New regulatory framework for batteries in the European Union

On 17 August 2023, Regulation (EU) 2023/1542 concerning batteries and waste batteries (Batteries Regulation) will enter into force, implementing a new regulatory framework for batteries in the EU.

The European Green Deal sets an ambitious growth strategy aiming to form the EU into a resource efficient economy and prosperous society with no net greenhouse gas emissions in 2050, aiming to decoupling economic growth from use of resources. EU’s product law framework plays an important role in safeguarding that products in the EU are sourced and manufactured sustainable. Batteries play a key role in this planned transition. They are one of the enablers for more sustainable developments and green mobility and it is expected that the demand will scale up. The European Commission therefore confirmed its commitment to implement the Strategic Action Plan on Batteries.

Against this background, the Batteries Regulation creates a harmonized regulatory framework for the entire life cycle of batteries placed on the EU market. It now will provide the legislation aiming to ensure a safe, circular, and sustainable battery value chain for all batteries.

Most of the provisions will apply as of February 2024 and will subsequently – until 2027 – replace the framework established under Batteries Directive 2006/66/EC. However, Batteries Regulation is not just replacing the existing framework, it is substantially extending it and will have a massive impact on the batteries industry. The Regulation does not only update and expand the regulatory framework. It will also tackle environmental, social and governance issues relating to the life cycle of batteries manufacturing.

The following requirements are of particular interest for companies active in the batteries sector:

 

New definitions of different categories of batteries

Due to the increased importance of electromobility, the Regulation introduces new categories of batteries. The former three categories of batteries will now include the five categories of portable batteries, LMT batteries (for light means of transport such as for pedelecs), SLI batteries (for starting, lighting and ignition), industrial batteries and electric vehicle batteries.

 

Carbon footprint declaration and maximum life cycle carbon footprint thresholds for electric vehicle batteries

For electric vehicle batteries (and LMT batteries and rechargeable industrial batteries with a capacity greater than 2 kWh) a carbon footprint declaration shall be drawn up. This carbon footprint declaration, drawn up for each battery model per manufacturing plant will comprise of information such as information about the manufacturer and the geographic location of the manufacturing plant. Further, the carbon footprint of the battery and a web link giving access to a public version of the study supporting the carbon footprint values must be provided.

The methodology for calculation and verification of the carbon footprint will be further outlined in a delegated act. The specifics will follow the Commission Product Environmental Footprint (PEF) method and relevant Product Environmental Footprint Category Rules (PEFCRs). This aims on bringing transparency on the batteries’ carbon footprint and shall ultimately shift the EU market towards low carbon footprint batteries.

This obligation to draw up the carbon footprint declaration will be mandatory for electric vehicle batteries as of 18 February 2025 – the other categories will follow in the subsequent years.

Further, maximum life cycle carbon footprint thresholds will be defined, starting with such thresholds for electric vehicle batteries defined in a delegated act by August 2026. These thresholds shall be drafted by the Commission considering the best available manufacturing and production processes and ensuring a high level of protection of human health, safety, and the environment. Manufacturers will need to demonstrate that the declared life cycle carbon footprint value for the relevant battery model is below the maximum threshold – for electric vehicle batteries this will apply as of February 2028.

 

Disclosure of information on use of recovered raw materials

Manufacturers will need to disclose information on the recycled content in their (industrial, electric vehicle, LMT and SLI) batteries. For example, such batteries shall be accompanied by documentation containing information about the percentage share of cobalt, lithium, nickel or lead that has been recovered from waste. One goal of the Batteries Regulation is to increased the use of recovered raw materials – this aims at accelerating the further development of the circular economy but also reducing the EU’s dependency on raw materials from non-EU countries.

 

Updated labelling and marking requirements and conformity assessment procedure

The Batteries Regulation will also impose new labelling and marking requirements. Further, information on the state of health (SOH) and expected lifetime of batteries will need to be made available for certain types of batteries (such as LMT and electric vehicle batteries).

The Regulation will also implement new requirements in terms of the relevant conformity assessment procedure that the manufacturer must implement to issue the declaration of conformity. While internal production control is sufficient for most scenarios of portable batteries, for batteries that are subject to the carbon footprint declaration requirements (such as electric vehicle batteries), conformity assessment requires involvement of a notified body. For the latter batteries, the manufacturer shall lodge an application for assessment of its quality system with a notified body.

 

Sourcing of batteries under scrutiny – Obligation to implement batteries due diligence policies to be verified by notified bodies

The Regulation will also address issues around sourcing of raw materials used for manufacturing of batteries. Such raw materials are typically sourced in non-EU countries with lower standards of governance, and sourcing often contributes to environmental and social risks.

One goal of the Regulation is that the expected massive increase of demand for batteries should not also lead to an increase of such environmental and social risks. Further, raw materials such as cobalt, lithium and natural graphite, are critical raw materials for the Union (Critical Raw Materials Resilience: Charting a Path towards greater Security and Sustainability).

Current policy in place, in particular Conflict Minerals Regulation (EU) 2017/821 does not address the raw materials used for battery production. Against this background, the EU decided for imposing supply chain due diligence requirements for economic operators in the batteries sector.

The Regulation lays down the requirements and obligations in terms of battery due diligence policies. This includes disclosure of information to authorities and immediate downstream purchasers. In addition, it will be required to report annually on the battery due diligence policies in a report publicly available on the internet. Such shall contain information on steps taken by the economic operator to comply with their due diligence obligations and shall include findings of significant adverse impacts and how they have been addressed. The relevant due diligence policies will also require third party verifications by a notified body.

Non-compliance with such due diligence obligations will result in significant risks for the relevant company. Not only will non-compliant companies be exposed to public scrutiny – that are likely accelerated by interested NGOs. The Regulation provides that the member states shall take all appropriate measures to restrict or prohibit the batteries made available on the market by a non-compliant economic operator. This can go as far as an ordered withdrawal or recall from the market – irrespective whether the product itself poses an immediate serious risk.

In addition, member states shall lay down penalties for non-compliance with the requirements of the Regulation. Such provisions on penalties shall be implemented in the member states’ national law by August 2025 and shall be effective, proportionate, and dissuasive.

 

What’s next?

The new Batteries Regulation leads to massive changes in the regulatory landscape of the batteries sector. It does not only regulate the product regulatory framework but will also impose environmental, social and governance responsibilities for manufacturers of batteries. All economic operators active in this sector should assess potential impact of the updated framework on their current business to be prepared when the new obligations will enter into force.

When it comes to implementation of batteries due diligence policies, companies are well advised to also consider other upcoming legislation such as the EU Corporate Sustainability Due Diligence Directive (CSDDD). Based on how sophisticated the policies currently in place are, setting up such policies and management systems can bind significant resources – therefore any new policies and management system should also consider the new requirements on the horizon.