What Can We Learn From the EU Battery Law? 

February 3, 2023 | 8:00 am
Håkan Dahlström/Flickr
Jessica Dunn
Senior Analyst

Last December, the European Union (EU) agreed on a comprehensive battery policy that aims to make electric vehicles (EVs) more sustainable. Included in the regulation are requirements for mineral sourcing, life cycle emissions, information sharing, and recycling. These regulations set a precedent for battery policy; an area where the US needs to do more.  

The US doesn’t need to reinvent the wheel here—many of these policies can and should be implemented domestically. 

Why does the EU need new battery regulations? 

The EU is transitioning away from gasoline vehicles because of their significant contribution to climate change and adverse health impacts– transitioning to EVs offers an attractive solution. EVs have no tailpipe emissions and their life cycle impacts are much less than the gasoline alternative, not even taking into account the potential for batteries to become more sustainable. The mining for minerals used in batteries is often associated with negative human rights and environmental impacts. However, innovative approaches can reduce those harms, including the creation of a circular economy through reuse and recycling. 

Supporting a circular economy  

This may seem counter-intuitive, but let’s start by talking about regulations that touch retired EV batteries. 

When a battery cannot be used in an EV, it should be repurposed for a different application, such as stationary storage, and then eventually be recycled. The materials can then be recovered and used in the manufacturing of next generation EVs. This process is referred to as the circular economy because materials are being returned to use, which lessens environmental impacts and reduces waste. Essentially, it is decoupling economic activity from resource extraction.  

The EU battery law seeks to increase circularity through a plethora of measures that the US can replicate. These measures include requiring automotive companies to recycle the batteries when they reach the end of their life, recover a minimum amount of the materials through recycling, and using these recovered minerals in the manufacturing of new batteries. The law also requires the increased sharing of information about the battery type and use, making repurposing and recycling more efficient.  

Let’s take a closer look… 

Extended Producer responsibility and reporting: This regulation requires that automotive companies ensure retired batteries are collected and then reused, repurposed, or recycled. The companies are required to report the level of recycling, which provides a route to monitor compliance. The regulation also encourages the extended use of the battery through repurposing for second-life applications. They consider the repurposed battery to be a new product and therefore the repurposer is now responsible for ensuring it is eventually recycled.  

Recycling recovery rates: Recovery rates specify that amount of material recovered from the recycling process. The regulation requires an overall recycling recovery rate of 65% by 2025 and 70% by 2030. Higher recovery rates are specified for the more valuable materials: in 2025 the recovery rate of cobalt, nickel, and copper must be 90% and lithium 50%, increasing to 95% and 80% respectively in 2030.  

Recycled content standards: Once materials are recovered, they can be used to manufacture new batteries. The regulation proposes recycled content standards, a measure requiring a certain percentage of recycled materials to be used in the manufacturing of new batteries. These standards start at 16% for cobalt, 6% for lithium, and 6% for nickel in 2030 and then increase to 26%, 12%, and 15% respectively in 2035. 

Sharing of information: Information such as battery chemistry, mineral sourcing, and battery health are not currently provided by the automotive companies. This lack of information results in several end-of-life complications: 1) it takes extensive testing to know if the battery is suitable for repurposing, and 2) the battery value is difficult to assess because the health and the chemistry are unknown.  

The regulation proposes the use of labelling to clarify battery characteristics as well as the use of a battery passport, which will provide detailed information on the material supply chain, the use of the battery, and the state of health. This is potentially a revolutionary technology that can increase material sourcing transparency, expedite end of life processes, and help track the life of batteries.   

Material sourcing and manufacturing requirements 

The impacts upstream from the EVs represent the majority of impacts, and over the next several decades there will need to be materials mined to supplement the recycled content. The EU law has laid out steps to decrease those impacts, including supply chain due diligence and carbon footprint limits. 

Supply chain due diligence: EVs are a more sustainable alternative to gasoline vehicles, but we must continue to address the impacts associated with sourcing battery materials. The regulation seeks to reduce sourcing impacts through implementing a framework based on several principles, including the Ten Principles of the United Nations Global Compact and the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.  

Essentially, the companies will be required to identify and address risks in the battery supply chain that infringe on the protection of human rights, including human health, protection of children, and gender equality. While the rules are stricter than those in the US, Amnesty International recently stated that the policies only provide safeguards against harm and don’t provide access to remedies such as compensation if their rights are infringed on.  

Battery carbon footprint: The life cycle carbon footprint of the battery is required to be included on the label of the battery, easily communicating this information to consumers. In addition, an assessment will be completed to determine maximum carbon thresholds for EV batteries. 

Europe is paving the way- will the United States follow?  

The US has not enacted any of the policies that were listed above. Instead, they have taken a different approach of dispersing federal funds for battery recycling and repurposing research, development, and demonstration projects. Battery repurposing and recycling in the US is reliant on these processes being profitable and does not provide policy safeguards that ensures if the economics don’t work out, the battery is still eventually recycled. Ideally, the federal government would follow the EU’s lead and enact similar policies to ensure optimal resource recovery and a sustainable and circular battery economy. 

Currently, the US does have the potential to increase the availability of information to help circularity through the implementation of current law. The Inflation Reduction Act (IRA) sets requirements for sourcing EV battery minerals in the clean vehicle tax credit. There will need to be tracking of these batteries to ensure they meet the requirements. This presents an opportunity to draw on the example of the battery passport, which can help tracking and make repurposing and recycling more efficient. Ford is piloting a battery monitoring system as we speak, and policy can help speed up this adoption process.  

California, the leader of US EV adoption, is also leading the US in progress towards EV battery recycling requirements. A state appointed advisory group released a report last year with policy recommendations to increase recycling. While their recommendations represent a leap forward beyond the business as usual by requiring recycling and increased information sharing, the EU policy goes much further by including the full battery life cycle and requirements such as recycled content standards and material recovery requirements.  

As the California legislative session kicks off, we look forward to seeing how EV battery recycling regulation develops. Stay tuned for opportunities to support California and US battery recycling policies.