why loose lithium batteries aren’t allowed in hold luggage, but electronics containing lithium batteries are allowed
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To the main answer to your question is [thermal runaway.](https://ul.org/research/electrochemical-safety/getting-started-electrochemical-safety/what-thermal-runaway#:~:text=Thermal%20runaway%20is%20one%20of,or%20particulates%20(violent%20cell%20venting))
Basically all lithium ion batteries are in a very high energy charge and have the potential to overheat when stressed too much and can catch fire which can spread rapidly. Because of how the fire is produced, they can overwhelm many of the fire suppression systems in airplane cargo compartments since those systems were designed with non-lithium ion battery fires in mind decades ago. These fires also aren’t as reliant on oxygen to burn like traditional fires. Aircraft fire suppression systems use a chemical called halon which basically displaces oxygen and suffocates the fire out. Lithium ion fires will just continue to burn.
When the batteries are in devices, their contacts are connected to the circuit and are less likely to spontaneously ignite, however [some ](https://en.wikipedia.org/wiki/Samsung_Galaxy_Note_7#%3A%7E%3Atext%3DBattery_defects_caused_many_Note%2Cdue_to_these_repeated_incidents.?wprov=sfla1) [devices](https://eridehero.com/hoverboard-recalls/) have had well known instances of catching fire and airlines won’t transport them. When the batteries are loose, the contacts are exposed and if they touch and get too stressed the opportunity for them to short out and catch fire is very high. There was a [UPS flight](https://en.wikipedia.org/wiki/UPS_Airlines_Flight_6?wprov=sfla1) that crashed because of loose batteries being shipped and autoignited leading to thermal runaway.
Now if lithium ion batteries are so bad, why can I carry them in my carry on in the cabin instead of the cargo hold?
Well, when a fire ignites in the cargo compartment there’s 1) no way to know what kind of fire it is and 2) the fire suppression system is not designed to put out lithium ion battery fires. The solution? Remove the batteries and carry them with you in the cabin. If they ignite, [the flight attendants have procedures to isolate the device](https://medium.com/faa/fighting-fire-with-videos-30d59034a001) and contain the fire’s spread.
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