We’ve heard a lot about batteries these past years, and even more these past months – the critical raw materials they use, their key role in the green transition, and their importance for Europe’s strategic ambitions as global technology exporter.
This month, the EU will publish a Regulation revising its 2006 Batteries Directive with the bold ambition to make EU batteries “the most sustainable in the world”. Scrutinising the full battery lifecycle through the EU’s sustainability microscope, the Regulation is expected to set strict requirements on material sourcing, battery performance, and end-of-life treatment. It will cover all battery types – from the AAs in remote controls and coin/button cells in laptops and smartwatches, to the traction batteries in electric vehicles or industrial batteries used to balance electricity grids – and form part of a broader framework to green the EU batteries sector (see our analysis here). Here are the six big topics that institutions, NGOs, and industry will lock horns on.
1. Responsible sourcing
Due diligence is emerging as a trending topic across all policy files as the EU begins to craft its first-ever mandatory rules. This is particularly true for sectors with large, networked value chains spanning several continents. Batteries, which largely depend on critical raw material imports, are one of the first in line. The Regulation is expected to include extensive due diligence requirements to ensure that the raw materials have been sustainably mined, respecting both labour and environmental aspects.
What’s at stake? The OECD already regulates due diligence through its five-step Guidance which has been widely embraced by industry. Establishing sector-specific due diligence requirements will create an important administrative burden on industry, which supports horizontal approaches instead – such as through the European Commission’s upcoming due diligence framework. The European Parliament, on the other hand, will likely push for more ambition.
2. Second-life applications
One key innovation of the revised Regulation will be to set a framework to keep batteries within EU borders, particularly spent electric vehicle batteries which may be repurposed to serve as electricity storage units. However, doing so requires clarifying the status of those batteries once they reach the end of their first (electromobility) life, as well as clarifying who will be responsible under the Extended Producer Responsibility (EPR) Scheme (dealing with proper disposal). Making electric vehicle batteries fit for electricity storage also implies stricter requirements on battery design – which could put a spoke in the wheel (pun intended!) of Europe’s emerging EV industry.
What’s at stake? A Battery Passport, generally supported by industry, could improve traceability of batteries throughout their lifetime and provide information on the health status of the battery before it enters the second-life market. The EU will also clarify whether second-life batteries can be given end-of-waste status under the revision of the Waste Shipment Regulation. However, this implies that they may be shipped abroad, which goes against the EU’s circular economy and strategic interests. The transfer of responsibility under the EPR is also problematic as it would imply making economic actors liable for a product they did not manufacture.
3. Recycling loops and recovery targets
Looking further down the lifecycle line, the Regulation will seek to improve the recyclability of EU batteries once they become waste. This means setting recovery targets for valuable materials such as lithium and cobalt as well as making it mandatory for all batteries to include a certain percentage of recycled content.
What’s at stake? A closed recycling loop in which recycled batteries – and their precious raw materials – would feed back into battery manufacturing is the EU dream, as it would hit two birds with one stone: reducing our dependence on raw material imports, whilst also ensuring battery recycling results in minimal waste. But for industry, this is not realistic. High-performance batteries require extra pure materials which current recycling technologies cannot guarantee.
4. Information & labelling requirements
To improve recycling efficiencies, the EU plans to connect manufacturers to recyclers by increasing information exchange. The question is, what type of information will manufacturers need to provide, under which format, and who will this be accessible to?
What’s at stake? In a highly competitive industry such as batteries, making public overly detailed information on what materials the batteries contain and how they are built can raise Intellectual Property red flags. The EU will need to identify what information is strictly necessary for recyclers to do their jobs and for consumers to make sustainable purchasing decisions. As such, Battery Passports cannot be a miracle solution to all the EU’s information-sharing woes.
5. Addressing non-rechargeable batteries
Riding on the Single-Use-Plastics wave, the Circular Economy Action Plan announced in March that the Batteries Regulation will seek to gradually phase out non-rechargeable batteries where alternatives exist. For industry, beyond the socio-economic impact of putting a sunset clause on a lucrative business stream, the measure would make it technically impossible for billions of devices to function, for a questionable impact on emissions.
What’s at stake? The EU will need to decide whether an outright ban is the best approach and may opt for a more nuanced measure instead, such as a performance and sustainability standard which would keep the worst-in-class batteries off the market. Industry will face an uphill battle dissociating themselves from the single-use concept (many non-rechargeable batteries can last more than a decade) and convincing policy-makers that non-rechargeable batteries can be beneficial for the environment if used in the right devices.
6. Secondary legislation
Perhaps the biggest battle of all, however, will come after the Regulation has been proposed, debated and stamped. The Regulation is expected to include an army of secondary legislation that will carry discussions through for several years – and this is where the real negotiations will begin, as this is where the direct business impact will be felt. For instance, secondary legislation may look at setting performance standards or defining emission thresholds for each battery type.
What’s at stake? The November proposal is expected to provide a framework within which the more detailed rules, or standards, will be developed. At this time, the key for industry is thus to steer these future rules in the right direction by locking in supportive guidelines and favourable wording. The sheer breadth of technologies and applications which the Regulation will seek to address means that secondary legislation will take years, and substantial resources, to complete.
The Regulation is in final drafting stages following extensive consultations with industry and stakeholders. Meanwhile, the European Parliament is taking preliminary positions on all sectors covered by the Circular Economy Action Plan, including batteries, while the Council is working on similar conclusions due in December. The three institutions are lining up their pieces on the chessboard. The proposal on 18 November will kick off the official legislative process – and that’s when the real game begins.