Everything important about the EU Battery Regulation

In 2020, the European Parliament and Council agreed to review the existing Directive 2006/66/EC, also known as the Batteries Directive, in light of the changes in the market related to batteries and waste batteries. In this article, we look at why this is an important development and what it means for companies.

Why the Batteries Directive is important and why it’s due for a review

The Batteries Directive was proposed in 2006. It regulates the management of hazardous wastes from the manufacture and disposal of batteries. The objective of the Batteries Directive is to protect the environment and human health from the potentially adverse effects of battery chemicals if they become exposed. 

The Directive covers the maximum allowable quantities of certain chemical and metal content in batteries, proper disposal of battery waste and its collection, and the financial responsibilities for battery waste management.

Now with the climate agenda at the forefront of the bloc’s priorities, as well as rapid digitalisation and technological adoption, the Batteries Directive is more relevant than ever. Batteries are in high demand to fuel our electronic gadgets, and the mass feasibility of electric vehicles hinges on energy storage and battery performance. 

With nations committed to net zero and approximately 30% of global GHG emissions arising from transportation, batteries are critical in facilitating the transition to clean energy. A key feature of this net-zero economy is certainly electric vehicles that tackle climate change’s transport problem. 

While electric vehicles grow in popularity, they are creating higher demand for vehicle battery production. Considering the ambitious EU Green Deal, the circular economy action plan, Europe’s new industrial strategy, and the sustainable and smart mobility strategy, there is immense pressure for Europe to meet its green goals (which include cutting 90% of transport-related GHG emissions by 2050) – and batteries lie at the heart of it. 

Since the Batteries Directive was proposed in 2006 and came into force in 2009 in Germany, the market for batteries has grown to include new makes and models for different purposes such as e-bikes and e-scooters. With external technological developments and changes in battery applicability, it makes sense to review the directive now for relevance. 

Changes in the proposed EU Batteries Regulation

In assessing the EU batteries directive, the Commission identified areas where the policy fell short in practice. Essentially, the key shortcomings were:

• Exclusive focus on end-of-life battery management, leaving out many aspects of the battery value chain that contributes significant environmental impact, such as its carbon footprint and sourcing of raw materials.
• Lack of provisions to incentivise the production capacity of sustainable batteries
• Sub-optimal collection and recycling of batteries due to lack of infrastructure and high capital costs

As a result of the assessment, 13 measures were proposed to tackle these challenges. These measures can be broadly summarised as the following:

• Management of batteries throughout their life cycle
• Develop economies of scale through coordinated investment for recycling end-of-life batteries
• Harmonisation of a regulatory framework that will ensure the applicability of the rules to all battery types and operators

The Commission proposed to convert the Directive into a Regulation, which has legal implications for enforcement. A regulation will impose the same obligations for all Member States of the EU and it will transcend national laws to ensure businesses are directly liable for compliance.

The Batteries Regulation applies to all types of batteries being placed on the EU market. The proposed regulation has some very specific requirements as to the collection and recycling of batteries, as well as their performance, durability, and emissions footprint. 

Under an Extended Producer Responsibility, all operators placing batteries on the EU market excluding SMEs are required to ensure they meet higher collection targets.

Some of the targets are:

• Collect 45% of portable batteries by 2023, 63% by 2027, and 73% by 2031
• Collect 51% of light means of transport (LMT) batteries by 2028 and 61% by 2031
• 100% of collected batteries shall be recycled and valuable material content recovered
• Material recovery of 50% lithium by 2027
• Material recovery of 80% lithium by 2031
• New batteries containing certain raw materials must contain a minimum of 16% recovered cobalt, 85% recovered lead, 6% recovered lithium, and 6% recovered nickel
• Portable batteries in appliances must be easily removed and replaced
• All waste of LMT, electric vehicle (EV), supplying power for starting, lighting or ignition of vehicles (SLI) batteries is to be collected with the operator bearing the full cost of collection
• Labelling rules to improve transparency on battery performance, durability, chemical composition, and collection category for rechargeable industrial batteries, non-rechargeable portable batteries, and stationary battery energy storage systems

Businesses placing batteries on the EU market either directly or indirectly must demonstrate that the batteries used in production were sourced responsibly. This is a broad definition which captures social risks in addition to environmental concerns. 

In other words, companies must prove that their battery value chain does not violate EU standards for labour and human rights. The due diligence process will be the company’s responsibility, to ensure sufficient and relevant data is collected and verified in order to assess, identify, and mitigate risks. 

Like many other regulations, the proposed Batteries Regulation, once adopted, will be enforced by mandatory due diligence and reporting. The new regulation is scheduled to come into force in the first or second quarter of 2023.

What do companies need to do?

There are three things companies need to do to prepare for compliance with the Batteries Regulation. 

1. Benchmark current data against the regulation’s targets to see how far you still have to go. This will lead to designing strategies to meet the targets within the timeline, as part of a wider action plan for compliance.
2. Set up your data collection processes to ensure traceability. You need to know where each raw material comes from, the mines from which metals were sourced, the labour that was used at every step of the value chain and their working conditions, etc.
3. Prepare your data for a new reporting framework, the Battery Passport. This is a concept introduced in the Batteries Regulation. Essentially, it is a means to share information digitally on a battery’s life cycle and benchmarking tools, thus increasing transparency.

How we help

• We guide you to achieve legislative compliance with the Batteries Regulation by contacting your battery value chain and simplifying the collection of relevant data internally and along the whole supply chain.
• We facilitate traceability through an open platform that allows for data exchange with third parties while maintaining confidentiality about business-critical information.
• We conduct risk assessments of your battery value chain and set up a grievance mechanism. 
• We provide a centralised platform to manage all your data, pulling data from enterprise software such as ERP, HRM, EMS, etc.
• We offer insights powered by data analytics, enhancing your understanding of your battery value chain, progress, and reporting strength.
• We automate follow-ups to data sources, reminder emails and calculations and free up more time for you to do other things.