On August 17th, the EU’s new battery law, REGULATION (EU) 2023/1542 (EU Battery and Waste Battery Regulation), officially came into effect and will be mandatory from February 18th, 2024.
This new battery law was first adopted by the EU Council on July 10th of this year, and the principle of “whoever produces it, recycles it; whoever imports it, recycles it” is a key element of this law. The new battery law establishes detailed rules for the entire lifecycle of batteries, from production to recycling and reuse. As the EU’s largest trading partner in the new energy sector, Chinese companies need to make adjustments as soon as possible to adapt to the new battery law.
In summary, the EU’s new battery law has the following three points worth noting:
1. It sets minimum recycling rates and material recycling targets for power batteries.
Regarding material recycling targets, the new battery law clearly states that: 1. By December 31st, 2027, all recycling should meet at least the following material recycling targets: cobalt 90%; copper 90%; lead 90%; lithium 50%; nickel 90%. 2. By December 31, 2031, all recycling must meet at least the following material recycling targets: 95% for cobalt; 95% for copper; 95% for lead; 80% for lithium; and 95% for nickel.
II. Provision of Battery Carbon Footprint Declarations and Labels
There are many ambiguities in the carbon emission data of batteries throughout their production, use, and recycling cycles. To better regulate carbon emissions, the new Battery Law requires companies to collect and calculate carbon emission data for batteries sold to the EU at each stage of their life cycle, including upstream raw materials, product manufacturing, transportation, end-of-life, and recycling, according to relevant standards.
III. Power Batteries Must Provide Electronic Passports
Only power batteries with battery passports can enter the European market. This introduces for the first time information disclosure requirements for battery labels and digital passports, covering information such as battery capacity, performance, application, chemical composition, and recyclable materials. The new Battery Law requires that within 48 months of the regulations’ entry into force, the Commission should establish a universal information exchange system, and every electric vehicle battery placed on the market should have an electronic record, i.e., a “battery passport.” From the above three points, the EU’s more comprehensive requirements for imported batteries undoubtedly bring greater cost expenditures to enterprises. However, the industry generally believes that the emergence of the European battery passport can, on the one hand, strengthen the management of battery quality, and on the other hand, help the process of battery lifecycle carbon management, achieving carbon neutrality as soon as possible.
The new battery law is coming on strong, bringing both opportunities and challenges to Chinese lithium battery companies:
With the gradual refinement of the EU Battery Law regarding battery recycling technology, environmental standards, and the use of recycled materials, building and supporting battery recycling and processing companies that meet EU requirements has become an inevitable trend for Chinese companies going global. Currently, my country has not established a certification mechanism for the use of recycled raw materials, making it impossible to determine which batteries use recycled raw materials and what proportion, which will also hinder future exports. The new regulations stimulate the green development of the domestic battery recycling industry, encouraging recycling companies to improve their battery recycling capabilities and efficiency.
Chinese battery companies have weak accumulation in terms of their full lifecycle carbon footprint. The challenges include the need for battery companies to collect carbon footprint data across the entire supply chain, from mining and cathode/anode materials to battery cells, and to measure and assess the carbon footprint at each stage. Currently, China lacks mature digital tools and faces difficulties such as inconsistent standard databases and the absence of international mutual recognition mechanisms. China urgently needs technologies and equipment that comply with EU battery law standards and must establish relevant capabilities in imports to enhance its sustainable development performance.
Building a battery recycling system that aligns with the positioning and needs of Chinese companies, and ensuring a stable supply of recycled materials for large-scale overseas expansion, has become the core and pillar for companies to cope with this policy. The emergence of the new EU law undoubtedly represents a new idea and an inevitable trend. For companies, the source, technical specifications, chemical composition, manufacturing process, and carbon footprint of battery materials are all disclosed in the battery passport information, allowing companies to clearly understand the supply chain, deeply control raw material supply, and make costs, capacity, risks, and opportunities transparent.
The promulgation of the new battery law means that the EU’s green trade barriers will profoundly impact every stage of the battery industry chain’s lifecycle. The power battery industry is poised for a technological revolution in production, with Chinese companies actively pursuing low-carbon transformation and committed to increasing industry transparency. In the long run, the Battery Law will help improve China’s power battery mechanism, further propelling the industry towards a green and low-carbon future.
