By Dr Mark Mistry, Senior Manager, Life Cycle Assesments and Sustainability, Nickel Institute
The new European Union (EU) Battery Regulation has implications for nickel producers both inside and outside of Europe. If they are supplying material to the EU battery chain destined for the European market, all producers need to comply with the new rules.
The drive in Europe to achieve the energy transition and the ambition to establish a European batteries value chain has led to a far-reaching regulation that cannot be ignored by nickel producers looking to serve the substantial European Union (EU) market. But what are the concrete consequences of the new legislation for nickel producers? Who is affected, what needs to be done, and by when does it need to be done?
what is the EU battery regulation?
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 electric vehicle (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.
The EU Battery Regulation was published in the Official Journal of the European Union on 28 July 2023, and the new legislation entered into force on 18 August. It will take another six months before the new regulation will apply on 18 February 2024.
It took more than 2.5 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 result is a new approach, accounting for the complexity and the importance of batteries for the EU and member states to achieve the energy transition. Establishing a European batteries value chain is key to the European energy strategy, and is why reaching agreement on the final regulation was a lengthy process.
carbon footprint – a key requirement
Mitigating climate change is a top priority for the EU, 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 February 2025 onwards, they will be required 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 is currently under development by the European Commission Joint Research Centre, and is due to be published by 18 February 2024. The protocol will stipulate how each actor in the battery value chain must collect and provide product-specific carbon footprint data to the economic operator.
EV BATTERIES VALUE CHAIN
Nickel producers will have 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 is the environmental, social and governance (ESG) issues related to the production of raw materials. The EU wants 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. Currently, cobalt, lithium, natural graphite and nickel are in the spotlight. The economic operator will have to provide evidence that such ESG issues are acknowledged in a structured way and are properly managed, and that companies address any issues identified. Compliance has to be shown by 18 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 includes 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 the end of 2023. The Nickel Institute life cycle data is developed following internationally agreed protocols and goes through a critical peer review process, which gives it a high credibility. It is generally acknowledged to be of a very high standard by international stakeholders, and is 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 that are already widely used and acknowledged by automotive companies, among others. 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 beyond 2024
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, and 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 EU Battery Regulation to be high on the agenda for the years to come.
For more information on how the Nickel Institute can assist nickel producers, contact email@example.com.