As transport and industrial sectors accelerate to achieve electrification and eliminate dependence on fossil fuels, the demand for sustainable battery production is mounting. The European Parliament is pushing to ban the sale of new internal combustion engine cars by 2035, meaning the demand of battery materials will continue to dramatically increase.1 By 2030 the EU will need 5 times more cobalt and 18 times more lithium compared to the demand in 2018, numbers which exponentially increase when estimating demand in 2050.2 If electrification is to be a truly sustainable transition, a system-level approach must be taken to ensure sustainable material sourcing, efficient battery production, and effective end-of-life processing.
A proposed update to the 2006 Battery Directive3 aims to ensure the growth of the battery industry is done sustainably. In March 2022 the proposed EU Battery Regulation Amendment received further updates, laying out the structure to achieve sustainable battery lifecycles. This includes a digital record system to enable the transfer of key information between parties - the battery passport, which is detailed in Article 65.4
In this article you will learn:
- Who does the battery passport regulation affect?
- What information will need to be included in the battery passport?
- Battery passport example
- Battery passport data structure, sovereignty, and security
- Other Battery Regulation Amendment information requirements
- What value will battery passports bring?
- What value will the other Battery Regulation Amendment requirements bring?
- When will battery passports be required?
- How to implement a battery passport system
- What additional regulations will define battery passport requirements and implementation?
- Future of battery passports
Who does the battery passport regulation affect?
According to the proposed Battery Regulation update, every industrial or electric vehicle (EV) battery on the EU market with a capacity of over 2 kWh will require a battery passport. This means regardless of the origin of the battery, it will require a battery passport in order to be listed in the European market. It will be the responsibility of the party placing the battery on the market, to ensure that all data required is entered in the digital record and that the information is correct and up to date.
Battery passports will therefore require input from:
- Cell producers
- Module producers
- Battery producers
- Automotive OEMs
- Battery service, refurbishing, and repurposing companies
What information will need to be included in the battery passport?
The battery passport must contain information on:
- Identification of the battery in the form of a unique identifier.
- Basic characteristics - battery type and model which will also be stored in the EU electronic exchange system.
- Statistics on performance and durability must also be updated over the battery lifecycle by parties conducting repair or repurposing of the battery.
The specific performance characteristics required in battery digital product passports are detailed in Article 10 of the Battery Regulation Amendment. Technical documentation on the electrochemical performance and durability of the battery must be provided, including details on how this data was obtained. This is to ensure the batteries meet the minimum requirements for battery performance and capacity, in order to guarantee batteries on the market are operational and efficient over a sufficient lifetime. These exact requirements are to be determined in a delegate act released by the end of 2024.
To gain access to the battery passport, the physical battery must have a QR code printed or engraved on it to act as a unique product identifier (per the 2022 amendment).5
The 2022 draft of the Battery Regulation Amendment also outlines many other requirements for making key data available to the battery value chain. While the battery passport is not specifically prescribed as the way of making this data available, it is likely that in future amendments to the regulation, more of this information will need to be included in the battery passport. However, it’s important to mention that ensuring the protection of confidential data is also a key consideration in the Battery Regulation Amendment, as aspects of this data are linked to companies' intellectual property and competitive advantages.
Battery passport data structure, sovereignty, and security
The need for data protection was also mentioned by the Deputy Director General of Business Europe, Mr Alexandre Affre at the recent IMCO herding on digital product passports. He mentioned five requirements for a successful digital product passport implementation, including:
“ensure[ing] that disclosure of confidential and sensitive information is avoided. To give an example: some product information [about suppliers] can be a trade secret, and also not necessarily relevant for [enabling] a circular economy. Trade secrets and confidential information need to be protected.”
From an efficiency perspective, in order to avoid the administrative burden of manually managing this process and maintaining multiple data distribution systems, it will be logical to use the battery passport system to share and possibly store this information. Therefore the battery passport system will become a valuable asset in ensuring information is effectively distributed to all the parties that require it. Using a decentralised method of data storage is the way to achieve this.
What is decentralised data storage?
Decentralised data storage means instead of data being stored in many different places, it is stored in various locations connected with each other. This method allows maintaining a single source of truth (e.g. a manufacturer's bill of materials), and the relevant information is then continually distributed as required to selected parties in a peer-to-peer fashion. A strategy that is also supported by the EU Data Economy Strategy.6
Mr Thomas Götz from the Wuppertal Institute explained the current landscape of digital product passports and how it brings together data in one place while also emphasising the need of doing this in a decentralised way:
“A decentralised approach using data from different sources is - especially from the beginning phase onwards - very important because the spread data has to be brought together. It’s reasonable to use existing data and link to it from the DPP so that (...) all needed information is collected and can be found in one place.”
Read more about the importance of decentralisation and data security for digital product passports
Other Battery Regulation Amendment information requirements
The Battery Regulation requires many other criteria to be met to sell batteries in the EU, including the reporting of a carbon footprint declaration (Article 7), recycled content percentages (Article 8), as well as human rights and battery supply chain due diligence obligations throughout the battery value chain (Articles 39 and 72). Here are some of the main requirements that must be met:
- Facilitate repair and end-of-life processing (Articles 46-49)
Battery model information must be made electronically available to parties conducting any repair or end-of-life processing. Information should also be made available to end users to facilitate collection schemes for end-of-life batteries. This means producers and distributors must ensure consumers are aware of collection schemes through the use of posters and social media campaigns, or QR codes on the battery which link to a website providing the relevant information. This leads to businesses having greater responsibility for what happens to the products they produce after they leave the factory.
Extended producer responsibility will mean that battery producers are required to finance or organise the collection of waste batteries. This means establishing a take-back network that covers the whole of the EU and that does not merely target areas where the collection is profitable.
- Recycled content (Articles 8 and 57)
By the beginning of 2030, batteries must contain a minimum of 12% cobalt, 85% lead, 4% lithium, and 4% nickel which is from non-virgin sources. To meet these targets all waste batteries collected must enter a recycling process with minimum efficiencies of 65% for lead-acid batteries and 75% for nickel-cadmium batteries (per Annex III of 2022 update) which will increase over time.
- Carbon footprint and GHG emissions calculation (Article 7)
Battery producers will be obligated to report the carbon footprint associated with the overall life cycle (excluding the use phase) of the specific manufacturing batch of batteries. The EU Commission intends to offer a web-based tool and free access to the libraries of secondary datasets to facilitate the process of calculating the carbon footprint, based on the adopted rules.
The data will then be submitted and possibly used to set benchmarks of GHG (greenhouse gas) emissions. The data will then be assessed to determine the need for additional incentives or reporting requirements.
- Battery health data (Article 14)
Battery health information must be made available to the battery owner in order to determine the further use, repurpose, or remanufacture potential of the battery.
- Conformity declarations (Articles 17 and 18)
Before a battery can be placed on the EU market, it must have a conformity assessment conducted by a notified body to produce a declaration of conformity.
- Safety and hazardous materials requirements (Articles 12 and 71)
Stationary batteries must include evidence that they are safe during their normal operation as part of their technical documentation. All batteries cannot contain materials which present a hazard to humans or the environment during all stages of the battery life cycle. A range of deligate acts will follow the Battery Regulation Amendment to outline the details of the hazardous substances requirements.
- Battery supply chain due diligence requirements (Article 39)
As of 12 months after the proposed Battery Regulation update is implemented, companies selling EV and industrial batteries on the EU market must conduct supply chain due diligence to mitigate social and environmental risks.
- A due diligence policy must be established, made publically available and overseen by senior management.
- A five year record of supply chain transparency must be kept detailing the chain of custody of each material from source to the company selling the battery in the EU.
- The overall quantity of raw materials used in each battery must also be communicated as a percentage or mass per material.
- The due diligence policy must also be verified by a notified body to ensure the scope, competence, and reliability of the due diligence process.
- All information must be made available to the public, to authorities upon request, and to downstream customers.
For guidance and standards of due diligence, reference the OECD Due Diligence Guidance.
Risks of non-compliance with the Battery Regulation:
The 2022 amendment to Article 69 states that businesses should actively remedy harm caused by themselves or in cooperation with other actors even when due diligence has been carried out. Such operators should be liable for any adverse impact within their control that they caused or contributed to. Anyone adversely impacted is entitled to remedies and should be provided with access to justice. This adds to the ever increasing need for greater supply chain visibility and overall product impact tracking, in order to mitigate the risk of significant compensation claims when something goes wrong.
What value will battery passports bring?
Battery passports may at first seem like an administrative burden, but they also present the opportunity to work towards the common good and create a competitive advantage for businesses. Here are a few ways you can benefit from the battery passports:
Enable sustainable production
The battery passport system is designed to ensure the sustainable production of batteries as demand continues to grow rapidly. Durability and performance data reporting requirements will lead to batteries being higher quality and in use for longer. As more data requirements are added to battery passports, it will also lead to greater traceability in battery supply chains.
Create a competitive edge
The performance requirements and conformity declaration will ensure that EV and industrial batteries meet a certain standard. From a commercial perspective, the requirement for durability information will also increase competition in areas of longevity and quality, providing companies with additional ways to differentiate themselves from their competition.
Leverage your data
Making information openly available via battery passports empowers OEMs and consumers to make more informed buying decisions. For the upstream parties in battery production, attaching data to each unique product allows companies to monetise their sustainable business practices by creating a data stream to their downstream customers.
Incentivise sustainable product use
The need to continue updating the battery passport over the product's life cycle will also start to facilitate more sustainable use of the product.
What value will the other Battery Regulation Amendment requirements bring?
The additional requirements outlined in the proposed Battery Regulation Amendment are even more extensive than for the battery passport, but these too create an opportunity for businesses to capitalise on:
Improve end of life battery recovery
Requirements to report on recycled battery component content links to the EU targets for battery material recovery and moves the industry to meet targets and improve material recovery systems.
Ensure fair working conditions
Supply chain due diligence requirements will help to ensure ethical work practices across the battery supply chain, regardless of location.
Maintain safe working conditions
Similarly, reporting on safety requirements and conformity will ensure fair and safe working environments in the battery industry.
Circular battery economy and value chain cooperation
Extended producer responsibility and the associated take back and waste processing requirements will drive more circular business practices and value chain cooperation.
When will battery passports be required?
From 1st January 2026, all EV and industrial batteries on the EU market will require a unique battery passport retrievable using the unique product identifier in the form of a QR code.
Key dates for other Battery Regulation requirements
The proposed Battery Regulation update also requires sustainability assessments accessible via the QR code on the battery for other battery parameters:
- 1st July 2024 - carbon footprint specific to the manufacturing site and batch of batteries which is third party verified and publicly accessible on the internet.
- 1st January 2026 - performance classification for carbon impact and electrochemical performance and durability requirements.
- 1st July 2027 - impact assessment of battery life cycle to ensure it meets the carbon footprint threshold, plus technical documentation detailing the percentages of cobalt, lead, lithium, and nickel which came from recovered sources.
How to implement a battery passport system
- The first step is to identify what information you need to gather and from whom so that you can meet the battery passport data requirements.
- Next, you need to ascertain if your suppliers are prepared to give you the information you need and if the data will be reliable. It's possible some suppliers will have no interest in sharing this data and therefore will no longer be active in the European market. Changing suppliers for critical materials is not only time-consuming but could also require a product redesign to support the new material supply, so it is best to start this process as soon as possible.
- Ensure you have a QR code on the battery casing to act as a unique identifier and will link to the battery passport. This will require slight changes to product design and production processes if a QR code is not already present, so again, it is best to start planning for these operational changes early in order to avoid mistakes and disruption.
- Choose a system to act as the data storage and distribution medium, which is reliable and scalable. More information will need to be included in the battery passport over time which will need to be selectively shared with members of the value chain. Therefore choosing a system which can adapt to the evolving requirements is key. Decentralisation is one of the most promising ways in which this can be achieved.
Learn more about the considerations to be made when implementing a digital product passport system.
What additional regulations will define battery passport requirements and implementation?
Article 64 of the Battery Regulation Amendment states that the EU Commission aims to implement acts by the end of 2024 which will define the data format and rules for accessing, sharing, and managing the data in the battery information exchange system. This system will be implemented by the Commission by the beginning of 2026.
Other key updates relating to the Battery Regulation update
A delegate act will be published by 1st July 2023 to outline a set methodology for calculating battery carbon footprint and by the end of 2024, the carbon footprint performance class thresholds will be defined (per Article 7). The minimum values for EV battery electrochemical performance and durability will also be defined in a supplementary act by the end of 2024 (per Article 9).
A variety of wider reaching regulations are in the process of being implemented which will affect companies located and selling to the European market to ensure sustainable and ethical supply chains. Get an overview of the upcoming EU regulations in this guide.
Future of battery passports
The Battery Regulation Amendment is still in the proposal phase, and there will be many other associated acts to outline the specific requirements mentioned in this regulation. This means that while we have a good idea of the future for battery passports, the exact roadmap is not yet certain. Areas of development for battery passports will likely include:
The granularity and reliability of data in battery passports
It is clear that each battery needs a unique identifier and product passport, but it is not yet clear if the other information that needs to be provided under the Battery Regulation update must be product-specific. For example, a carbon footprint calculation tool will be provided by the EU Commission, but this will be based on shared data sources and averages i.e. using estimates to calculate the carbon footprint for that batch, but not necessarily reflect the impact of the specific material flows and operations conducted for each battery. The granularity and reliability of the impact data being gathered and shared still need to be clearly defined and will likely increase over time.
The proposed Battery Regulation Amendment also requires a great many other sustainability criteria to be met by batteries entering the EU market. How this information is shared remains to be determined, but battery passports are a logical choice as the medium to share more information over time.
International cooperation for battery passport creation
This regulation is the most advanced of its kind, with many other countries looking to the EU to set an example for sustainable production regulations. However with a globalised economy and supply chains crossing multiple continents, if a truly sustainable battery production system is to be created, a system-wide approach must be adopted.
- China plays a key role in the battery market. From the 1st of January 2020, battery material recycling requirements were introduced, ensuring rare earth elements have a recovery rate of no less than 97%.7 But despite China’s influence on the global battery market, collaborative international agreements remain to be seen.
- As highlighted by the European Raw Material Alliance (ERMA) Action Plan, boosting supply security through better cooperation among stakeholders is a top priority.8 For rare earth metals suppliers, this means not only becoming more sustainable but also proving their compliance and quality criteria to customers and regulators.
- In June 2022, the EPA submitted a request for information with the US Federal Register to implement initiatives for developing best practices, plus communication and labelling systems for end-of-life battery collection and recycling.9 It's possible this will be the beginning of a similar transition to more sustainable battery production in the USA, so members of the battery supply chain should consider providing feedback to the EPA on this action. But given the early stage of these discussions, international standardisation has not been mentioned.
Play an active role in battery passport standards
Battery passports and best practices are still being defined. Establishing practical and reliable standards for sustainable battery production will require cross-sector and cross-continental cooperation. Various organisations are working to shape the future of sustainable battery production and the regulations which govern this, so if you want to play an active role in how battery passports develop, consider joining the Global Battery Alliance, Catena-X, MOBI, or work with Circularise on battery passport implementation.
Summary
The proposed Battery Regulation Amendment lays out a range of plans to create a sustainable battery industry, including structures for more effective battery recycling, supply chain due diligence, and GHG emissions reduction. The battery passport system will initially only require a small proportion of this information, relating to basic battery information and statistics. But with many subsequent acts to follow the Battery Regulation Amendment, and the clear direction from the proposed Ecodesign Regulation10 that digital product passports will be a key tool in creating a more circular economy in the EU, it’s highly likely we will see battery passports information requirements increase substantially over time.
Therefore, regardless of the specific requirements to come, members of EU battery value chains need to gain visibility into their supply chains in order to collect the technical and environmental impact data that will soon become a legal requirement. Companies also need to get ready to implement a battery passport system and integrate data into their product in order to share information with members of the supply chain who require it.
Contact us to discuss digital product passport implementation and how to securely share data with members of your value chain.
Circularise is the leading software platform that provides end-to-end traceability for complex industrial supply chains. We offer two traceability solutions: MassBalancer to automate mass balance bookkeeping and Digital Product Passports for end-to-end batch traceability.
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