Thousands of amendments have been tabled in the European Parliament’s Environment Committee, which will soon adopt its Report. In parallel, Member States are still negotiating the dossier in the Council of EU. Significant progress has been made but important issues remain open. The Nickel Institute calls for an ambitious but realistic approach, to ensure the swift adoption of the Regulation, avoid overlaps and duplications with existing EU legislation.
EU Batteries Regulation: Where do we stand?
The proposed Regulation will introduce a wide range of sustainability requirements and promote the recycling of key battery raw materials like nickel. EU legislative work is entering a crucial phase.
It is one of the key EU initiatives to implement the European Green Deal.
An ambitious, complex and innovative legislative proposal
In December 2020, the European Commission published its proposed Regulation on Batteries and Waste Batteries. It is one of the key EU initiatives to implement the European Green Deal, moving Europe towards a low carbon and circular economy and boosting clean mobility.
The objective is also to foster a sustainable battery value chain in Europe and increase the EU’s resilience in the supply of battery raw materials. The Commission’s proposal puts strong emphasis on sustainability, introducing a wide range of new requirements for batteries and key battery raw materials such as nickel. The Commission has made significant efforts to develop a comprehensive regulatory framework covering all parts of the battery life cycle, from mining to the end-of-life management.
The proposed Regulation will introduce new requirements for batteries placed on the EU market, with a specific focus on electric vehicle (EVs) batteries. Particularly notable for raw material producers are the provisions on carbon footprint, recycled content, recycling efficiencies, materials recovery targets and due diligence.
As nickel plays a key role in well-established batteries as well as in emerging technologies for EVs, the Nickel Institute and the nickel industry are following with great interest the ongoing legislative work.
Where do we stand?
ENVI Committee’s Members tabled over 1000 amendments.
The Commission’s proposal is currently being examined by the European Parliament (EP) and the EU Council, which have to jointly adopt the Regulation. Policy makers welcome the proposal as a positive step in the right direction. But they have diverging views on some aspects and the level of ambition. In the EP, the Industry (ITRE), Internal Market (IMCO) and the Transport (TRAN) Committees have already adopted their Opinions. In October 2021, the Rapporteur, MEP Simona Bonafè, presented her draft Report in the lead Environment (ENVI) Committee. Overall, ENVI Committee’s Members tabled over 1000 amendments. It is a huge number but it is not surprising given the complexity of the proposed Regulation.
A crucial vote ahead in the EP Environment Committee
Following intense discussions and negotiations on possible compromise amendments, the ENVI Committee is expected to vote on the file on 10 February 2022. It will be a crucial vote to define the EP position, before the plenary session in March and future negotiations between the EU institutions.
Expected vote from the ENVI Commitee
What are the next steps in the EU process?
After having adopted its Report, the EP will have to negotiate with the Council which is also preparing many amendments. Legislative work is expected to continue at full speed in the coming months under the aegis of the French (1H2022) and Czech (2H2022) EU Presidencies.
It will be important to avoid unintended consequences and duplication with existing EU legislation.
The views of the Nickel Institute
At the Nickel Institute, we welcome the Commission’s proposal and fully supports the aim of the Regulation. At the same time, we think that some aspects could be improved to ensure an effective and more workable regulatory framework. In particular, it will be important to avoid unintended consequences and duplication with existing EU legislation. As outlined in more detail in the Nickel Institute’s Position Paper (July 2021), our comments and recommendations focus on the following issues:
1. Recycled content (Art. 8) and material recovery targets (Art. 57, Annex XII Part C):
The proposal includes binding targets for the batteries’ recycled content and the recovery targets for nickel and other metals. In our view, setting the targets - without first developing and agreeing on the appropriate methodology for calculating and verifying them – can create uncertainty on whether the targets can be met. The targets’ feasibility will depend on many factors (available technologies, etc.) which will evolve over time. For this reason, we recommend a gradual approach to setting the targets.
The 95% minimum recovery target proposed by the Commission for nickel is already ambitious. Proposing an increase at this stage, as suggested by some EP amendments, is very premature, as the Commission has not yet adopted the methodology to calculate the targets. In addition, as mentioned earlier, the target feasibility will depend on many parameters (e.g. number of batteries in service, their lifetime, uptake of second life batteries vs recycling) which will evolve over the next years. Therefore, we believe it would be more appropriate to:
- first, define the methodology for the calculation and verification of the targets;
- assess the costs and benefits of the different recycling and recovery targets and their impacts on international trade flows;
- then, derive and agree on adequate and verifiable targets.
2. Due diligence (Articles 39 and 72; Annex X):
We fully support due diligence and agree that sustainable sourcing of raw materials is paramount. However, introducing application-specific due diligence requirements opens the door for the multiplication of reporting obligations for upstream parts of the supply chains, diverting resources from proper and efficient risk management. A horizontal risk-based approach for all value chains and raw materials would be more appropriate to ensure regulatory consistency and avoid duplication. We therefore recommend establishing links with the upcoming EU horizontal initiative on due diligence and sustainable corporate governance.
In addition, it important to keep the possibility to implement the due diligence requirements through participation in industry-led schemes, as proposed by the Commission. If industry-led schemes meet the requirements, including third-party verification, they should be accepted for the implementation of the due diligence requirements for batteries.
3. Implementation timelines:
The proposed timelines for many requirements are ambitious. This can create feasibility challenges when it comes to collecting the necessary data and developing the methodologies on time. Noting the complexity of the supply chain and the need to adopt the various calculation methodologies, etc. some of the proposed timelines may be too short.
In our view, the implementation deadlines should be more realistic and give more time to authorities and industry to get prepared, taking into account the time needed to develop the necessary methodologies and collect the data.
4. Battery technologies and sustainability requirements:
Sustainability requirements currently focus on nickel and cobalt containing battery technologies. To make the Regulation “future-proof”, it would be appropriate to introduce mechanisms that can address future changes in battery technologies, to ensure a level playing field and prevent a shift towards battery chemistries involving raw materials not covered yet by the sustainability requirements and the targets for recycled content and material recovery. This is critical to ensure technological neutrality, avoid distortions and unintended consequences.
5. Hazardous substances (Articles 6 and 71):
The proposal includes an ad-hoc process to regulate hazardous substances in batteries. To reduce regulatory uncertainty, we recommend avoiding duplication and overlaps with existing EU legislation for chemicals management (i.e., REACH Regulation) and workplace protection (OSH).
Several industry associations, covering different parts of the battery value chain (raw materials supply, battery manufacturing, downstream use and recycling) have expressed similar views on this and other issues in a comprehensive joint position paper published in January. The Nickel Institute is part of Eurometaux, which is one of the co-signatories of this joint initiative, on behalf of the non-ferrous metals industry.
Conclusion: more work ahead!
A huge work has already been done by EU policy makers, but more efforts will be needed in the next months to adopt the Regulation.
A key step will be the upcoming vote by the EP Environment Committee. In parallel, the French EU Presidency is pursuing the negotiations with a view to find a political agreement at the Environment Council on 17 March 2022 (tbc).
It has to be seen how much time will be needed for the EP and the Council to find a deal on their amendments. It is therefore unclear whether the new Regulation will be finally adopted in 2022, as expected by the Commission. But what is clear is that its adoption will only be a first, major step, on a long journey to establish the new EU regulatory framework. Several requirements, as well as implementation methodologies, will have to be adopted by the Commission over the next years, via the so-called EU “secondary legislation”.
In the meantime, it will be important to continue the dialogue with stakeholders and prepare for the implementation of the Regulation, together with the other industries along the EV battery value chain.