EU Batteries Regulation Impacts
A new paradigm
Participants in battery value chains need to comply with comprehensive new rules. William Bergh, CEO and Founder of Cling Systems, a marketplace for used EV batteries, explains the impacts to Paul Chapman, host of the Enco Insights Podcast.
Paul Chapman: The new EU Batteries Regulation came into force in January 2024. Can you talk us through it?
William Bergh: To break it down, it says that you must declare carbon footprints of batteries produced. There will need to be labels on the batteries and recycled content inside the battery. There must be performance and durability declarations on every battery. It creates much more comprehensive scrutiny on the entire supply chain.
Taking a step back, the previous battery regulations were put into force in 2006 and haven’t been updated since. Back then lithium-ion batteries weren’t really a big thing; neither were EVs. This pulls back the regulations to the world in which we live in today.
There are innovative solutions coming with it, with battery passports and other technology inventions that can be used to track and trace unique batteries.
“The really complex part of traceability starts when you take the battery out from a vehicle. Where does each and every battery go? Is the battery still in the individual market? Has it been sold? Is it still in Europe?”
Paul: One challenge here is once the battery's left the factory, attributes like the performance and the state of battery health are very much down to the individual cell, right?
William: Yes. If a battery leaves a factory or is inside a car, you know which factories and refineries were involved. Eventually you can look all the way back to the mine. And you can put that supply chain into a battery passport. You can have that passport updated while the vehicle or the battery application is being run. And then you can attribute this state of health and other performance data to the battery. It's in its ‘first life.’
There's a big challenge, however, when the battery reaches the end of its first life - when you take the battery out from a vehicle and you're starting to imagine downstream traceability. Where does each and every battery go? Is the battery still in the individual market? Has it been sold? Is it still in Europe? Is it still in the Western world? Has it been reused? Has it been recycled?
Those questions can only be answered if there's a large ecosystem where everyone is contributing to traceability. The car dismantler has to participate. So do the logistics companies; the import export agencies - all the way down to recyclers. There's no such traceability today.
Discover the range of industries we work with
Paul: A solution at the moment is battery passports. What are they and what are the incentives to get someone to continue the chain of custody?
William: Battery passports are a digital identification of a unique battery. They hold supply chain information and the process, performance and health data of a battery. How they’re going to be updated is still to be decided. So too is how they’ll be read from - whether via a QR code on the battery, or an RFID tag. It's probably going to be various different solutions.
Regardless, there's still this problem of incentives. Why would anyone scan a QR code or read an RFID tag and add data to it? Here’s an illustrative example of this. One third of all vehicles on the European market are eventually lost. They are not registered as being destroyed, or recycled, or exported. We have no idea where they eventually went. So if we cannot keep track of large vehicles, there's a bigger challenge to keep track of sub-components, such as a battery. The reason for this is a big one: the lack of incentives for anyone to participate towards traceability.
The solution to these incentives is to see traceability as a byproduct of commercial transactions. So how do we create commercial transactions that are traced? How do we know when a car was sold? How do we know when a battery was sold? That's done through traders or marketplaces that don't currently add to battery passports because they don't exist yet. But when they do, battery passports should be connected to commercial transactions. That's the way we will keep traceability.
Navigate the
energy transition with confidence
Paul: When does all of this start being enacted? What are the milestones? When do the battery passports come into effect?
William: Starting from 2024, there have to be declarations of performance and durability of batteries. The battery passport should come into place by 2027. The recycled content - the percentage of how much cobalt and nickel and lithium that needs to be recycled content in new production - starts in 2031.
It sounds like a distant future, but it's time to start.
Listen to William Bergh’s full Enco Insights Podcast interview on Apple or Spotify. Subscribe for regular expert insights.
