The U.S. government is trying to find better, cheaper ways to deal with the world’s soaring number of dead or used lithium-ion batteries from computers, phones, and electric cars.

The Energy Department wants to boost the number of recycled lithium-ion batteries to 90 percent from below 5 percent currently, it said Feb. 15.

So it is opening a new recycling center at Argonne National Laboratory to develop more efficient ways of stripping the lithium, cobalt, and other key materials from used batteries. And it offered up to $5.5 million in prizes for developers of promising new lithium-ion recycling technologies.

“These...