Legal requirements for a battery value chain

The need for urgent and more intensive actions against climate change has been broadly recognized.

The Paris Agreement 2015

The Paris Agreement was approved by 196 parties on December 12, 2015, at the COP 21 held in Paris. The Paris Agreement aims to keep global warming far below 2 degrees Celsius, ideally 1.5 degrees, relative to the pre-industrial levels.

European Green Deal 2020

A set of initiatives aimed at making EU climate neutral by 2050 known as the European Green Deal was approved in 2020. Batteries play an essential role in achieving the EU Green Deal, as they are considered a critical and strategic technology in achieving Europe’s climate change mitigation targets and moving towards green and sustainable mobility.

Batteries can serve numerous purposes, and the global battery demand is expected to increase by more than 19 times over the next decade. If batteries are to help mitigate climate change, this cannot be achieved without a fundamental change in the way materials are sourced and in the manner that this technology is produced and used.

A circular, responsible and just battery value chain is one of the major drivers in realising the 2 degrees Celsius Paris Agreement goal. In order that a sustainable and competitive battery industry is achieved across Europe, the European Commission proposes that future batteries should

• be easily replaceable to build long-lasting systems
• have clear labels to openly share relevant information
• be produced from responsibly sourced materials and with the restricted use of hazardous substances
• be produced with a certain minimum amount of recycled materials
• meet collection and recycling targets and have a clear carbon footprint declaration.

The European Commission has proposed a new set of rules to achieve a wide-ranging influence on the entire battery value chain. The introduction of new regulations aims to replace the 2006 batteries directive, as the old directive does not cover new technologies and focuses only on a few parts of the battery life cycle, such as labelling requirements and end-of-life management.

The new proposal puts a strong emphasis not only on sustainability but on introducing a wide range of new requirements for batteries and for key raw materials for batteries, with a focus on electric vehicle (EV) batteries. Importantly, the European Commission has made significant efforts to develop a comprehensive regulatory framework covering all parts of the EV battery life cycle, from mining to end-of-life management.

This EU legislation will not only cover EU-based companies but also the companies that will introduce batteries into the EU market, as they must obey the manifold requirements in the regulation. Li, Co, Ni and Mn are the raw materials for which specific requirements have been formulated. The focus given to these battery raw materials reflects the importance the Commission gives to Ni-containing EV battery technologies and the acknowledgement that these raw materials are an essential component of these batteries. The requirements address various aspects of battery life cycle.

In a recent discussion, three main points are underlined: due diligence requirements, carbon footprint and recycling.

Due diligence requirements

Production of batteries, as well as the mining of raw materials, can be associated with the governance and social and environmental (ESG) issues. The new regulatory framework seeks to ensure that ESG issues are identified and addressed through accepted standards. With this policy, raw material producers will have to be audited against a standard indicating that environmental, social and governance risks have been systematically identified and addressed.

Carbon footprint

EV battery production has a high carbon footprint. To reduce greenhouse gas (GHG) emissions and promote the production of low-carbon batteries, the European Commission points to a three-step approach.

1. The first step is to develop a method to calculate the battery’s carbon footprint.
2. The second step is the establishment of carbon footprint classes.
3. In the third step, a binding carbon footprint threshold will be set for EV batteries sold in the EU market.

Recycling

Raw material producers involved in the recycling and supply of batteries to the market will have to meet a series of requirements regarding the efficiency of recycling an entire battery system and the raw materials they contain.

For EV batteries, an ambitious recycling target must be achieved, covering all battery components. For battery cathode materials (Co, Li, and Ni), ambitious material recovery targets must be achieved in the medium term. In addition, downstream companies in the battery value chain must ensure that a certain amount of the raw materials used in EV batteries are recycled.