The new law sets environmental protections throughout the entire life cycle of batteries – including the sourcing of raw materials, production and recycling, and has been welcomed by green groups such as Transport & Environment (T&E) and Deutsche Umwelthilfe (DUH).

Battery manufacturers which want to sell in Europe will have to report the product’s entire carbon footprint, from mining to production to recycling, as early as July 2024. That data will then be used to set a maximum CO₂ limit for batteries to apply from the end of 2027, ensuring that companies make them using clean energy instead of fossil fuels.

Alex Keynes, Clean Vehicles Manager at T&E, comments: ‘Batteries are already far more sustainable than burning oil in our cars, but they will soon have to be even better. New rules on carbon footprint, recycling and due diligence checks, provided they are properly implemented, will mean batteries sold in Europe will set the standard for the rest of the world. The next step is to put in place measures to bring to market smaller and affordable electric vehicles that use even less materials.’

Companies selling batteries in the EU will also have to comply with rules designed to prevent environmental, human rights and labour abuses in their supply chains. The law will require battery-makers to identify, prevent and address a wide range of issues, spanning water pollution to community rights, notes T&E.

New EU recycling targets will extend the climate advantage of batteries over fossil fuels even further. From 2027 battery-makers will need to recover 90% of nickel and cobalt used, rising to 95% in 2031. They will also need to recover 50% of lithium used in 2027, rising to 80% in 2031.

Noting that the shift to e-mobility ‘will lead to an enormous demand for resources in the coming years’ and that the new regulation ‘will contribute to reducing the environmental impacts’ of this shift, Marieke Hoffmann, Expert for Circular Economy at Deutsche Umwelthilfe (DUH), warns: ‘There is still a need for action.’

She continues: ‘We have to set good conditions for the longer use of vehicle batteries now by guaranteeing high durability, reparability and reuse. For example, discarded vehicle batteries should be reused as stationary power stations. Such scenarios must now be taken into account to avoid a lack of spare parts or limited software access later. We call on the EU Commission to close these remaining gaps in the legislation.’

The effectiveness of the EU Batteries Regulation will, in practice, depend on the implementing rules that are to be agreed next, according to T&E and DUH. They are concerned that draft new carbon footprint rules – due to be finalised by the end of 2023 – could allow ‘greenwashing’, whereby battery producers would only need to disclose Guarantees of Origin to prove that their energy is renewable. Both environmental organisations are calling for stricter rules to incentivise the use of power purchase agreements (PPAs).

Strong push needed to keep EV sales on track for net zero
Meanwhile, according to a new report from BloombergNEF, EV adoption is set to soar in the coming years, with over 100mn passenger EVs expected on the roads by 2026 and over 700mn by 2040, up from 27mn at the beginning of this year. Electrification is now spreading quickly to all sectors of road transport from rickshaws to heavy trucks and is also picking up in emerging economies like India, Thailand and Indonesia.

As momentum grows, new economic opportunities are taking shape. The cumulative value of EV sales across all segments is forecast to reach $8.8tn by 2030 and $57tn by 2050 in BNEF’s base-case Economic Transition Scenario, which assumes no new policies are implemented. EVs and batteries are now a central part of many countries’ industrial policy and competition to attract investment will increase in the coming years, it says.

However, despite the rapid progress, urgent action is required from policymakers and industry participants to keep road transport on track for long-term emission targets countries have set. ‘Direct electrification via batteries is the most efficient, cost-effective and commercially available route to fully decarbonising road transport. Still, a stronger push is needed on areas like heavy trucking, charging infrastructure and raw material supply,’ comments Aleksandra O’Donovan, Head of Electric Vehicles at BloombergNEF.

The report also includes a Net Zero Scenario consistent with a global zero-emissions-capable fleet by mid-century. Only one segment of road transport – three-wheeled vehicles – is fully on track for this more ambitious scenario, but buses and two-wheeled vehicles are also very close. Commercial vans and passenger cars are gaining momentum as well but will need additional policy support to stay on track, according to BNEF. ‘Heavy trucks are far behind the net zero trajectory and should be a priority focus for policymakers. Grid investments, grid connections and permitting processes also need to be streamlined to support the large number of charging points needed for the trucking transition,’ it says.

The report flags specific recommendations for governments and industry, including:

• Governments with mid-century net zero goals should set a phase-out date for sales of new internal combustion (ICE) vehicles no later than 2035, across all segments. These targets need to be backed by legislation and supported by concrete policy measures with interim targets.
• Fuel economy standards and/or tailpipe CO₂ emissions standards need to be made stricter and stretch further in time than current rules. More stringent standards for vans, trucks and other commercial vehicles are needed urgently in all markets.
• Governments should set requirements and standards for the recycling of EV batteries and continue to support research into next-generation battery technologies.
• Advancements like sodium-ion batteries, solid-state batteries and next-generation anodes are now entering commercialisation. Governments should look at ways to support domestic development of these areas and continue to support R&D into emerging battery technologies that reduce dependence on critical raw materials.
• Dense public charging networks are required to help reduce the EV range consumers feel they need, which in turn reduces pressure on battery raw material supplies. EV ranges have increased by 10% annually since 2018. Even if this slows to 5% a year from 2023 to 2030 it adds nearly 50% more demand for lithium, nickel and cobalt compared to a base case where BEV ranges remain flat.
• Investment in clean power should go hand in hand with road transport electrification investment. As solar generation increases, more EV charging should be shifted to midday to maximize emissions benefits and lower costs.