a partial equilibrium model of the circular LAB industry with competition between formal and informal processes, we derive a fluid approximation for the rate of lead emissions per EV. (We use “EV” to refer to a LAB user, while considering all LAB use categories.) The lead emissions per 3-wheeled EV in Greater Dhaka amount to approximately 30 kg of lead annually. Using the fluid approximation, we demonstrate that policies considered by the Bangladesh government could strictly increase lead emissions. We derive policy that is guaranteed to reduce lead emissions and generate government revenue.
Policy Implications: We recommend a smelting fee scheme with a fee imposed on every LAB and a subsidy per ULAB processed by a qualified formal smelter. An alternative approach is to increase the import tariff on lead and support ULAB collection for a qualified formal smelter. The smelting fee scheme and the alternative approach reduce lead emissions by favoring formal processes. The smelting fee scheme generates net government revenue whereas, depending on model parameters, the alternative approach may be prohibitively costly. Simply increasing the lead import tariff, reducing the tax on formally-manufactured LAB, or improving consumer protection could increase lead emissions. This paper is inspired by field research and collaboration with government ministers in Bangladesh, yet relevant for other developing countries suffering from lead emissions from their LAB industries.