Europe awaits finalisation of battery regulations overhaul

A provisional agreement on the overhaul of the EU battery regulations has been reached by the European Parliament and Council. The initial proposal was presented in December 2020 by the European Commission. An agreement reached on Friday 9 December 2022 still awaits formal approval.

The long-stretched process to develop the new regulation is a cause for a lot of uncertainty in the industry. Therefore, the battery industry organisation Recharge called on the EU to pick up the pace and conclude the proposed Regulation in July 2022. Developing a competitive and sustainable batteries industry in Europe is regarded as urgent: it will contribute to energy security and the strategic resilience of the EU economy.

The regulation agreed upon on 9 December will cover the entire battery life cycle, from design to end-of-life and apply to all types of batteries sold in the EU, including those of e-bikes, e-scooters and all other types of LEVs. Three and a half years after the entry of the legislation comes into force, portable batteries in appliances must be designed so that consumers can easily remove and replace them themselves. At the moment it is not sure when the legislation will enter into force.

Carbon Footprint

Negotiators agreed on stronger requirements to make batteries more sustainable, performant and durable. According to the deal, a carbon footprint declaration and label will be obligatory for EV batteries, LMT batteries and rechargeable industrial batteries with a capacity above 2kWh.

Digital battery passport

To better inform consumers, batteries will have to carry labels and QR codes with information related to their capacity, performance, durability, chemical composition, as well as the ‘separate collection’ symbol. LMT batteries, industrial batteries with a capacity above 2 kWh and EV batteries will also be required to have a ‘digital battery passport’ including information on the battery model as well as information specific to the individual battery and its use.

According to the deal, all economic operators placing batteries on the EU market, except for SMEs, will be required to develop and implement a so-called ‘due diligence policy’, consistent with international standards, to address the social and environmental risks linked to sourcing, processing and trading raw materials and secondary raw materials.

Other measures foreseen by the regulation:

Whether realistic or not, the regulation has also set collection targets. For portable batteries these targets are 45% by 2023, 63% by 2027 and 73% by 2030;
Minimum levels of recovered cobalt (16%), lead (85%), lithium (6%) and nickel (6%) from manufacturing and consumer waste must be reused in new batteries;
All waste electric vehicle batteries must be collected, free of charge for end-users, regardless of their nature, chemical composition, condition, brand or origin;
By 31 December 2030, the Commission will assess whether to phase out the use of non-rechargeable portable batteries of general use.

Regulation for entire life cycle

“For the first time, we have circular economy legislation that covers the entire life cycle of a product,” said rapporteur Achille Variati (S&D, IT). “This approach is good for both the environment and the economy. We agreed on measures that greatly benefit consumers: batteries will be well-functioning, safer and easier to remove. Our overall aim is to build a stronger EU recycling industry, particularly for lithium, and a competitive industrial sector as a whole, which is crucial in the coming decades for our continent’s energy transition and strategic autonomy. These measures could become a benchmark for the entire global battery market.”

State Aid Fund

The European Commission has also widened the State aid rules to make it easier to subsidise the battery industry and raw materials recycling in the EU.

Ruling supports subsidising European battery industry

Newly announced public financial aid could foster batteries for industry and for cars, as well as for e-bikes or other light means of transport (LMT batteries). The new State aid rules are one of the pillars of the European plan to respond to the Inflation Reduction Act (IRA), the massive USA investment plan for the green industry. The new set of rules is the result of a consultation with member states, started on February 1. The new state aid rules will be operational until 31 December 2025.

New framework

In March, the European Commission has adopted the new Temporary Crisis and Transition Framework to foster support measures in sectors considered key for the transition to a net-zero economy. In fact, the new Temporary Crisis Framework works for the same strategic equipment covered by the IRA. Other than batteries and production and recycling of related critical raw materials, the new rules apply to solar panels, wind turbines, heat-pumps, electrolysers and carbon capture usage and storage. The new rule doesn’t specify which kind of batteries can be subsidized, meaning that it’s up to the EU member states to decide.

According to the new framework, the maximum thresholds for state aid are the follows. For large enterprises;

€350 million and 35% of the investment for “a” area (outermost regions or regions whose GDP per capita is below or equal to 75% of the EU average),
€200 million and 20% of the investment in “c” area (regions with per capita GDP above 75% of the EU average),
€150 million and 15% of the investment for non-assisted regions.
For SMEs the thresholds are:
€350 million and 55% of the investment in “a” area;
€200 million and 40% of the investment in “c” area;
€150 million and 35% in non-assisted areas.