Powering change: Navigating the EU Batteries Regulation

On July 1, 2023, the European Commission’s revised Guidelines on Horizontal Cooperation Agreements entered into force.

The EU batteries Regulation represents a crucial step in addressing environmental and economic challenges associated with the lifecycle of batteries within the European Union. In this article, we analyse the context, impact and implementation timeframe of this new regulatory framework.

Sustainable obligations for the battery Industry

Since 2006, batteries and waste batteries have been regulated at EU level by the EU Battery Directive. This Directive brought a welcome improvement in the environmental performance of batteries and established common rules and obligations for economic operators.

However, with the substantial increase of electric vehicles powered by batteries in the EU, the 2006 Directive became less adapted to today’s technological developments. New legislation addressing the complete life cycle of batteries was needed to mitigate the environmental impact of increased battery production. The Council consequently adopted Regulation 2023/1542 concerning batteries and waste batteries (the “Batteries Regulation”). This Regulation aims to replace the 2006 Battery Directive and is designed to strengthen sustainability rules for batteries and waste batteries and to further improve the circular economy. To this end, the Batteries Regulation regulates the entire life cycle of batteries – from extraction of raw materials to reuse and recycling – and ensures that these are safe, sustainable and competitive. In addition, the Batteries Regulation is designed to prevent and reduce adverse impacts of batteries on the environment and ensure a safe and sustainable battery value chain for batteries. In this process, the carbon footprint of battery manufacturing, ethical sourcing of materials and recycling of batteries are taken into account.

Important to note is that, whereas the 2006 Directive applied to any batteries regardless of their shape, volume, weight, material composition or use, the new Regulation clearly distinguishes between the different types of batteries. The different battery types include batteries incorporated into or added to products or specifically designed to be incorporated into or added to products, portable batteries, starting, lighting and ignition (SLI) batteries, light means of transport (LMT) batteries, electric vehicle batteries and industrial batteries. Additionally, the Regulation applies regardless of whether the batteries were produced or imported in the EU.

Who will be affected by the Batteries Regulation?

The Regulation will apply to all economic operators placing batteries or putting them into service on the EU market. Such economic operators are defined as ‘the manufacturer, the authorised representative, the importer, the distributors or the fulfilment service provider’. In addition, any other natural or legal person who is subject to obligations in relation to the manufacture, preparation for re-use, preparation for repurposing or remanufacturing of batteries, the making available or the placing of batteries on the market will be subject to the Regulation’s obligations. Finally, the Regulation also lays down some requirements for procuring governments when acquiring batteries or products into which batteries are incorporated.

When will the Batteries Regulation take effect?

The Regulation will not apply in its entirety on one particular date. Rather, it intends to gradually phase out the 2006 Directive and replace its provisions with those contained in the Regulation. The first provisions will start to apply from 18 February 2024. All economic operators’ obligations (other than due diligence policies and end-of-life management) and rules on conformity assessment procedures will start to apply from 18 August 2024, rules relating to end-of-life management of batteries will need to be complied with from 18 August 2025 and from 18 February 2027, companies should ensure the removability and replaceability of portable batteries and LMT batteries.

What obligations will the Batteries Regulation impose?

Sustainability and safety requirements

Chapter II of the Regulation draws up several sustainability and safety requirements. This includes the restriction of the use of certain hazardous substances in batteries, the addition of a carbon footprint for some batteries, the preparation of documentation concerning recycled content in some batteries, performance requirements, removability and replaceability of some batteries and the safety of stationary battery energy storage systems. In addition, Chapter III defines labelling and marketing requirements for batteries containing significant amounts of certain substances such as cadmium or lead.

CE conformity assessment of batteries

The manufacturer must affix the CE Marking (mark to indicate that the battery is in conformity with its requirements) to each individual type of battery before it is placed on the EU market or put into service. The marking must be affixed visibly, legibly and indelibly to the battery. Where this is not possible, the marking must be affixed to the packaging and to the documents accompanying the battery. The CE marking must also include the identification number of the notified verification body that carries out appropriate tests to check the conformity of the battery with applicable requirements.

Due diligence requirements

The Regulation also imposes several due diligence obligations on economic operators. These do not apply to economic operators that had a net turnover of less than 40 million euro in the financial year preceding the last financial year and that do not belong to a group exceeding, on a consolidated basis, the limit of 40 million euro.

The due diligence obligations include adopting battery due diligence policies concerning raw materials such as cobalt, natural graphite lithium, nickel and other chemical compounds, establishing an economic operator’s management system, fulfilling several risk management obligations and carrying out third-party verifications. In addition, economic operators will need to disclose information on their battery due diligence policies and apply to have their due diligence scheme recognised by the Commission.

Waste batteries

The Regulation extends producer responsibility for the management of their batteries at the end-of-life stage. Battery producers shall finance the cost of collecting, treating and recycling all collected batteries. These rules are intended to maximise separate collection of waste batteries and to ensure that all collected batteries are recycled with high efficiency. However, producers are allowed to appoint a producer responsibility organisation to carry out these obligations on their behalf.

“Distributors”, which are defined as any natural or legal person in the supply chain, other than the manufacturer or the importer, who makes a battery available on the market, will have the obligation to take back some waste batteries from the end-user free of charge and without imposing an obligation on the end-user to buy or to have bought a new battery. But end-users will not remain without their own obligations, as they will have to discard waste batteries separately from other waste streams, including mixed municipal waste.

Battery passport

From 18 February 2027, each LMT and industrial battery with a capacity greater than 2 kWh and each electric vehicle battery placed on the market or put into service must have an electronic record. This record is called the ‘battery passport’. In short, the battery passport contains information relating to the battery model and information specific to the individual battery such as material composition, carbon footprint information and rated capacity. This battery passport must be accessible through a easily legible QR code. Once the battery has been recycled, the battery passport will cease to exist to make space for a new one.

Union market surveillance and Union safeguard procedures

When market surveillance authorities of a Member State have sufficient reason to believe that a battery covered by the Regulation poses a risk to human health or the safety of persons, property or environment, an evaluation shall be carried out. This evaluation will determine whether or not the battery complies with the requirements of the Regulation. Where the market surveillance authority deems that the battery does not comply with the requirements set out in the Regulation, the relevant economic operator will be required to take appropriative corrective action.

Green public procurement

Public procurement constitutes an important sector with regard to reducing the environmental impact of human activities. It can help stimulate market transformation towards more sustainable products. Therefore, according to the Regulation, when procuring batteries, contracting authorities must take into account the environmental impact of batteries throughout their life cycle. Such environmental impacts must be kept to a minimum. This will be accomplished by delegated acts supplementing the Batteries Regulation, which will establish award criteria for procurement procedures for batteries or products containing batteries based on the sustainability requirements as laid down in the Batteries Regulation.

Penalties

By 18 August 2025, Member States must establish penalties applicable to infringements of the Regulation and must ensure that those penalties are effectively implemented. The penalties must be effective, proportionate and dissuasive. This means that, when imposing penalties, “due regard” must be given to the nature, gravity, scope, intentional nature and repetition of the infringement. Furthermore, the level of cooperation with the competent authority will also be taken into account.

Conclusion

In essence, the upcoming EU Batteries Regulation is a game-changer, replacing the 2006 Battery Directive and introducing stringent requirements for sustainability and safety starting from 18 February 2024. This overhaul impacts economic operators, manufacturers, and distributors, with new obligations like CE conformity assessments and extended producer responsibilities. The battery passport, market surveillance, and green public procurement are key features emphasising transparency, environmental responsibility, and safety. Penalties for non-compliance, set by Member States, underscore the regulation's seriousness. Overall, the Batteries Regulation sets a higher standard for the EU battery industry, promoting a more responsible and environmentally conscious approach to design, production, and waste management.

dvanherck@deloitte.com cdhaene@deloitte.com

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