On December 9, 2022, the European Parliament and the European Council reached a provisional agreement on the Regulation of the European Parliament and of the Council concerning batteries and waste batteries, repealing Directive 2006/66/EC, and amended Regulation (EU) No 2019/1020 (hereby referred to as the “Regulation”). This Regulation was first proposed by the European Commission (the “EC”) in December 2020, and will be published in the Official Journal of the EU in the first half of 2023. The Regulation is expected to take effect in phases starting from 2024.
The Regulation replaces the EU Directive 2006/66/EC and requires relevant parties to prove that batteries entering into the EU market are eco-friendly and safe throughout their entire life cycle, starting from the production stage up to the recycling stage. The purpose of the Regulation is to strengthen the competitiveness of EU’s eco-friendly battery industry and to contribute to EU’s de-carbonization by reflecting the policy objectives set out in the European Green Deal, the Circular Economy Action Plan, EU’s New Industrial Strategy, and EU’s Strategic Plan on Batteries, among others.
1. Battery Products Covered by the Regulation
The Regulation sets forth requirements for information, including sustainability, stability and labeling-related information, among others, to distribute batteries in the market. It also includes requirements for the collection, processing and recycling of waste batteries. The Regulation also stipulates the types of batteries subject to regulation, including portable batteries, SLI batteries (starting, lighting, and ignition batteries for vehicles), batteries for light-weight transportation such as electric bicycles, batteries for electric vehicles, and industrial batteries.
2. Sustainability and Safety
The use of harmful substances, such as mercury and cadmium in batteries, is prohibited. In addition, in line with the EU’s Carbon Footprint Declaration, which will take effect on July 1, 2024, batteries will be classified by grade of carbon footprint starting from January 1, 2026. Furthermore, from January 1, 2027, the impact assessment will be required to comply with the specified upper limit of the battery carbon footprint.
Beginning on January 1, 2027, if batteries for industrial use and electric vehicles contain cobalt, lead, lithium and nickel, a technical document indicating the content of these components will be required. From 2030 onwards, in the case of batteries for industrial use and electric vehicles that include cobalt, lead, lithium and nickel, a set percentage of them must be recycled raw materials. The specifications are as follows:
As of January 1, 2030: 12% cobalt, 85% lead, 4% lithium and 4% nickel
As of January 1, 2035: 20% cobalt, 85% lead, 10% lithium and 12% nickel
Starting from January 1, 2026, portable batteries for general use can only be released in the market if they meet electrochemical performance and sustainability requirements. Rechargeable industrial batteries must also meet the minimum requirements for electrochemical performance and sustainability.
Moreover, producers of devices containing portable batteries and light-vehicle batteries must design their products to allow users or independent operators to separate and replace waste batteries.
3. Labeling Requirements
From January 1, 2027 onwards, information on a battery’s lifecycle, charge capacity, recall requirements, hazardous substances and safety must be displayed in a visible, legible and indelible manner. For this objective, the EC plans to establish compliance laws and regulations to prepare specific labeling requirements for each product by the end of 2025.
4. Conformity Assessments and Notifying Authorities
The Regulation sets out two types of conformity assessment procedures, depending on the requirements to be assessed, and provides a form of EU conformity declaration that shows sustainability, safety and labeling requirements have been met. The EC may modify and change the conformity assessment procedures in line with changes in the battery industry and the value chain.
Each EU member state will designate the notifying authority for conformity assessments, which will establish and implement compliance assessments and conformity assessment operating procedures in each respective state. The notified bodies will be established under the local laws of the member states and conduct conformity assessments in accordance with the procedures established by the above-mentioned certification body.
5. Due Diligence of Supply Network
The Regulation requires economic operators to establish due diligence policies for rechargeable industrial batteries and electric vehicle batteries launched within the EU. The EC has the authority to review the list of substances and the scope of risks involved.
In addition, with respect to the EC’s Green Public Procurement, contracting authorities and parties are required to review a battery’s entire lifecycle to minimize environmental impact. Governments, industrial coalitions and stakeholder coalitions will establish and develop a supply network due diligence system, which the EC will adopt and reflect in its implementation rules.
6. Waste Battery Management
The Regulation also provides for obligations to manage waste batteries. EU member states are tasked with maintaining a register to monitor compliance with waste battery management requirements. Companies that sell batteries in a member state are subject to enhanced producer responsibility, such as segregation, authority reporting and collection of waste battery information. The manufacturers of automotive, industrial and electric vehicle batteries are jointly responsible for collecting all waste batteries individually or in groups. The Regulation aims to collect 65% of portable batteries by 2025 and 70% by 2030. To prevent and manage the accumulation of waste batteries, manufacturers are required to provide consumers with relevant information, such as the safety requirements of waste batteries and the risks that may arise from inappropriate treatment, written in a way that is easy to understand.
7. Exchange of Information on Batteries (Battery Passport)
The EC’s system for electronically exchanging battery-related information is set to be introduced on January 1, 2026. Starting from January 1, 2026, rechargeable industrial and electric vehicle batteries must have a battery passport that enables access to individual electronic data records in connection with an information exchange system.
The Regulation is regarded as the world’s first comprehensive battery regulation proposal aiming for sustainability and is expected to apply the EU’s high environmental standards to the battery value chain to fundamentally block non-conforming products from the EU market.
The scope of the Regulation is broad and can have a wide range of impact on the global battery industry, as it applies not only to finished batteries but also to the entire battery life cycle and the overall supply chain network.
Some believe that the introduction of regulations on issues such as carbon footprints or battery recycling requirements, will act as a technical barrier to trade (“TBT”) for offshore companies aiming to enter the EU battery market. However, some suggest that Korea needs to similarly supplement its waste battery regulations and protect and foster the Korean battery industry, as the EU aims to do.
Taking into consideration the circumstances mentioned above, it is pivotal for battery companies that have entered or are planning to enter the EU market, as well as their upstream/downstream associated companies, to have a close understanding of the overall terms and requirements of the Regulation and subsequent legislations in relation to the manufacturing and distribution of batteries. It is advisable to prepare a strategy to meet the legal requirements of the new Regulation in order to secure competitiveness throughout the transitional cycle, from raw material mining and production of waste battery collection to recycling.