The EU intends to implement a horizontal regulation on the qualification, recycling, and waste management of batteries (Battery Regulation) aiming to replace the existing Batteries Directive. Once the EU approves the Commission’s proposal, the new regulation will make the batteries more sustainable throughout their entire lifecycle, according to EU officials. Given Hungary’s significant role in battery production, we summarize the additional statutory obligations and consequences that could be imposed on battery producers.
The producer’s obligations and responsibilities under the Battery Regulation would cover the whole lifecycle of a battery and it could be divided into three main cycles: (1) production; (2) distribution; and (3) collection.
Regarding production, batteries might be placed on the internal market if they comply with the mandatory sustainability, security, and labeling requirements. Once the Battery Regulation becomes effective, the producers must be registered as battery producers in the EU market. Therefore, the authorities could effectively monitor whether the company’s batteries comply with the mandatory requirements.
Prior to the distribution of a battery, the producer must request a conformity assessment body to perform a conformity assessment procedure and evaluate whether the produced battery complies with the mandatory requirements. In the event of compliance, the producer must prepare the EU conformity declaration and must place CE labeling on the battery. By introducing mandatory labeling requirements, significant data will be placed on batteries in connection with their lifespan and condition.
Before distributing these assets to the EU market, the battery producers must justify their financial capability of being able to comply with the newly introduced extended responsibility of the producers.
This extended responsibility of producers is a new concept the regulation establishes. It means that the battery producers will be responsible for organizing the recycling, collection, and repurposing of waste batteries that they make available on the market for the first time within the EU. The producer’s extended responsibilities would cover the following obligation: (1) to organize the separate collection of waste batteries; (2) to report on the fulfillment of its obligation under the Battery Regulation to the domestic authorities; (3) to promote the batteries’ separate collection; (4) to provide information including end-of-life information about batteries; and (5) to finance the earlier defined activities.
Producers must also identify and mitigate the environmental and social risks associated with the extraction, processing, and trading of the raw materials used for battery manufacturing (e.g., nickel, lithium, cobalt).
Once the producer becomes aware that its battery might not comply with the mandatory requirements, they must immediately take the necessary actions to fix the defects of the battery or withdraw it from the market.
The newly introduced battery passport will make it possible for market participants to collect and reuse the information and data relative to the batteries placed on the market, creating the opportunity for the end users to accurately identify and monitor the condition thereof.
The mandatory collection of waste portable, automotive, industrial, and electric vehicle batteries might also mean an additional burden for battery producers. Once a portable battery reaches the end of its lifespan, the producer must collect and recycle the asset and reuse the most important raw materials that were already included in its predecessor. To comply with the collection requirements, the producer, among other obligations, must (1) establish waste portable battery collection points and (2) offer the collection of waste portable batteries free of charge for certain entities (e.g., voluntary collection points, distributors, etc.). If such an entity takes the offer of the producer to collect the waste portable batteries for free, a connected collection point will be created. The connected collection points enable participants and end users to have free collection of their waste batteries by the battery producer.
While not all responsibilities will be considered new under the European Commission’s proposed text, it is unknown yet when the EU will approve the proposal. Because it could mean significant expenses for the producers to comply with these provisions, the preparation cannot be delayed any longer, and it is advisable to follow the latest domestic developments in the future.
By Akos Fehervary, Managing Partner, and Daniel Orosz, Senior Associate, Baker McKenzie