What are the concrete consequences of the new legislation for nickel producers? Who is affected? What needs to be done? And by when? Let’s shed some light on some emerging topics.

EU Battery regulation - two and a half years in the making

On 28^th July 2023, the new EU Battery Regulation was published in the Official Journal of the European Union. The new legislation enters into force on the 17^th of August. It will take another six months before the new regulation will apply on 18^th February 2024.

It took over two and a half years from the European Commission proposal at the end of 2020 to the publication of the final regulation at the end of July 2023 – indicating the importance of this new piece of legislation, which has been described by the European Commission as a ‘blueprint for the future’.

The new approach, the complexity and the relevance of batteries for the EU and member states to achieve the energy transition, as well as the ambition to establish a European batteries value chain is the reason why reaching agreement on the final regulation took such a long time.

A framework for Europe’s entire battery value chain

The new regulation encompasses the entire life cycle of batteries, from mining and manufacturing to use and end of life. It covers new and emerging battery technologies such as EV batteries. It also assesses environmental, economic, and social dimensions. The new legislation is seen as the regulatory framework to enable the establishment of a full batteries value chain in Europe.

Carbon footprint as key requirement

Mitigating climate change is a top priority for all EU institutions and this is reflected in the EU battery regulation. The obligations towards carbon footprint lie with economic operators placing batteries on the EU market – for example, the battery manufacturer or the automobile producer. From 18^th February 2025 onwards, they will be obliged to report the carbon footprint of EV batteries from mining to manufacturing. Carbon footprint requirements for other battery technologies will follow later.

Reporting will have to be done according to a protocol that currently is under development by the European Commission Joint Research Center and due to be published by 18^th February 2024. The protocol will stipulate how each actor in the battery value chain must collect and provide their product specific carbon footprint data to the economic operator.

Nickel producers will have an obligation to provide carbon footprint data on the nickel products they sell to the EV batteries value chain serving the European market. In 2026 it is envisaged to publish carbon footprint classes for EV batteries and in 2028 to define thresholds, i.e., a maximum carbon footprint for EV batteries sold in Europe. Even though industry average data may be allowed during a transition period, collecting and providing company and site specific carbon footprint data for nickel products will become mandatory and will be a deciding factor of whether a company maintains access to the European batteries value chain.

ESG Due Diligence

Another priority relates to the environmental, social and governance (ESG) issues related to the production of raw materials. The European institutions want to ensure that the supply of battery raw materials does not lead to adverse impacts in other parts of the world where metals are mined and processed. The obligations are currently limited to cobalt, lithium, natural graphite and nickel. The economic operator will have to provide evidence that such ESG issues are acknowledged in a structured way and properly managed, and that companies address any identified issues. Compliance has to be shown by 18^th August 2025. Guidance will be provided by the European Commission six months ahead.

Challenges and support for nickel producers

The Nickel Institute has closely followed the battery regulation during the drafting and political process. The main issues emerging for nickel producers are the carbon footprint and ESG requirements. But there is only a limited time frame available for companies to provide the necessary information that customers serving the EU battery value chain will require.

To assist, the Nickel Institute is working on providing its Member companies with life cycle data. This robust, high quality data include the carbon footprint information in the format required by the EU Battery Regulation and is collected according to the guidelines of the European Commission. The first companies already have this information at hand, and we expect the work for other companies to be completed by end of 2023.

The Nickel Institute life cycle data are developed following internationally agreed protocols and go through a critical peer review process which gives them a high credibility. They are generally acknowledged to be of a very high standard by international stakeholders and are based on hard data rather than modelling.

To further support nickel producers, the Nickel Institute has also worked on an ESG framework to enable them to demonstrate compliance with due diligence requirements of the battery regulation. The “Nickel Mark”, available since 2023, builds on the Copper Mark standards which are already widely used and acknowledged by, amongst others, automotive companies. The first three companies with five production sites have already successfully implemented the Nickel Mark and completed the audit. There are more companies working on the implementation.

Work on the EU battery regulation will continue and require our attention beyond 2030

The new regulation is a framework, and many technical elements still have to be defined in secondary legislation that will be drafted over the next few years. Carbon footprint and due diligence requirements are items that we are working on now. In addition, the calculation of recycling efficiencies of battery systems, material recovery targets for metals as well as the method for calculating the mandatory recycled content are topics that will continue to be on our agenda in future years, as they are of relevance for those companies that either are engaged or plan to become active in the recycling of nickel. Some of the targets only apply from 2036 onwards, and the discussion around these topics will continue.

We therefore expect the battery regulation to be high on our agenda for the years to come.