Industry Highlights – Big Steps in Battery Regulation
As the energy transition pushes forward, one critical step is for regulations to align with the needs of the movement. Batteries are a significant enabler of decarbonization through electric vehicles and energy storage which makes the battery value chain a high priority. In December 2020, the European Commission developed a proposal to create battery-specific regulations for the European Union (EU). The goal was to create a framework for mandatory requirements on material sourcing, sustainability, safety, installation, and requirements for end-of-life management [1]. This proposal is closely aligned with the European Green Deal, the Circular Economy Action Plan, and the New Industrial Strategy, which are all foundational for the transformation to a circular, digital economy in Europe [2].
On March 17th, the Environmental Council held a policy debate regarding the legislative framework. This revolved around a compromise proposal developed by France which was considered instrumental to bringing the group to a consensus. Within this meeting, the Council officially adopted a general approach to the regulations and now negotiations begin on the final text and any remaining sticking points with the European Parliament [3]. The efforts put in by France were in hopes to accelerate the implementation schedule. As stated by Pascal Canfin of France, a Member of the European Parliament (MEP) of the Renew Europe group, “With this text, we become the world leaders in environmental regulation of battery production throughout the value chain” [4].
If the finalized wording can be adopted by the end of 2022, which is an accelerated review period, the regulations will be in force six months early, becoming active in January 2027 instead of July [4]. One thing to note is that the compromised proposal incorporated delays in formal regulation enforcement. The initial proposal did pose quicker timelines, with earliest enforcement of certain elements starting in 2023; the change was most likely needed to gain more acceptance, giving all the EU member countries time to work out their own implementation strategies. There is concern that this waiting period is too long. Industry leaders in Europe felt obligated to appeal to the Environment Ministers directly for swift action. In an open letter, they noted that many companies are close to already adopting all the necessary changes outlined in the draft and this delay may hurt the future competitiveness of European businesses [5]. Slow implementation will make it hard for newcomers in the industry to contend and that regulations like this will help the rapid development of the battery industry occur in a more resilient and sustainable way. Only time will tell how the final version will resolve but there is hope that this can be fully accepted within 2022.
Governance over batteries within the EU is not a new topic. However, this new proposal is meant to replace the Batteries Directive of 2006, which was considered too narrow in its scope and limited in its ability to enforce mandates at end-of-life [6]. One significant move within this new framework is the creation of a battery passport, which will track the battery through its life cycle, forcing all parties involved at any stage to be compliant with the requirements. There are still elements to work out, such as the methodologies for calculating targets and how compliance will be penalized, but so far, the industry is behind this change [6]. Once the set of regulations has been formalized, it will be interesting to see how each country of the EU interprets the law for their nation. The EU is on their way to establishing the starting framework that other countries worldwide could use to advance in electrification.
As stated by Simona Bonafé, the Vice-Chair of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament, “For the first time in European legislation, the Battery Regulation lays down a holistic set of rules to govern an entire product life cycle, from the design phase to end-of-life. This creates a new approach to boost the circularity of batteries and introduces new sustainability standards that should become a benchmark for the entire global battery market. Batteries are a key technology for fostering sustainable mobility and for storing renewable energy” [2]. With the significance that batteries hold for decarbonization, it is crucial to lay the groundwork for the future.