Breaking down the global relevance of the EU Battery Regulation

The EU is preparing to enact a new standard for regulating battery materials and assets—expected to come into force as early as 2024. It will introduce requirements for sustainable and responsible batteries—such as proof of provenance, embedded carbon, and minimum recycled content. The EU regulation is setting unprecedented requirements on batteries both manufactured and placed into service in the EU market and therefore makes it a key regulation for the entire global industry.

 

 

 

In this interview, we talk to SYSTEMIQ’s Circular Mobility Platform Lead Tilmann Vahle. SYSTEMIQ leads the “Battery Pass” project, which involves eleven consortium partners, including Circulor as the technical implementor. Here, Tilmann breaks down what makes the new regulation globally so significant and what companies should do now to prepare. 

Q&A with Tilmann Vahle

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How does the new EU Battery Regulation differ from the EU's current battery legislation, introduced in 2006? 

It’s a major improvement on the existing directive. For one, instead of having to be interpreted into national law by each EU member state as directives are, as a regulation, it will take direct legal effect – and therefore be fully consistent across all of the EU. 

For another, it raises the bar across all dimensions that the battery directive covered so far: it specifies higher and more detailed recycling rates, recollection rates, and end-of-life requirements. 

Lastly and critically, it goes far beyond what the directive has covered so far. The regulation will newly cover requirements for batteries regarding sustainable sourcing, CO2 footprint transparency, minimum recycled content use, and much more. One of the most exciting elements is the introduction of a so-called “battery passport,” a database that will contain data on all of the above for each individual battery that comes to the EU market—a step-change in sustainability and business data transparency. 

 

What impact could the launch of the EU Battery Regulation have on European and global businesses? 

The EU Battery Regulation will apply to any battery placed on the EU market, irrespective of where it is produced or where the company is incorporated that puts it on the market. This means that the Regulation will for the first time create a ‘level playing field’ for all batteries in the EU, and will really raise the bar when it comes to sustainability and circularity.  

This will have a significant impact on how European and global businesses will produce batteries and will kick-start a circular economy for batteries: high-value recycling, repair, refurbishment, and repurposing activities will be boosted through the Battery Regulation. This way, batteries and the precious materials contained in them will be produced more sustainably and generate more value for society and businesses, globally. 

 

Part of the Regulation is, that by January 2026, every industrial and traction battery is to receive an individual digital file – a battery passport. Why is such a battery passport important? 

As I touched on in the beginning, the battery passport will contain plenty of valuable information on the battery, ranging from technical information for economic operators, to user data like state of health, to sustainability data.  

This way, society, businesses, and consumers will benefit from it. Consumers will know exactly how much life is left in a used battery they buy – for example, in a second-hand car. They’ll also be assured just how much CO2 was emitted in the battery production process and what was done to produce it sustainably. Businesses will be able to use the data to benchmark the sustainability of various batteries in the marketplace. The data will also help them handle batteries safely and efficiently, for example during transport, repair, and/or recycling. And lastly, society benefits such as the data collected through battery passports will allow for efficient and effective regulation, for example on CO2, environmental footprints, and human rights considerations. 

 

Digital product passports (DPP) are part of the European Green Deal. What other important categories will the European Commission target with DDP and what does that mean in terms of decarbonization and a circular economy? 

The European Commission plans to let industry develop Digital product passports (DPP) for many sectors and products, ranging from electronics to consumer products, buildings, and fashion. In the long run, all parts of the economy should be equipped with DPP so that relevant product and sustainability information can be provided efficiently, reliably, and safely to both businesses and consumers. The idea is that this will create faster, more efficient pathways to decarbonization and circularity, helping us create a vibrant economy that is far more sustainable than today. 

 

At present, such passports are intended only for batteries within the EU. To what extent could this have a global impact 

Since any large battery (meaning, above 2kWh capacity) sold to the EU will have to carry a battery passport, and the EU battery market is expected to make up at least one-third of the global battery market by 2030, a large share of all batteries globally will be directly covered. This means that all businesses that participate in the production of these batteries will have to contribute data. Since these value chains are entirely global, the effects will be felt globally. For example, cobalt is mined especially in the Democratic Republic of Congo, refined in Finland, turned into battery materials in China, used in batteries in Korea, and built into cars in Spain before being sold in Germany. 

But it doesn’t stop there. Even if batteries sold in other markets do not need to carry battery passports, the improvements created through them will in many cases transfer to production for other markets. Therefore, the effects for sustainable battery value chains will be truly global and affect all battery productions. 

 

What steps should organizations take today if they want to stay ahead? 

Companies involved in producing batteries should carefully review the upcoming requirements of the Battery Regulation and prepare for becoming compliant – or better even, try to stay ahead of the market. After all, carbon emissions are fast becoming a business risk and only low-carbon products will have a place in the future economies. For these companies that specifically means using as much renewable energy in production as possible, preparing and beginning to collect required data, especially in deeper tiers of the supply chain, and start getting ready to share that information with value chain partners to create a battery passport. 

Buyers of batteries should start asking their suppliers what they are doing to be compliant with the requirements of the forthcoming Battery Regulation. 

Both may find it hard to make sense of the regulation’s asks – in fact, many of them are not yet fully defined and will require further work. That is where for example our “Battery Pass” project with the German Federal Ministry for Economic and Climate Affairs comes in, to help define the data points and suggest how battery passports can be implemented technically. And we welcome all organizations to reach out and get involved!