Significant overhaul of EU batteries legislation now law

On 28 July 2023, the EU Regulation on Batteries and Waste Batteries was published in the Official Journal of the European Union (the “Regulation”). It will enter into force twenty days following its publication (on 18 August 2023) and start to apply six months thereafter, albeit with some significant provisions having a deferred entry into force of between twelve months and twelve years. The Regulation constitutes an overhaul of the batteries regime applicable in the EU, with the existing Batteries Directive (2006/66/EC) being repealed for the most part and replaced by the Regulation. The ramifications for all economic operators dealing with batteries at any stage of the supply chain are significant, as the Regulation introduces many new requirements whilst also imposing stricter duties, including as to due diligence, on various actors in the batteries supply chain. 

Background

The overhaul of the EU’s regulatory regime on batteries is an important part of the European Green Deal and is a key prong of the EU Commission’s 2020 Circular Economy Action Plan. Both communications emphasised the importance of creating a safe, circular and sustainable battery value chain for the achievement of the EU’s climate neutrality by 2050 ambitions, not only because circularity is seen as a prerequisite for climate neutrality, but also due to batteries’ role in boosting electromobility in the EU. 

The EU Commission’s Proposal for the Regulation was published in December 2020 and cited as its key goals embedding circularity in the battery value chain, improving the sustainability of batteries and keeping pace with technological developments. The Proposal was subject to consideration and amendments by both the European Parliament and the Council. The EU Parliament voted to approve the agreement on 14 June and the Council followed suit on 10 July 2023. The act was then officially published in the Official Journal.

Overview of the Regulation

The Regulation contains fourteen separate chapters dealing with numerous distinct issues, ranging from sustainability and safety requirements for batteries; labelling and information rules and the assessment of conformity of batteries; through the obligations of economic operators (including as to due diligence); the management of waste batteries and the digital batteries passport; to market surveillance and green public procurement. Some of the most significant provisions are summarised below.

Scope

The Regulation applies to all types of batteries, including not just portable batteries in consumer devices, but also industrial batteries; batteries used in electric vehicles; batteries designed to supply electric power for starting, lighting, or ignition; batteries used for light means of transport (e.g., e-scooters and e-bikes); as well as to battery energy storage systems; battery modules and battery packs. The only excluded types of batteries are those used in military equipment and batteries in equipment designed to be sent into space.

Sustainability requirements

Various new requirements in terms of the sustainability of batteries are introduced, such as restrictions on the maximum concentration of various hazardous substances; requirements to measure and provide information on batteries’ carbon footprint (to evolve into labelling, and ultimately, maximum carbon footprint requirements); minimum recycled content requirements and requirements to disclose the amount of certain raw materials in the battery recovered from waste (to evolve, eventually, into minimum content recovered from waste requirements); minimum durability and performance requirements, as well as related requirements to provide information regarding the same; and finally, requirements for certain types of devices to be designed in a way that allows end-users to readily remove and replace their batteries.

Labelling requirements

New labelling/information provision requirements are imposed for new batteries. Additional requirements are introduced to place a QR code on all batteries linked to a battery passport. Another novelty is the requirement that some batteries be accompanied by information on the state of their health and on their expected lifetime by way of a management system.

Obligations of economic operators

Significantly for anyone involved in the batteries supply and distribution chain, new obligations are being imposed on manufacturers, suppliers, importers and distributors of batteries, as well as on the providers of fulfilment services (i.e., packaging, storage, dispatch and delivery services providers in the case of remote sales). The most stringent obligations are, as usual, imposed on the manufacturers and/or importers of batteries who will be responsible for ensuring the conformity of batteries with all the sustainability, labelling and provision of information requirements mentioned above, as well as for taking immediate corrective action in the event a non-conformity is identified (amongst many other requirements). Distributors are required to exercise “due care” in relation to the compliance with the Regulation of the batteries they sell and ensure that they are appropriately marked and labelled, as well as that the manufacturer or importer has complied with its labelling and information requirements under the Regulation. If distributors suspect that a battery does not conform with the Regulation, they must not make it available on the market. Providers of fulfilment services are required to ensure that the conditions in which they keep or transport batteries they handle do not jeopardise their compliance with the requirements of the Regulation. All economic operators must cooperate with national market surveillance authorities, in accordance with their roles in the supply chain.

Due diligence

In addition to the requirements on economic operators, there are onerous due diligence duties on economic operators involved in the batteries supply chain if they meet certain minimum turnover requirements. Such operators must, with the involvement of the top-level managers in their companies, produce and implement (including via their contractual arrangements with their suppliers and through their internal management systems) a policy for the supply chain of raw materials which addresses environmental and social risks in accordance with international due diligence standards. The risks of adverse impacts must be identified, prevented or mitigated. The policy must be subject to a third-party verification. The due diligence policy must be disclosed to the public on an annual basis. 

Management of Waste Batteries

The existing extended producer responsibility regime pursuant to the Batteries Directive is expanded to all types of batteries in scope of the Regulation. Producers must bear the waste management costs of the batteries they place on the market, which they are entitled to do by joining a producer compliance scheme and paying the membership fees. Both producers and distributors are required to cooperate in setting up collection schemes (free of charge) for used batteries which must cover the whole national territory in the relevant EU Member States where they operate. Distance sellers are also brought within scope of the EU’s extended producer responsibility for batteries and are made subject to many of the same obligations as the producers of batteries in relation to batteries they import onto a national market of an EU Member State. For the first time, the operators of online platforms facilitating the distance sales of batteries are also obligated, being required to obtain from the producers using their platforms their registration number and a self-certification of compliance with the extended producer responsibility rules applicable to them.

Digital battery passport

Perhaps the most innovative element of the Regulation is the requirement for multiple battery types to be accompanied by a battery passport (accessible via a QR-code as mentioned above in relation to labelling). The battery passport will be publicly accessible and will contain various information regarding the battery, including as to its performance and durability, material composition and chemistry, carbon footprint, etc. Certain, more detailed technical information, would have to be made available to other actors in the value chain (subject to proprietary rights), such as repairers/recyclers, waste management schemes, etc. Various provisions are also made as to the passports’ technical design, their interoperability and their accessibility.

Comment

The Regulation is undoubtedly one of the most significant and ambitious acts forming part of the circular economy package to have thus far made its way through the legislative process. It introduces a whole range of novelties, including but not limited to the digital battery passport requirement and the requirements on due diligence. Those and the other stringent requirements particularly as to sustainability and performance could present formidable challenges to all participants in the industry, including in terms of manufacturing and design (challenges of a technical nature), as well as in terms of the monitoring and implementing strict measures to prevent environmental and human rights violations upstream in their supply chains (challenges of a logistical nature). The due diligence obligations under the Regulation go beyond those contained in the parallel and wider existing and proposed EU legislation on corporate sustainability and it remains to be seen how compliance can be achieved in practice considering the constraints manufacturers in the EU are already facing in terms of sourcing raw materials for batteries.

As for the digital battery passport, the batteries industry will serve as a guineapig for what is anticipated to be a much wider roll-out of digital product passports under the European Commission’s proposed Ecodesign for Sustainable Products Regulation (making its way through the legislative process) which would pave the way for the creation of digital passports for many other product categories. While the passport is seen as a crucial step towards promoting circularity due to its ability to close the information gap that currently exists as between manufacturers, distributors, end-users and recycling/recovery facilities and waste managers, the key will be in the detail as to how it will function practically. Concerns have been raised about how the proprietary rights of manufacturers will be balanced against the need to ensure the availability of data for repair, recycling and remanufacturing.