Announcement of Plans to Develop Laws, Institutions and Infrastructure to Foster the Used Battery Industry

At the Ministerial Meeting on Economic Affairs held on July 10, 2024, the Government announced the “Plans to Develop Laws, Institutions and Infrastructure to Foster the Used Battery Industry (the “Used Battery Measures”)” (Link) in collaboration with the Ministry of Economy and Finance, the Ministry of Trade, Industry and Energy (the “MOTIE”), and the Ministry of Environment (the “MOE”).

The Used Battery Measures are a follow-up to the “Plan to Strengthen the Competitiveness of the Secondary Battery Industry over the Lifecycle of Batteries” announced on December 13, 2023 and are designed to improve the used battery management system and allow the domestic battery industry to preemptively respond to global trade regulations. The major details of the Used Battery Measures are as follows:

Consolidated Bill Proposal to Foster Used Battery Industry

To foster the used battery industry and stabilize its supply chain, the Government announced plans to propose a “bill to foster the used battery industry and support the safety of its supply chain” (tentatively named; the “Consolidated Bill”) and also amend related laws under the jurisdiction of relevant ministries in the second half of 2024. The Consolidated Bill is expected to include (i) a battery lifecycle assessment system, (ii) a renewable raw material certification system, (iii) a procedure for performance evaluation prior to removal of batteries from electric vehicles (“EVs”), (iv) a requirement for pre-distribution safety inspections and post-distribution inspections of products equipped with remanufactured or reused batteries, and (v) the establishment of the “Used Battery Policy Committee” (tentatively named).

The Consolidated Bill will govern the basic system of the used battery industry under the joint jurisdiction of relevant ministries, and detailed operational rules will be prescribed under individual laws or joint notifications of relevant ministries.

Authority	Individual Laws	Provisions
MOTIE	The Act on Promotion of the Conversion into Environment-Friendly Industrial Structure (the “Environment-Friendly Industry Act”)	Registration of distributor/re-user, certification on the use of renewable raw materials
MOE	Act on Resource Circulation of Electrical and Electronic Equipment and Vehicles (the “Act on Resource Circulation of Electronic Equipment”)	Certification on the production of recycled raw materials
MOE	Wastes Control Act	Registration of recycling business
Ministry of Land, Infrastructure and Transport (the “MOLIT”)	Motor Vehicle Management Act	Definition of remanufacturing, registration of remanufacturer, performance evaluation before removal of batteries and safety inspection

Establishment of Battery Lifecycle Assessment System

The Government plans to establish an information management/sharing system covering the lifecycle of batteries from the time of battery manufacturing to the circular use of used batteries. The Government plans to have relevant ministries establish their individual systems by 2026 and establish an integrated portal that links those individual systems in 2027. This system is expected to support battery companies (e.g., battery exporters) in responding to battery regulations in other jurisdictions and to promote transparency in associated transactions.

Specifically, the MOTIE will set up a “Data Platform for Battery Supply Chain” and a “Transaction Information System,” and the MOE/MOLIT will set up an “Integrated Environmental Information System for the Lifecycle of EVs” and “Safety Certification Management System for EV Batteries,” respectively. Moreover, the “Integrated Portal Task Force” will be operated to carry out measures for compatibility and linkage among these systems.

Operation of Individual Systems over the Lifecycle of Batteries (Proposal)

Introduction of Renewable Raw Material Certification System

As the European Union (the “EU”) mandates the use of recycled raw materials for battery production starting from 2031, the regulations on battery recycling have been heightened. As a result, the Government plans to establish a globally-accepted certification system (the “Korean-style Certification System for Renewable Raw Materials”) to (i) ease the burden of expected certification costs that are to be incurred by domestic battery exporters, (ii) reduce possible leakages of corporate information, and (iii) stabilize the supply chain of key raw materials by recycling used batteries.

Starting from 2025, (i) the MOE plans to certify cobalt and nickel, among others, produced by recycling used batteries, which are difficult to remanufacture or reuse, as renewable raw materials (“Production Certification”), and (ii) the MOTIE plans to track the supply chain stage of battery manufacturing and confirm the ratio of renewable raw materials contained in new batteries (“Use Certification”).

Certification System for Battery Recycling Process and Renewable Materials (Proposal)

Introduction of Performance Evaluation Before Removal of EV Batteries

Starting from 2027, the Government plans to introduce a system that classifies batteries installed in EVs into levels for remanufacturing, reuse and recycling, by conducting performance evaluations without removing the batteries when they are no longer used.

In particular, EV owners, insurance companies (in case of an accident) and vehicle manufacturers (in case of recall) will be required to conduct a performance evaluation prior to the removal of EV batteries. From the performance evaluation, ratings will be determined based on the battery’s performance (residual capacity), stability (cell voltage deviation) and history (maintenance, inspection recall, etc.) in order to maximize the use of used batteries and determine their market value.

Performance Evaluation System Before Removal of EV Batteries (Porposal)

Preparation of Used Battery Distribution System

The Government emphasized that it will establish a distribution system to ensure the fairness and safety of the used battery market in preparation for the expected rapid increase of used batteries and also to prevent reckless distribution and use of used batteries.

Specifically, fair trade guidelines will be prepared in the second half of 2024 to prevent unfair trade practices, such as used battery price manipulation or unfair discrimination against counterparties. Moreover, relevant business entities (e.g., remanufacturers, distributors and re-users) will be subject to the registration requirement to ensure expertise and accountability as described in the table below. Detailed transportation and storage standards, in the form of a joint notification, will be also prepared in 2025 by supplementing current guidelines – including the “Detailed Regulations on Methods of Separating and Storing EV Waste Batteries” (MOE’s Notification) – to ensure the safe transaction and distribution of used batteries.

Matters to Be Reflected in the Business Registration System Under Individual Laws

Type of Business Entity	Statutes	Governing Administrative Entity	Note
Distributor	The Environment-Friendly Industry Act and its subordinate statutes	MOTIE	New
Remanufacturer	Article 30-2 of the Motor Vehicle Management Act and Article 40-5 of the Enforcement Rules of the same act	MOLIT	-
Re-user	The Environment-Friendly Industry Act and its subordinate statutes	MOTIE	New
Recycler	Article 25 of the Wastes Control Act and Article 28 of the Enforcement Rules of the same act	MOE	-

The legislative plan for the Used Battery Measures is significant in that it will make it easier for Korean battery exporters to respond to the trade regulations of major countries overseas, including the EU’s obligation to use renewable raw materials for new batteries and China’s EV battery management platform. In addition, it will lay the legislative foundation for the domestic battery management system throughout the lifecycle of batteries. In particular, the pre-removal performance evaluation is expected to improve the recurring use of used batteries by helping quickly classify batteries at the end of their use based on their rating. In other words, after the use of an EV, the battery parts will be (i) replaced (or repaired) and then re-assembled into an EV battery (“Re-manufacturing”), or (ii) re-assembled for other purposes, such as being used in an energy storage device (“Reusing”). The system will allow batteries to be classified efficiently before raw materials such as black powder are extracted (“Recycling”).

The Government expects that at least 100,000 used batteries will be produced by 2030 (for reference, about 810,000 vehicles were scrapped in 2023). It is crucial for companies engaged in businesses relating to used batteries to thoroughly comprehend and be prepared for the Consolidated Bill as well as individual laws that are to be enacted/amended in the future. In particular, remanufacturers of used batteries, re-users and recyclers are required to undertake the following legal reviews in advance:

First, it is necessary to establish measures to comply with the safety standards that are expected to be strengthened for the distribution and use of used batteries. As the safety management of lithium, a water reactive chemical, is being emphasized due to a recent fire at a lithium electric plant in Hwaseong, it is expected that battery separation standards as well as transportation/storage methods will be specified in more detail. Therefore, it is necessary to be prepared in advance to minimize potential legal risks.
Second, it is necessary to utilize the renewable raw material certification system, which will be introduced for used battery recycling, not only in response to the EU’s regulation pertaining to the ratio of recycled raw materials used, but also in calculating Scope 3 greenhouse gas emissions. On March 26, 2024, the MOE announced that it would pursue a pilot project for certification of renewable raw materials together with companies that recycle waste EV batteries. The certification system of renewable raw materials is expected to be utilized in connection with the existing electronic processing system (i.e., the Allbaro system) established under Article 45 of the Wastes Control Act.
Third, it is necessary to review whether used batteries are subject to the Wastes Control Act. Through a resolution of its administrative committee (April 2024), the MOE recently revised relevant regulations by excluding black powder from the scope of waste regulations as long as it complies with applicable recycling standards (e.g., removal of organic solvent, prohibition of mixing foreign substances, etc.). Meanwhile, the circular use of waste EV batteries is not deemed to be “waste” to the extent that it complies with the terms and conditions that have been prescribed under the Act on Promotion of Transition to Circular Economy and Society, but will be still subject to the Act on the Transboundary Movement of Hazardous Wastes and Their Disposal if waste batteries are exported.

As such, it is necessary to continuously identify various legal issues that may arise in terms of safety, renewable raw material certification, waste management, among others, throughout the course of the distribution and utilization of used batteries that have undergone pre-removal performance evaluations.

[Korean Version]

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