The EU’s grand ambitions to corner a significant chunk of the multi-billion-euro global battery market will take a step forward this year, when the bloc’s executive branch reviews the rules that underpin the manufacturing and recycling of power packs.
Batteries are becoming increasingly big business as demand for clean energy storage and electric vehicles ticks gradually upwards.
Bloomberg New Energy Finance predicts that production costs per kilowatt-hour will continue to fall and reach $100 in the coming years, the point at which most analysts say electric cars will reach price parity with their internal combustion equivalents.
Electric vehicle uptake is expected to keep growing, as EU rules on CO2 emissions force carmakers to sell more battery-powered models and consumer preferences lean more towards green options.
According to new data from clean mobility group Transport & Environment, EV sales in Europe will top 10% this year and 15% in 2021, as manufacturers race to meet the 2020 and 2030 emissions reduction targets.
But EU decision-makers, while happy that carmakers are starting to embrace change and contribute more to the bloc’s overall climate ambitions, are fearful of trading external dependence on fossil fuels with reliance on third parties for clean energy tech and materials.
To that end, the European Commission has already published a raw materials strategy that aims to boost the EU’s domestic supply of critical materials. It will later this year reveal how it intends to regulate batteries directly.
As part of a review of the existing Batteries Directive, the Commission will propose turning it into a regulation and impose green standards designed to make “Europe’s batteries the greenest in the world”, according to Vice-President Maroš Šefčovič.
The new rules will affect design standards, how batteries can be reused for different purposes and also cover smaller components like triple-A batteries.
During a virtual event organised by EURACTIV earlier this month, Mattia Pellegrini, one of the senior Commission officials overseeing the review, said the idea is “to cover the whole value chain of the life of a battery, from sourcing materials to possible second-life.”
He added that the rules will include “performance standards” that will aim to phase out from the European single market batteries that “are not performing well from an environmental or energy point of view”.
Pellegrini explained that it will follow a similar classification system as the existing energy efficiency grades for fridges and other household appliances.
The industry is unanimously in agreement that the legislation needs updating, as the current rules do not provide battery manufacturers with the framework needed to design and build power packs that are sustainable during use and simple to recycle when they expire.
EU officials envisage a thriving ecosystem of electric vehicles, powered by clean energy, feeding power into the grid when not in use. Batteries that are no longer suitable for use in cars would then be given a second shot at life in renewable energy storage facilities.
“Batteries will play a very important role in balancing the grid but also providing larger storage capacities, starting with households and up to an industrial scale,” Renew MEP Claudia Gamon said at the same event.
Mark Mistry of the Nickel Institute said it is “impressive how many of our member companies are now preparing themselves to have the capacities to recycle in Europe and make materials available for further life cycles.”
The industry has started to organise itself under the EU Battery Alliance, which launched in 2017, with manufacturers like Northvolt, recycler Umicore and car giants like BMW and Audi, all teaming up to build closed loops.
National governments have also wrangled willing companies together under so-called Important Projects of Common European Interest, which qualify for relaxed state aid scrutiny. Billions have already been approved and more are on the way.
Europe’s battery bigwigs have a lot of catching up to do, as Southeast Asian countries, notably China, have already cornered a substantial part of the market and home-grown power packs will struggle to compete naturally on price or volume.
But there is an opening as climate policies progressively start to be built more on the back of life-cycle emission assessments. Batteries are only as clean as the process that built them and it is there that Europe can stamp its authority.
The Commission is working on a carbon border tax that should act as an anti-climate-dumping instrument and dirty battery imports could find themselves on a list of products that will be subject to tariffs.
However, Claudia Gamon warned that it is difficult to establish the environmental footprint of imports and insisted the EU should focus on science-based rather than policy-based decisions.
“It’s a bad idea to start the debate with banning anything if you don’t have an alternative that has a sustainable business model in Europe,” she added.
Revising the Battery Directive will not be the end of the story, as it will have a knock-on effect on other pieces of legislation linked to state aid and chemicals management.
“If that legislation goes through as currently written, we’re not going to be having a battery value chain in Europe because we are not going to be handling some of the critical raw materials we need,” warned Adam McCarthy, head of the Cobalt Institute.
“We risk regulating ourselves out of having such a good value chain,” he added, urging EU legislators to make sure rules are coherent with one another.
Mattia Pellegrini acknowledged that aspect and added that waste management rules will also be retooled in order to make it easier for the industry to recycle batteries.
The review of the directive is on course to be published in November, after which the European Parliament and Council will hash out their own positions on the update. Trilateral talks will then follow before a final agreement can be brokered.
[Edited by Zoran Radosavljevic]