Regulation on Batteries: Will High Standards Endanger the Competitiveness of the EU Economy?

The new Regulation on Batteries and Waste Batteries came into force on February 18 of this year. Since it focuses on sustainability, it represents a significant shift towards a more responsible battery industry, but implementation will not be without challenges. Various aspects, from defining upper limits on carbon footprints and minimum efficiency standards to disposal, will require entrepreneurs and the community to engage in thoughtful strategy and planning.

The European Parliament and the Council adopted the new Regulation 2023/1542 on Batteries and Waste Batteries in mid-last year. This is the first regulation at the Union level that governs the entire life cycle of the products it regulates. Thus, the Regulation contains provisions on batteries from production to recovery. Including provisions from the previous Battery Directive (2006/66/EC), the new regulation introduces a series of key and new rules that will significantly impact the battery sector.

Directives obligate member states regarding the goals that must be achieved, but their text does not directly produce legal consequences. An exception to the rule occurs when member states fail to implement directives within the prescribed time, and they may be liable for damages incurred by entrepreneurs due to such omissions. Batteries are now regulated by a regulation that causes direct legal effects between the state and entrepreneurs and among entrepreneurs. It is directly applicable, and member states are obliged to act in accordance with the rules prescribed by it. It came into force on February 18, 2024, but there are significant exceptions to this prescribed entry into force. Thus, Directive 2006/66/EC will be repealed only on August 18, 2025, when Chapter VIII of the Regulation (management of waste batteries), which substantively changes the repealed directive, comes into force. Certain articles come into force later. For example, Article 11 (Possibility of removal and replacement of portable batteries and batteries for light means of transport) comes into force on February 18, 2027, and certain obligations only from a specific date. For instance, the obligation to declare the carbon footprint for rechargeable industrial batteries with external storage comes into force no earlier than August 18, 2030.

Waiting for the ‘highest threshold’

To place batteries for electric vehicles, rechargeable industrial batteries with a capacity greater than two kilowatt-hours, and batteries for light means of transport on the EU market, it must be proven that the declared carbon footprint value during the lifetime is lower than the highest threshold of that footprint. The highest threshold for the carbon footprint will be determined by the Commission through regulations for each type of battery. This provision in practice means that it has the right to prohibit access to the market for part of the products through a delegated act.

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There is currently no indication of what the ‘highest threshold for the carbon footprint’ would be. The maximum threshold is introduced for individual types of batteries on average three years after the introduction of carbon footprint declarations and efficiency classes according to it. The Commission will first obtain an overview of the market by facilities and types of batteries (in carbon footprint declarations) and then determine the maximum threshold. Granting such powers to the Commission certainly does not contribute to the legal certainty needed by entrepreneurs. The deadline for determining the maximum carbon footprint threshold is August 18, 2026, for batteries for electric vehicles, February 18, 2028, for rechargeable industrial batteries (except those with external storage), February 18, 2030, for batteries for light means of transport, and February 18, 2032, for industrial batteries with external storage.

A problem for entrepreneurs

Entrepreneurs who will enter into procurement contracts for the covered types of batteries close to these dates will have to find a way to mitigate the risk that the battery they procure does not become non-compliant with the carbon footprint requirements ‘overnight’. The risk could be mitigated by a contractual clause that releases both contracting parties from obligations if the Commission’s delegated act declares the batteries subject to the contract non-compliant with the carbon footprint requirements. Another way to mitigate the risk would be to set the obligation from the contract as alternative – the subject of the contract is one type of battery, but if that type is declared non-compliant by the Commission’s delegated act, then the subject of the contract is another type of battery, compliant with the carbon footprint requirements.

No earlier than August 18, 2028, for industrial batteries with a capacity greater than two kilowatt-hours (except those with exclusively external storage), batteries for electric vehicles, and batteries for starting, lighting, and ignition, and from August 18, 2033, for batteries for light means of transport containing cobalt, lead, lithium, or nickel, documentation on the share of the specified ores that has been recovered from waste in the production of the battery or after consumption must be attached for each battery model and by production facility. The Commission reserves the right to revise the established recovery targets after 2028. This provision will cause significant differences in the favorability of battery production in the Union. When assessing where to locate their production within the Union, battery manufacturers will target member states with available recovered ores, which will lower unit production costs. This will generally be member states where a high percentage of waste is recovered. Therefore, Croatia, if it wants to attract battery production, should aim to increase the share of waste recovery, i.e., increase the share of recovery of specific ores needed for battery production in the upcoming period.

Conditions for electrochemical efficiency and durability are introduced for batteries for general use (e.g., your household AAA batteries), industrial batteries, batteries for light means of transport, and those for electric vehicles. The Commission will adopt minimum mandatory values for parameters for each type of battery through a delegated act. Similar to the maximum carbon footprint threshold, this gives it the authority to exclude part of the batteries for general use and industrial batteries, batteries for light means of transport, and batteries for electric vehicles from the market. Therefore, the risk mitigation model should also apply to this item as with the maximum carbon footprint threshold.

Removal and replacement

Among additional requirements, it should be noted that from February 18, 2027, all portable batteries must be easily replaceable and removable from the products that contain them, meaning that this can be done by the end user (e.g., the consumer). Batteries for light means of transport must be designed so that they can be easily removed and replaced by an independent expert (e.g., your local electric scooter service).

Software must not be an obstacle to the removal and replacement of the battery. Therefore, all software that monitors portable batteries and batteries for light means of transport must be compatible with all types of batteries available on the European market from February 18, 2027. From August 18, 2024, the management system for stationary batteries for energy storage, batteries for light means of transport, and batteries for electric vehicles must contain updated data on the age and expected lifespan of the battery.

Due diligence policy

The Regulation also introduces an obligation for economic entities to implement a due diligence policy related to batteries; it comes into force on August 18, 2025. Smaller economic entities (with turnover less than forty million euros in the penultimate financial year) are exempt from its application, considering consolidated groups, economic entities that place recycled batteries on the market, and minerals and metals originating from conflict-affected and high-risk areas (e.g., metals from Ukraine). The due diligence policy includes significant obligations for economic entities, e.g., establishing and maintaining a supply chain transparency system by identifying actors in the upper part of the supply chain and establishing a risk management system.

This policy is verified through periodic audits by compliance assessment bodies that issue approval for it. Economic entities then submit this approval to the market surveillance authority and to other member state bodies upon request. Governments, industry associations, and groups of interested organizations can establish their own due diligence program and oversee it, requesting recognition from the Commission. If the Commission recognizes such a program, it is considered that the economic entities applying it have fulfilled the requirements related to the due diligence policy regarding batteries.

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Provisions for recognizing due diligence programs allow, for example, the Government of the Republic of Croatia or the Croatian Chamber of Economy to establish a due diligence program, thus significantly facilitating the application of this regulation for entrepreneurs in Croatia. The due diligence program should be established by a Croatian body in dialogue with industry participants, as such a program will better reflect the situation in Croatia than one established by a foreign body.

Digital battery passport

The Regulation also introduces a digital passport for batteries. It applies to batteries for light means of transport, industrial batteries with a capacity greater than two kilowatt-hours, and batteries for electric vehicles. It will contain information about the battery available to the general public, information available only to compliance assessment bodies and market surveillance authorities, and information about the battery available only to physical and legal persons with a legitimate interest in accessing and processing that information.

Economic entities placing the battery on the market are responsible for the accuracy, completeness, and timeliness of the data from its digital passport, which is valid until the battery is recycled. Its purpose is to ensure that all necessary information about the battery is available in one place for all participants (from consumers to potential buyers of industrial batteries and competent authorities).

The Regulation recognizes the possibility of establishing an organization for controlling producer responsibility. Organizations are recognized in most EU member states as a better way to organize waste recovery than state bodies, as they ensure lower costs and greater efficiency in waste recovery. They are also currently recognized in the Croatian Waste Management Act, but their application in the field of batteries is excluded by subordinate regulations. Therefore, these regulations will need to be amended by August 18, 2025, to align with the text of the Regulation.

The new European Regulation on Batteries signifies a thorough shift towards a more sustainable and responsible battery industry within the European Union. By focusing on sustainability, efficiency, and transparency, the Regulation aims not only to improve environmental standards but also to encourage innovation in the sector. With the gradual introduction of provisions, it provides entrepreneurs with the opportunity to adapt their business to the new regulatory framework. However, challenges such as defining upper limits on carbon footprints and setting minimum efficiency standards will require thoughtful strategy and active planning to ensure compliance and maintain competitiveness in the market.

Carbon footprint declaration: What it must contain

It must be physically attached to batteries for electric vehicles (no earlier than February 18, 2025), rechargeable industrial batteries (no earlier than February 18, 2026, or August 18, 2030, for those with external storage), and batteries for light means of transport (no earlier than August 18, 2028).

It will contain at least information about the manufacturer, battery model, geographical location of the battery production facility, carbon footprint of the battery (in kilograms of CO2 equivalent per kWh of total produced energy during the expected lifespan), carbon footprint by phases of the battery life cycle, ID number of the EU declaration of conformity, and a link to a website containing a study confirming the carbon footprint values.

From February 18, 2027, the carbon footprint declaration must be available via a QR code that labels the battery.