By passing amended proposals for the EU Battery Regulation, the EU institutions have improved on the original draft and raised expectations. With further refinements, the regulation will provide the basis for a sustainable, circular batteries value chain in the EU and globally.
Tilmann Vahle and Achim Teuber explain what to expect.
Battery electric cars and trucks are key to decarbonizing road mobility in the coming decades. To ensure that their production, use and disposal are managed as efficiently as possible, and with minimal footprint for the environment and people along the entire supply chain, the EU Commission proposed a draft Battery Regulation in late 2020.
Recently, the EU Parliament and Council adopted revised versions; a vote on the final text is expected by June. If passed as expected, it will be an innovative regulatory step-change for sustainable economies. Key amendments have improved the original draft in crucial points, while there is still time to include three more crucial elements in the regulation and build a circular batteries system.
Keeping innovative elements
Crucial regulatory innovations include the requirement to report lifecycle CO2 footprint per battery model, batch and battery plant, ushering in a new era of detailed carbon accounting. The first digital product passport – and a prototype for other sectors – is expected to support not just the workings of the regulation, but also a range of valuable economic activities by providing crucial data to consumers, governments and businesses. Additionally, it provides for material-specific recycling quotas to ensure material circularity and high-value metal recovery. Lastly, the implementation process of a regulation, rather than a directive, guarantees greater consistency and speed when it is transposed into national law.
More ambitious
The European Parliament’s draft is more ambitious than the Commission’s on mandated recyclate contents, recovery targets, recollection, due diligence and the review process of the regulation. For example, recycling quotas would require sellers to ensure that their batteries are recycled efficiently: by 2028, all key battery materials would have to be recovered at rates of over 90%, bringing a greater quantity of metals back onto the market.
More comprehensive, more global
Both Parliament and Council refer to batteries “for light means of transport”, covering bikes and scooters. This is welcome: it reflects the importance of ensuring the safe and sustainable handling of growing volumes of batteries in other modes of transport. The Council further introduced new rules on trans-boundary movement of end-of-life and waste batteries, which could minimize the risk of illicit exporting and dumping of waste batteries outside the EU.
More circular, more systemic
Parliament has introduced requirements to apply higher-value circular strategies first, whereby all batteries must be tested for refurbishment, remanufacturing and ‘second life’ potential before recycling is an option.
Moreover, Parliament’s draft foresees that batteries should be enabled for vehicle-to-grid and smart charging. According to IRENA, this technology could achieve up to 90% savings on the costs of charging infrastructure,[1] save up to 1Gt CO2e per year by 2030 globally by allowing more renewable energies in power grids[2] – and provide additional value of up to €2,000 a year, per vehicle.[3] The Commission draft lacks these elements, and thus misses the chance to incentivise the automotive value chain to truly assimilate circular manufacturing.
More precise
The regulation’s industry-ready terminology cuts out ambiguities and provides the basis for a consistent application of the rules. For example, ‘remanufacturing’ means “to restore the battery capacity to at least 90% of the original rated battery capacity” – a realistic target to reflect ‘battery fade’. And differentiating between ‘used’ and ‘waste’ batteries, based on proofs of testing and state of health, should help prevent illicit false labelling and dumping.
The last decision-making step in the process is the Trilogue, a negotiation between Parliament, Commission and Council. For the regulation, this is an opportunity to address three gaps.
Set re-collection targets
Huge numbers of vehicles globally end up as scrap or waste, or are lost to the system entirely, along with their materials and components.[4] It is uncertain how this develops for BEVs. Incentives will be needed to foster complete re-collection and high-quality treatment of old batteries. A Dutch-style model of vehicle deregulation, applied specifically to batteries, could help, as could a deposit, certificate or buy-back monetary scheme from the original equipment manufacturers.
Re-define recycling
Think-tanks like CEID[5] are calling for two key changes to more accurately define recycling and according targets. First, the definition of ‘recycling’ – which is currently vague – should be specified to cover the entire process from dismantling of a battery to the finished recycled battery materials. Second, recycling targets should be complemented by quality criteria for the recyclates. Only readily useable, input-grade materials should qualify for the mandated quota. This would prevent downcycling and incentivise high-quality material recovery.
Reward the low-carbon front runners
Building on the newly required accuracy and transparency on value chain carbon data, the regulator should create incentive systems that reward manufacturers, within or outside the EU, which produce batteries that contain less embedded CO2 and count more towards climate targets.
The European institutions appear to have succeeded in drafting a regulation to shape a more competitive, more sustainable economy around the life cycle of circular batteries. With the addition of the three proposed amendments, the EU would set the European battery value chain on a truly circular pathway that delivers both social and economic benefits.
[1] IRENA 2018 technology outlook smart charging
[2] GBA 2019 Vision for sustainable battery value chain
[3] Elli 2022 Position paper bidirectional charging
[4] WEF Circular Cars Initiative 2021, Paving the Way
[5] Circular Economy Initiative Deutschland (CEID) 2020, resource efficient battery cycles
