·EU batteries market: battery manufacturers would have a clear and predictable legal framework that supports innovation and competitiveness in a growing market.

·Health, environmental and social impacts: all industrial batteries would have a calculation of their CO2 footprint and manufacturers of industrial lithium batteries, except light personal transport batteries, would also provide information on responsible sourcing;

·Information: end users would have better and more accessible information on the batteries they buy: what they are made of, how they will perform (including expected durability) and how their production meets environmental and social standards;

·Recycling: all collected batteries would be recycled. The recycling processes would be highly efficient and pose lower occupational health and safety risks, contributing to supplying materials to the battery industry and reducing the environmental burden of their production from raw materials;

·Collection: more portable and industrial batteries collected and recycled at a lower unit costlight personal transport batteries would also be collected and all industrial batteries would be counted, tracked and reported;

·Raw materials: better recycling efficiency and better material recovery for nickel, cobalt, lithium and copper (batteries would contain a higher degree of recycled and recovered materials);

As part of a future evaluation of the new rules, the Commission would expect to observe the following improvements as a measure of the success of the new rules:

The aim of the monitoring arrangements detailed above is to collect factual data on the implementation of the new provisions on batteries. This would help assess whether the new provisions achieve the intended objectives and help identify any unintended consequences.

National market authorities would be responsible for checking the validity of the information provided to fulfil all the obligations in the regulation. The regulatory proposal would include the option for the Commission to carry out additional compliance checks, as it does for type-approval legislation for vehicles.

Provisions on the carbon footprint and recycled content declarations, and on the due diligence policy for the responsible sourcing of raw materials would require third-party verification, in principle, via notified bodies.

The obligation for producers to provide information on the volume of recycled content would follow a harmonised methodology.

Similarly, the obligation to provide information on performance and durability should form part of the technical documentation. Depending on the type of battery, this information should also be made available online in a battery database and/or in the battery passport.

The obligation to report the carbon footprint associated with the overall lifecycle (excluding the use phase) of batteries placed on the market requires developing an IT tool that allows manufacturers to enter the information directly. The Commission intends to offer a web-based tool and free access to the libraries of secondary datasets to facilitate the process of calculating carbon footprint, based on the adopted rules. The data submitted could be used to set benchmarks for GHG emissions, to assess whether bringing in classes of GHG intensity performance would be useful to improve the carbon footprint and environmental performance of batteries and to assess the need for additional incentives and/or market conditionality measures.

The recycling efficiency target for lithium batteries is set at 65% starting in 2025. Eurostat has collected data on recycling efficiencies for lead, cadmium and other batteries on a yearly basis since 2014. It would therefore be a minor addition to include the recycling efficiency of lithium to the established data collection procedure.

Creating a reporting system for automotive and industrial batteries requires collecting information that is already generated at national level. Moreover, for automotive and EV batteries, the reporting system could be built on top of the system set up by the End-of-life Vehicles Directive.

Setting a new collection rate target for portable batteries requires monitoring the collection rate in Member States. This was set up for the current target of 45% and involved Eurostat collecting information from Member States on a yearly basis. Setting a new target would therefore not entail additional reporting obligations.

The aim of the proposed change to the classification of batteries is to update the existing rules to ensure they cover all batteries, including possible new battery types. Monitoring arrangements would need to ensure that the new measures are implemented and enforced as intended.

Requirements would apply in a proportionate manner both to European producers and to importers, and would be consistent with the EU’s international obligations. Likewise, European producers would not be disadvantaged in their ability to function inside or outside Europe.

An assessment of the economic impact demonstrates that the proposed regulation would not affect production costs in a significant manner. The proposed Regulation would thus not affect the EU's international competitiveness.

2)For some measures, the impact analysis found that an incremental approach is the most suitable. For instance, this is the case for the discussion on performance and durability requirements, which involves setting information obligations as the first step and then setting or enforcing limit values later on when more information is available.

1)All measures except Measure 11 on design requirements for portable batteries would be further fleshed out in secondary legislation, which would facilitate adaptability and regulatory responsiveness in line with technological and market developments.

The proposed Regulation has two features that should combine to make the policy framework future proof and innovation friendly:

Future proofing legislation means striking a proper balance between predictability and legal certainty and allowing the sector to respond to technological progress. This is especially important for the battery sector, which is undergoing fast-changing demand, and innovation in battery characteristics and performance. Careful consideration has been taken of the market and of Europe’s research agenda (see Annex 8) in particular, so the revision is careful to avoid being overly prescriptive / restrictive in order to support innovation.

3)This policy proposal makes maximum use of the potential of digitalisation to reduce administrative costs. To this end, Measure 12, for example, proposes setting up an electronic information exchange system or battery dataspace of information on every portable and industrial battery model placed on the market and a battery passport for each industrial battery placed on the market. Although developing this tool would entail some costs to both the Commission and to economic operators, it would provide Member State authorities and the Commission with a powerful tool to enforce the obligations in the proposed regulation, as well as a market intelligence tool to feed into future revisions and refinements of the obligations.

2)This policy proposal includes several measures that cover areas identified in the evaluation of the Batteries Directive where the lack of harmonisation or insufficiently detailed provisions leads to sub-optimal outcomes in terms of a level playing field and cost-efficiency (e.g. producer responsibility organisations). Likewise, it includes a number of measures that ensure that the regulatory environment is up-to-date and fit for purpose to adapt to technological novelties, such as EV batteries, light transport vehicles or second-life industrial batteries.

1)The evaluation of the Batteries Directive found that “Implementing the Directive involves necessarily complex procedures that could sometimes entail significant costs for local authorities. However, national administrations do not perceive that implementing the Directive results in unnecessary regulatory burdens.”

Three further qualifications can be made regarding the administrative burden and simplification potential related to this policy proposal:

Cost estimates are in any case highly uncertain as markets and technologies are still developing and likely to become more efficient. Likewise it is rather difficult to monetise the environmental benefits or the improvements in batteries' efficiency and performance.

The current annual market volume of the EU batteries market is €12 billion and set to grow. The impact assessment shows that the cost of the legislative proposal is mostly determined by the cost of the collection target for portable batteries, which is estimated to be EUR 1.09 per capita per year. Adding this up to the cost estimates of the measures for which there are currently no provisions in the Batteries Directive, like for example the measures on second life, carbon footprint, supply chain due diligence etc, – for which the impact assessment shows that the regulatory cost is negligible – a prudent estimate for the regulatory cost of the entire package would be around EUR 500 million per year (not taking into account the investment costs for Measure 5 on recycling efficiencies and material recovery).

In terms of the overall regulatory burden, although the financial costs and benefits of the overall package is uncertain, it appears likely that it would not have a significant impact on the price of batteries.

Setting up an electronic information exchange system for batteries and a passport scheme (for industrial and electric vehicle batteries only)

Carbon footprint performance classes and maximum carbon thresholds for batteries as a condition for placement on the market

At the end of the first life, used batteries are not waste. Repurposed (second life) batteries are considered as new products which have to comply with the product requirements when they are placed on the market.

At the end of the first life, used batteries are considered waste (except for reuse). Repurposing is considered a waste treatment operation. Repurposed (second life) batteries are considered as new products which have to comply with the product requirements when they are placed on the market

New calculation methodology for collection rates of portable batteries based on batteries available for collection

Legend: green = preferred option; light green = preferred option pending a revision clause; all symbols indicate impact relative to the baseline situation, with "+ & -" = positive and negative impacts, "~0" = negligible, and " ?" = further assessment needed

Table 8: Overview of the analysis of the impacts of all options

For Measure 13 on due diligence for raw materials, the preferred option is Option 3, a mandatory approach. There is a fair degree of consensus among stakeholders that this option would be more effective in reducing the social and environmental risks related to raw material extraction.

For Measure 12 on the provision of reliable information, a combination of both Option 2 and Option 3 is preferred. Option 2, bringing in a printed and an online labelling system providing basic and more tailored information is preferred because it would help provide better information to consumers and end users and stimulate a market shift towards more environmentally sound batteries. The principle of Option 3, an electronic exchange system and battery passport, as proposed by the Global Batteries Alliance, is accepted by several global organisations. The electronic exchange system will have a one-off administrative cost for setting it up, but will lead to administrative simplification and lower implementation costs in the long term. The battery passport should furthermore enable second life operators to take informed business decisions and allow recyclers to better plan their operations and improve their recycling efficiencies.

For Measure 11 on design requirements for portable batteries the preferred option is a strengthened obligation of battery removability (Option 2) and a new obligation of battery replaceability (Option 3). The economic costs of these options are negligible, while they will generate environmental benefits and resource savings. It will do so by facilitating the reuse, repair and recycling of batteries and the appliances in which they are integrated.

For Measure 10 on extended producer responsibility and producer responsibility organisations, no high level ambition option was proposed since it mostly involves fine-tuning existing provisions under the Batteries Directive. The proposed measure would level the playing field for EPR schemes for EV and industrial batteries that are currently classified as industrial batteries and for PROs for portable batteries. The economic costs of this measure are expected to be negligible and largely offset by the environmental benefits of increased collection rates.

The preferred option for Measure 9 is both Option 2, bringing in a mandatory declaration of recycled content, in the short term, and Option 3, setting mandatory targets for recycled content for lithium, cobalt, nickel and lead in 2030 and 2035. The two options are complementary and would contribute to providing a predictable legal framework that would encourage market players to invest in recycling technologies that would otherwise not be developed because they are not cost-competitive with the production of primary raw materials.

For Measure 8 on non-rechargeable portable batteries, the preferred option is Option 2, setting electrochemical performance and durability parameters to minimise the inefficient use of resources and energy. These parameters will also be taken up by the labelling requirements that are covered by Measure 12 to inform consumers’ batteries' performance. With regards to Options 3 and 4 the conclusion is that there is currently insufficient evidence available to demonstrate the effectiveness and feasibility of a partial or complete phase out of non-rechargeable batteries. Producers and recyclers of non-rechargeable batteries are opposed to these two more ambitious options.

For Measure 7 on the performance and durability of rechargeable industrial and electric-vehicle batteries, the preferred option is Option 2, bringing in information requirements in the short term. This would help harmonise the calculation and availability of performance and durability characteristics of batteries and hence enable consumers and businesses to take informed decisions. Once the necessary information is available and the standardisation work has been completed, it will be possible to introduce minimum performance requirements (Option 3) at a later stage. The Commission concluded this option is more effective in the long term to help the market switch to better-performing batteries, and so trigger a shift to a lower environmental impact.

For Measure 6 on the carbon footprint of EV batteries, the preferred option is Option 2, a mandatory declaration, possibly complemented, over time, once sufficient market knowledge has been acquired and once further assessment is carried out,, with Option 3, setting carbon footprint performance classes and maximum threshold values as a condition for the placement of batteries on the EU market. These options are essential to achieve the objective of carbon neutrality and environmental protection, which were set out for example in the as stated in the new Circular Economy Action Plan for a cleaner and more competitive Europe. This will be carried out first by bringing about carbon footprint transparency and later on enable a verifiable regulatory framework to reward batteries with relatively lower carbon emissions.

The preferred option for Measure 5 on recycling efficiencies and material recovery is Option 2, increasing the targets for lead-acid batteries and Option 3, bringing in new targets for lithium-ion batteries, cobalt, nickel, lithium and copper. Option 2 sets targets for 2025 based on what is currently technically feasible, while Option 3 sets targets for 2030 based on what will be technically feasible in the future. Due to the high degree of uncertainty on a number of variables, quantifying the economic and environmental impact of these options has proven difficult. Modelling estimates indicate that, even under the most conservative assumptions, it would have a positive impact.

The preferred option for Measure 4 is Option 2, a new reporting system for automotive and industrial batteries. This measure is not expected to give rise to any significant economic costs or administrative burden but they would result in increased collection rates. Option 3, a specific collection target for batteries used in means of light transport, is expected to lead to significant increase in collection rates. However, due to the need to first develop the "available for collection" methodology, this Option is proposed to be re-assessed through a review clause.

For Measure 3 on a collection rate target for portable batteries, the preferred option is Option 2, a 65% collection target in 2025 and Option 3, a 70% target in 2030. These options are estimated to cost around €1.09 and €1.43 per capita per year respectively, to be financed through the mechanism of Extended Producer Responsibility. The reason for increasing the collection targets significantly compared to the baseline is twofold. First because the environmental benefits increase in a non-linear way due to the increased collection of lithium-ion batteries. Second because evidence shows that there are economies of scale and efficiency gains to be made. As a generally accepted principle, stakeholders accept higher collection targets as long as they are realistic and they have enough time to meet the targets. This is considered not to be the case for Option 4, a collection target of 75% by 2025.

For Measure 2 on second life of industrial batteries the estimated economic and environmental benefits for Options 2 and 3 would be equivalent (assuming equal levels of market penetration). The administrative costs of Option 3 – in which batteries are not necessarily considered as waste at the end of their first life (only when the battery holder decides to discard the battery) – are significantly lower than those for Option 2. This is also why most stakeholders believe that Option 2 – in which batteries become waste, leading to extra costs for permits needed to deal with hazardous waste – would for many prevent the development of this technology since it would make it non-viable from an economic point of view. This is why the preferred option for this measure is Option 3.

The objective of Measure 1 on classification and definition is to clarify the current provisions on battery categories and update them in line with the latest technological developments (Option 2). The administrative changes to some provisions in the current Batteries Directive would improve the effectiveness of several other provisions, without generating any significant economic costs or administrative burden. Stakeholders have said that they fully accept this measure. The possibility to set a new methodology for the collection rates based on "available for collection" (Option 3) is proposed to be re-assessed through a review clause.

The preferred option is a combination of Option 2 and Option 3. The blend of the medium and high-level ambition options chosen would result in a balanced approach in terms of effectiveness (achievement of the objectives) and efficiency (cost-effectiveness). It would facilitate the EU's response to fast-changing market conditions and ambitiously support a switch towards a more low-carbon economy, without risking excessive costs or disruption.

Table 8 gives an overview of the analysis of the impacts as discussed in Section 7 and Annex 9. It summarises the conclusions on the economic and environmental impacts, on feasibility and on stakeholder acceptance. Table 9 gives an overview of the preferred option.

Conclusions based on the analysis of the impacts of all options

In terms of stakeholder views, 60% of respondents to the public consultation held in 2019 were in favour of setting reporting obligations on the responsible sourcing of raw materials. Multiple public stakeholder meetings and informal meetings held with stakeholders during the regulatory process indicated a fair degree of consensus on mandatory supply-chain due diligence provisions for battery manufacturers/importers, rather than a voluntary system.

The main social and environmental benefits of this measure could not be quantified. They include improving political and social stability for local operators and communities in conflict regions (including protecting human and labour rights), strengthening environmental aspects, reducing contamination and health issues. These benefits are expected to be greater for Option 3.

For companies implementing a supply-chain due diligence framework, there are also economic benefits, which include the company’s improved knowledge of its operations and supply chain as well as its ability to detect problems and risks early. The prevention or/and mitigation of these risks reduces a company’s exposure to potentially high remediation costs that it could incur if the risk were not addressed and protects the company from long-term damage. These benefits may translate into increased transparency, credibility, reputation and public image and higher levels of trust in supply-chain partners.

Overall, the number of battery and vehicle manufacturers that would be directly affected by this obligation is estimated to be around 50. Extrapolating the OECD cost estimates gives a range of between €2-15 million in one-off costs and between €2-20 million in annual costs. The expected costs are commensurate with those identified by some of the studies carried out to quantify the cost of implementing the non-financing reporting Directive (NFRD), which imposes greater obligations than due diligence in the supply chain. It found that the annual cost of non-financial reporting (at company level) ranged from €155,000-€604,000.

Table 7 summarises the cost categories and the cost ranges provided by a study on the costs and benefits of due diligence carried out for the OECD. The cost ranges include the cost of collecting information and reporting, IT systems and software, strengthening internal management systems, consulting and training and possibly audits and are relatively low.

For Measure 13, Options 2 and 3 propose bringing in either a voluntary or a mandatory supply-chain due diligence approach for raw materials in industrial and EV batteries. No Option 4 was considered for this measure.

In terms of feasibility, this option is ambitious and costly but not impossible. In January 2020, 42 global organisations expressed their support for the idea of an interoperable battery passport as proposed by the Global Battery Alliance. This option is favoured in particular by the businesses that stand to reap more gains from creating a battery passport and a traceability management system, such as second-life battery operators and recyclers. By contrast, some battery manufacturers expressed concerns about the cost of developing and maintaining the battery database and the battery passport system.

These costs can be justified by the economic and environmental benefits that the battery open dataspace and passport would generate, including optimising the operational life and the use of materials in batteries, facilitating the second-life battery market and improving the availability of data for recyclers. It would give public authorities a powerful tool to enforce the obligations in the proposed regulation, as well as a market intelligence tool to revise and refine the obligations in the future. Producers, recyclers and re-purposers could have first-hand information on the technical characteristics of the different models, and could anticipate the expected volume of batteries reaching the end-of-life.

The economic and administrative costs of Option 3 for economic operators and public authorities would depend on how the battery passport and the supporting IT infrastructure is implemented. This would require a dedicated discussion with stakeholders and an assessment of the different implementation options, which exceeds the scope of this evaluation.

Option 3, which is complementary to Option 2, proposes the creation of an electronic information exchange system (mostly based on the information generated by the provisions of Option 2), and for industrial and EV batteries also a battery passport scheme. The electronic information exchange system or battery dataspace would include static information, such as material composition by element (including recycled content and CRMs), information on dismantling and recycling (including the producer organisation that would finance the cost of collection and recycling), hazard and safety information, battery efficiency (consumer information) etc. This type of information applies to all models of batteries. The battery passport would generate a unique digital ID for each industrial and EV battery, which would ensure that each battery has an individual (digital) record holding static and dynamic information that would be added to throughout its lifecycle.

Option 2 is considered to be fully feasible, given that energy labels have been common in appliances for the last 15 years and are accepted as being useful. All stakeholders generally accept the provisions of this option.

In terms of environmental impact, this measure would stimulate a market shift towards more environmentally sound batteries by enabling consumers to take better-informed purchasing decisions. Consumers are increasingly aware of the environmental impact of their consumption and it is likely that more and more consumers will wish to know before they purchase batteries what they can expect in terms of and what choices they have in terms of the environmental impact of their purchase. Improved labelling of batteries would also contribute to better battery collection and recycling.

The economic impact of Option 2 for manufacturers is estimated to be minor, as several battery manufacturers already provide additional information online to consumers and/or to registered dealers/repairers. The software to generate QR codes exists, as do the apps for users to read them. Essentially, the information is currently available to manufacturers, and it is just a question of them providing it systematically and transparently. For consumers, better information about batteries’ expected performance, durability and associated carbon footprint would enable them to take better-informed decisions and possibly to reduce the total cost of battery use and ownership. For recyclers, harmonised, improved labelling including accessible and more detailed information on battery chemistries would have a positive effect on the profitability of recycling, because it would improve battery sorting, the health and safety conditions of operations and even has the potential to increase the purity of the recyclable fraction.

Option 2 covers two provisions to ensure the provision of static information, both printed and online (e.g. through a QR code). The first provision (sub-measure a) is an extension of the existing labelling provision under the Batteries Directive, aimed at private consumers. It covers all basic information about a battery, such as the battery's chemistry, charging capacity and carbon footprint. The second provision (sub-measure b) covers more specialised information such as a detailed list of hazardous chemicals, standards, technical norms or any other guidance for dismantling and sorting, etc. The proposed digitalisation (included in both provisions) would help simplify administrative processes and reduce the cost of information.

Measure 12 includes a number of provisions that would provide more reliable and comparable information about batteries to economic operators. The goals of these provisions are multiple and depend on the type of batteries. They include avoiding regulatory differences between Member States, facilitating sustainable consumption choices, facilitating verification of compliance with legal requirements, facilitating the development of the second-life market and facilitating the sorting of batteries at their end-of-life.

Stakeholder views vary, depending on the costs and benefits that this measure would entail. Manufacturers are generally of the opinion that the level of battery integration in a product should be a manufacturer’s decision, based on functionality, durability and safety considerations. Waste operators, consumer organisations and environmental groups however emphasise the positive environmental impacts and contribution the measure would make to facilitate reuse, repair and recycling.

Based on similar requirements such as eco-design, this measure is considered to be feasible.

For recyclers, this Measure would generate benefits, including lower costs related to battery removal and fewer fires and safety incidents (linked to fewer lithium-ion batteries ending up in the wrong waste stream). Likewise, consumers would get net benefits in longer-life products (thanks to replaceable batteries) and easier repair. The latter is also expected to have an impact on employment: according to estimates from RREUSE, reuse and repair can create between 5 to 10 times more jobs than recycling.

The economic costs of Measure 11 are considered to be negligible. Given that the costs of (re)design make up only a very small fraction of total production costs, it would not have a significant impact on producers. The fact that requirements will be clearer and easier to enforce would level the playing field for companies operating on the EU internal market. In terms of additional administrative burden, this measure is not expected to have a significant impact, given that a similar provision already exists under the Batteries Directive.

In terms of environmental impact, Measure 11 would lead to an increase in the number of batteries recycled and appliances that can be repaired by facilitating removability and replaceability. WEEE would reach the treatment plants with lower volumes of non-removed batteries, expected to result in a fall in the number of safety accidents. This, in turn, would lead to a decrease in environmental pollution, such as emissions to air and water.

Measure 11 covers design requirements for portable batteries aiming at facilitating their circularity at end-of-life (reduce, reuse, recycle). Option 2 includes a strengthened obligation on battery removability (compared to the current Article 11 in the Batteries Directive) and Option 3 proposes to add a new obligation on battery replaceability. Option 4, a requirement on interoperability – which in theory could trigger a reduction in the number of batteries needed to operate a certain number of appliances – was not analysed in further detail because of the far-reaching consequences it would have in terms of design and product compliance obligations (including liabilities).

This measure responds to a request from some PROs to ensure a level playing field within the internal market. Coordinated nationwide campaigns and standards were the preferred options, based on their proven effectiveness without distorting competitiveness.

The environmental impact of the new requirements for PROs could not be quantified. They are expected to be positive through their contribution to increased collection rates.

The economic impact of the requirements for PROs are expected to be minimal. PROs may incur some additional set-up costs, but they should be offset by a number of factors, such as increased revenue from increased collection, economies of scale and peer learning.

Regarding producer responsibility organisations, this measure proposes a requirement for PROs within a Member State to coordinate their awareness raising campaigns plus a requirement to assess the distribution of collection points (network density, convenience, accessibility). The aim is to increase the cost-effectiveness of PROs and to facilitate the increase in battery collection rates.

In terms of stakeholder acceptance, consumer organisations and environmental NGOs have consistently supported the adoption of measures ensuring that industrial batteries held by private actors are collected and recycled properly. Stakeholder groups representing industry, by contrast, are not necessarily convinced of the need to make the EPR obligations more specific.

The environmental impact of the redefined EPR requirements for EV batteries and private energy-storage systems could not be quantified, because the Batteries Directive includes an implicit 100% collection target. The improved allocation of responsibilities would, however, facilitate improved enforcement and may be an additional trigger to opt for second-life use of traction batteries. By contrast, the new EPR requirement for e-bikes is estimated to increase their collection rate significantly compared to the baseline, and thus to reduce GHG emissions.

For PROs that currently do not collect privately owned industrial waste batteries, the costs will increase as a result of the additional volume of batteries they need to accept (potentially from new collection points, i.e. e-bike shops), although these costs will of course in part be compensated by increased revenue from recycled materials. Some extra administrative costs may arise for data collection, reporting and auditing, but they are expected to be negligible.

For producers of traction batteries, the cost or reporting obligations would not change significantly compared to the current situation. The benefit of the measure would be in levelling the playing field by allocating clear responsibilities for the cost of end-of-life battery management and ensuring that producers that exit the market before batteries have reached their end-of-life will have contributed their due share.

On extended producer responsibility, this measure proposes clearer EPR requirements for dismantling, collecting, transporting and recycling traction batteries of electric vehicles (EV) and for private energy-storage systems, and to specify obligations on a subset of industrial batteries such as "batteries sold to private costumers and / or used in non-industrial contexts". The aim is to ensure that, in line with the EPR principles, producers cover the costs of dismantling, safe storage, logistics and recycling waste industrial batteries and facilitate higher collection rates of, for example, batteries used in light transport or energy small storage applications. In this way, it would not be up to the end user to cover these costs.

Measure 10 on extended producer responsibility (EPR) builds on the already set out in the Batteries Directive, but proposes setting better-defined and more specific EPR obligations and to set minimum standards for producer responsibility organisations (PROs). This measure does not give a high ambition option since it mostly involves fine-tuning existing provisions in the Batteries Directive.

Stakeholder views on this measure are mixed. Some manufacturers of large EV batteries are against it because they consider that there will not be enough secondary raw materials to meet the criteria due to the expected exponential demand for battery materials over the coming years. Other manufacturers in the same sector not only accept the positive benefit of these measures but also commit to delivering products that go beyond the levels discussed here.

Setting mandatory recycled content targets will also generate environmental benefits. Adopting this measure could save a cumulated total of about 2.3 million tonnes of CO2-eq by 2035, compared to the baseline situation, with similar results for resource depletion and human toxicity.

Option 2 is an intermediate step towards Option 3, setting mandatory targets for recycled content for lithium, cobalt, nickel and lead in 2030 and 2035. The main benefit is that they would provide long-term investment certainty to recyclers, which is a necessary incentive to invest in recycling technologies that will contribute to promoting the circular economy and mitigating the supply risk for certain materials.

In terms of the economic impact of Option 2, there are no precedents to draw on to estimate the cost of bringing in a declaration of recycled content in a regulatory context. Since this presents a similar level of complexity as Measure 6 (carbon footprint declaration), the expected calculation costs per battery type would be in the range of €100-5,000, plus verification costs estimated to be in the range of €2000-7000 per battery type, an approximate total of €2100-12000 per battery type. Assuming that by 2025 the declaration of recycled content would apply to approximately 250 lithium-ion battery types (domestically produced plus imported) and approximately 340 lead-acid battery types (idem), the total (one-off) cost of this obligation for industry would be in a range of €1 180 000 and €7 080 000 (see Annex 9 for more details). For public authorities, this would also require some additional resources for market surveillance authorities to enforce this new obligation.

Table 6 sets out the current level (baseline) and proposed targets for recycled content for lithium, cobalt, nickel and lead in 2030 and 2035 (Option 3).

As explained in Section 2, lithium recovery is not yet cost-efficient, and in the absence of technologies that can produce battery-grade lithium and other substances, there is a risk that the supply of (low-grade) secondary lithium would significantly exceed demand. Based on experience with recycling and recovering other materials, it has been shown that legislative requirements can be a means to overcome the "valley of death". It gives the market legal certainty to invest in technologies that would otherwise remain undeveloped because they cannot become cost-competitive due to market failures. This is the rationale for proposing under Measure 9 to bring in a mandatory declaration of recycled content for industrial batteries by 2025 (Option 2) and to bring in mandatory levels for key materials in industrial batteries by 2030 and 2035 (Option 3). No Option 4 was considered for this measure.

Measure 9 on recycled content proposes a number of provisions that aim to stimulate the development of cost-efficient technologies that can deliver battery-grade recycled material, with a view to ensuring their use for the manufacturing of lithium and lead-acid batteries.

Given the far-reaching negative impacts of Options 3 and Option 4, they are opposed by EU producers and recyclers of primary batteries.

The assessment of the environmental impacts of phasing out primary batteries is a complex matter, because it depends on a multitude of factors, such as the appliances they are used in (high drain vs low drain), the batteries' chemistries, the number of recharge cycles. For this reason, the evidence and data on this topic is relatively scarce. There are indications that rechargeable batteries may be preferable from an environmental point of view for high consumption devices such as cameras, torches, and electronic toys, because these devices should allow for a number of charge cycles that is required as a minimum (50-150) to lead to a significant reduction of the environmental impact indicators across the batteries' life cycle.

The impacts of Options 3 and 4 would be much more far-reaching, because they would lead to the total or partial phasing out of primary batteries. Depending on the device in which they are used, this would result in a shift to removable rechargeable batteries or a need to replace the device. This will have significant implications for the producers and recyclers of primary batteries (loss of business) and for the producers of the devices that would need to be redesigned. In the long term, the economic impacts for consumers may be positive, though in the short term they may need to buy new rechargeable batteries, chargers and/or new devices.

For stakeholders, Option 2 is the preferred option over Options 3 and 4. A stakeholder group representing producers of portable batteries has expressed positive views on minimum quality standards and identified the existing IEC standard 60068-2 as a good starting point.

The environmental impacts of Option 2 would depend on the performance categories and criteria set. Similar experiences with, for example, eco-design requirements show that this can be a very effective measure to steer the market towards products that have a better environmental performance.

The economic impact of Option 2 would be limited. For consumers, it may bring some economic benefits by enabling consumers to identify the best value for money battery (by providing information on performance and durability (in low-drain appliances)) or by making the long-term economic benefit of rechargeable batteries more obvious (in high-drain appliances). For producers and public authorities, Option 2 would generate some administrative costs – for the development of standards and a market surveillance system – which are considered to be relatively low. As a benefit, this option would also level the playing field for producers of batteries with better performance and durability.

The purpose of Measure 8 on non-rechargeable batteries is to address the problem of their environmental impact. To this end, Option 2 proposes to bring in performance and durability requirements with the aim of ensuring minimum quality levels. Option 3 and Option 4 go a step further and propose a partial (general purpose batteries only) or a total phase out of non-rechargeable batteries.

Most environmental NGOs support setting minimum performance requirements. Battery manufacturers on the other hand generally prefer information requirements over minimum performance requirements, as they claim this gives them greater freedom in the design of batteries for different applications.

Option 2 for Measure 7 on performance and durability could be a first step in defining minimum performance requirements (Option 3) at a later stage. In itself, it is unlikely to make a significant difference in the market in the short term. Standardisation work triggered in parallel should help draw up minimum requirements in the medium term (3-5 years), once proper measurement methods for performance are in place. Over the same timeframe, it will be possible to build a publicly accessible data bank of real-life performance data, to enable fit-for-purpose measurement methods and accurate minimum requirements.

Similarly to Measure 6 on batteries' carbon footprint, Measure 7 should lead to a switch in the market towards better performing batteries, and to a lower environmental impact. Option 3, setting minimum performance thresholds, would have additional environmental benefits over and above Option 2, by reducing the supply of under-performing batteries.

Option 3 would be more effective than Option 2 by removing the worst performing batteries from the market in terms of performance and durability. This option would impose some economic costs on battery manufacturers, for example if they need to adapt certain manufacturing processes and choice of materials. The administrative costs for industry should be similar to those in Option 2, or slightly higher due to the need to calculate minimum characteristics, and more stringently verify compliance. For battery users, however, it should generate economic benefits (e.g. by providing better value for money).

Supporting harmonised standards or technical specifications would be required to measure and describe the performance parameters. Meeting these standards or specifications would be unlikely to cause additional economic impact for battery manufacturers/importers as they already measure these parameters as part of their internal quality controls and their contractual obligations. It may, however, give rise to some administrative costs for public authorities related to verification of the information requirements, which may involve testing batteries in laboratories.

Option 2 would bring in a requirement to provide information on battery characteristics such as capacity, internal resistance, energy round-trip efficiency or estimated lifetime (before significant degradation). This will facilitate the establishment of a level playing field and better enable economic operators to take informed decisions. By removing uncertainty from transactions, it will help generate economic value.

Measure 7 proposes bringing in information requirements on battery performance and durability (Option 2) or setting minimum thresholds as a condition for placement on the EU market (Option 3). No Option 4 was considered for this measure.

Further developing Measure 6 relies on the availability of a battery database or a battery passport, or both, to collect market information on the relative carbon content of battery cells/modules placed on the market. This is even more necessary for Option 3, which constitutes a market restrictive measure, so the thresholds would need to be set carefully, to avoid creating unintended supply restrictions. The Commission will facilitate this measure by providing battery databases and battery passports, to enable data collection and transmission (see Measure 12 for further details).

Stakeholder support for Measure 6 is significant. Almost 54% of respondents to the public consultation supported a reporting obligation on all environmental impact categories of batteries’ life cycle, including climate change. Environmental NGOs view this measure as a lever to push further for the decarbonisation of economic activity. . Battery manufacturers support this measure, as long as the carbon declaration rules are clear and widely accepted, and they are already taking steps to be ready for carbon transparency.

The administrative costs of Measure 6 would be relatively low, equivalent for Options 2 and 3. One-off costs per “battery type” would be in the range of €100–5 000, depending on the availability of the company-specific data needed and consultancy costs. Additional verification costs would be €2 000-7 000 per battery type with small follow-up costs on top. Overall, assuming that on average 50 producers would be subject to this provision, the total cost for industry would be in a range of €500 000-3 000 000, with some costs for support in the Commission.

Quantifying the economic impact of Measure 6 on battery prices has not been feasible since no methodology is available to estimate the effect of this regulatory proposal in isolation from other cost drivers. More analysis is needed and any introduction of maximum carbon thresholds via secondary legislation will be subject to a proportionate and dedicated impact assessment. As a proxy indication, manufacturer feedback indicates a willingness to pay premium prices to secure renewable electricity generation for their factories in order to lower the carbon footprint of battery production and thus attain green credentials.

In terms of environmental impact, life-cycle analyses suggest that the production phase is a significant contributor to life-cycle GHG emissions of lithium-ion batteries. Setting commonly accepted carbon footprint rules and datasets for EV and industrial batteries will provide an incentive for market differentiation based on the relative carbon intensity of batteries. This is expected to prompt manufacturers to choose greener electricity providers/contracts, which will contribute to the process of decarbonising electricity generation. It is not technically possible to quantify this environmental benefit but it is estimated to be higher for Option 3 than for Option 2.

Measure 6 proposes provisions to deal with the issue of batteries' carbon footprint. Option 2 proposes to do this by means of a mandatory carbon footprint declaration, while Option 3 proposes setting carbon footprint performance classes and maximum carbon thresholds for batteries as a condition for batteries to be placed on the EU market. No Option 4 was considered for this measure.

This measure meets both criteria of feasibility and stakeholder acceptance. It is considered feasible because the targets set are based on what is technically achievable. The stakeholder consultation has shown that there is a general recognition that current values of recycling efficiency are not resulting in an increase in material recovery and that the lack of a specific recycling efficiency value for lithium batteries does not incentivise the deployment of this sector. For many stakeholders, legal obligations would stimulate the innovation needed.

Given the high degree of uncertainty about future technological developments, it has proven difficult to quantify the exact environmental impact of the proposed measure. This is why the study underpinning this impact assessment opted to produce very conservative estimates, for example through the assumption of "closed loop recycling", i.e. processes in which only the materials recovered with a grade that would allow its use in battery manufacturing processes are considered as "recycled". In reality, open loop processes yield additional volumes of recovered materials, albeit not all at the same level of quality, and are less energy-intensive, resulting in additional environmental gains. However, even under the assumption of closed loop recycling, the proposed measure is estimated to yield environmental benefits in terms of greenhouse gas savings, abiotic depletion and human toxicity. In any case, the overall environmental impact of producing secondary raw materials (i.e. recycling) are lower for most environmental indicators (e.g. energy and water intensity, resource use, toxicity). For example, in the production of primary lithium, data indicate that 400 litres of water are needed to produce one kilo of lithium.

In terms of administrative costs, this measure is not expected to create any significant additional administrative burden, given that the basis for these provisions are already included in the Batteries Directive.

Data on recycling costs are scarce due to confidentiality issues. Costs are likely to go down in the future due to economies of scale and further technological developments. Data obtained during the study to support this impact assessment indicate a cost range of €2290-3730 (in 2020) per tonne of waste batteries (including collection, transport, dismantling and recycling), which may fall to €860-1300 by 2035. Data on revenue are equally uncertain. For lithium, for example, prices have more than doubled over the period 2013-2019, from €5,000 to €11,000 per tonne. This would thus suggest that overall the economic impacts would be positive. Certainly from a societal point of view it would be positive, given that the measure would not only stimulate the roll-out of state-of-the-art recycling technologies, but because it would oblige recyclers to not disregard the recycling of lower-value components (e.g. anodes). It could also be argued that the market for lead has shown that setting recycling efficiency and material recovery targets can be a major driver for investment in technological innovation and recycling capacity.

In terms of the economic impact, there are too many variables to make reasonable predictions far into the future. First, for lithium recycling, this is a market still in its infancy. Compared to the volume of end-of-live EV batteries that will become available for recycling in the coming years, current levels of recyclables are still rather low. Recycling technologies exist (pyrometallurgy, hydrometallurgy or direct recycling), but are not yet rolled out at large scale.

Assessing the impacts of the targets has proven to be rather complicated.

The aim of Measure 5 is to ensure sufficient levels of recycling efficiency and material recovery. For lithium-ion batteries and for cobalt, nickel, lithium and copper, Option 2 proposes bringing in target levels to provide a regulatory incentive for the roll-out of state-of-the art recycling technologies by 2025. Option 3 increases the level of ambition by 2030, but still based on what should be technically possible in the near future. For lead-acid batteries and lead, for which the Batteries Directive already includes a provision, Option 2 proposes to increase the current target levels on recycling efficiencies and introduces a quantified target for material recovery. Option 3 increases the level of ambition by 2030, but still based on what is currently already technically feasible. No Option 4 was considered for this measure.

Option 4, an explicit 100% collection target, was not assessed in detail because early analysis showed that it is rather complicated from an administrative point of view and the same results could be achieved by bringing in a reporting system (Option 2).

Option 3 proposes bringing in a collection target for batteries used in light means of transport. To set the target at the appropriate level however, it would be necessary to develop the "available for collection" methodology (see Measure 1). This methodology – equivalent to the approach used in the WEEE Directive for waste electric and electronic equipment – makes it possible to estimate the volume of waste batteries (and their weight) that have reached their end-of-life at a given moment. The estimates made during the work on this impact assessment indicate that setting a target for batteries powering means of light transport could result in an increase of nearly 30% in the volume of waste batteries collected (as compared to the baseline). Assuming that these batteries are recycled, this would lead to a reduction in GHG emissions of around 22%.

Option 2 is considered to be fully feasible. It is also accepted by producers, because they are aware of the advantages of reliable information on the status of industrial batteries.

Option 2 is expected to give rise to some minor additional administrative costs, although the new reporting system can build on existing systems under the End-of-Life Vehicles Directive and the Waste Framework Directive. Putting in place a reporting system will both improve data availability and result, according to estimates, in a 3% increase in the collection of lithium industrial batteries, which will generate additional revenue and environmental benefits.

The purpose of Measure 4 is to ensure the highest level of collection for automotive, EV and industrial batteries. To this end, it proposes bringing in a new reporting system for automotive and industrial batteries (Option 2), and to set a specific collection target for batteries used in light transport vehicles (Option 3). Option 4, proposes to convert the implicit "no loss" policy into an explicit 100% collection target for industrial, automotive and EV batteries.,

Achieving a collection rate of 65% and 70% (Options 2 and 3) for portable batteries is feasible in 2025 and 2030 respectively. The average collection rate in 2016 was 48%. Belgium for example, demonstrates that a 65% and even a 70% target can be achieved (Options 2 and 3). As a generally accepted principle, stakeholders welcome higher collection targets as long as they are realistic, and have enough time to meet them. There are some differences of opinion though, mostly reflecting countries' current divergence in performance.

The number of jobs that would be created by increasing the collection rates is estimated to be 2500 for Option 2 and 5500 for Option 4. These jobs would mainly be created in small and medium-sized enterprises involved in collection and transport.

Costs can be partially offset by revenue from recycled materials, but for portable batteries (contrary to automotive and industrial batteries) this revenue is currently not sufficient to cover all the costs. According to the model estimates, Option 2 would lead to an annual increase in the volume of recovered materials compared with the baseline of 42%. For Option 3, this would be 51% and for Option 4, this would be 61%. Using current prices, in 2030 this would lead to revenue of €72.7 million for Option 2, €77 million for Option 3 and €81.3 million for Option 4.

-As collection targets increase, the share of Li-ion batteries increase, which might have a higher cost.

-Data points used mostly cover densely populated countries and with labour costs that are higher than the EU average;

On the other hand there are also number of reasons that costs may not go down, and that the estimates can be seen as an underestimate:

-Evidence also indicates the importance of awareness raising campaigns to increase collection rates. Compared to the costs of setting up the collection points, the costs of these campaigns are low, thus leading to decreasing costs to scale.

-Evidence indicates that systems increase their efficiency. The PRO that is active in Belgium for example reports that the fee it charges to its members has decreased by 54% since 2013.

-A study commissioned by the European Portable Batteries Association indicates that increases in the collection rate are hindered by the sub-optimal market functioning, e.g. due to a lack of clarity on the definition of portable batteries, a lack of clear requirements for PROs (e.g. minimum awareness raising campaigns requirements) and distortion of competition between PROs. These issues are addressed by Measure 1 and Measure 10, which should facilitate the achievement of higher collection rates.

There are a number of reasons indicating that the costs estimates for Options 3 and 4 are overestimates.

Based on the Polluter Pays Principle, the Batteries Directive requires that these costs are covered through the Extended Producer Responsibility mechanism (see also Measure 10). It is unclear to what extent the cost estimates above, which are expressed in terms of cost per capita, will be passed on from producers to the consumers. Data on the collection of waste portable batteries in Belgium indicate that a 65-70% collection rate can be achieved at a cost of around €0.057 per portable battery placed on the market.

Setting increased collection rate targets would increase the cost of collection. Estimating the additional cost of meeting these collection targets is not an easy task, given the limited data available. Table 5 below presents an overview of estimated annual costs per capita of the different options. It is noted that the cost estimates presented above are subject to a high degree of uncertainty, given that they are based on only a few data points.

Figure 11 shows the greenhouse gas emissions savings that would be generated by achieving the different targets as calculated during this process. It shows that a 55% target (sub-measure a, not included in the Options) would lead to annual GHG savings of 4% compared to the baseline in 2030. For Options 2, 3 and 4 on the other hand these annual GHG reductions would amount to 51%, 53% and 56% respectively. Similar results are obtained for the indicators ‘abiotic depletion potential’ and ‘human toxicity potential’ (for example, the incorrect disposal of batteries through WEEE is a non-negligible source of dust and heavy metal emissions).

In terms of environmental impact, the mass flow model shows that the environmental benefits are non-linear. This is due to the additional types and volumes of batteries that would need to be collected to achieve the target. The higher the target, the lower the loss of lithium batteries, the higher the environmental benefits would be. This is demonstrated by the sensitivity analysis carried out based on a 55% collection target (sub-measure a), for which the model estimates significantly lower environmental benefits.

The aim of Measure 3 is to increase the collection rate of portable batteries to maximise resource efficiency and minimise the environmental impact of incorrect battery disposal. To this end, Option 2 proposes a collection target of 65% by 2025. Option 3 proposes a 70% target by 2030 and Option 4 a 75% target by 2025.

In terms of feasibility and stakeholder acceptance, regulating the second life of industrial batteries is a highly complex matter. Although all stakeholders recognise the business opportunity and the importance of providing legal certainty, opinions are divided on a number of technical issues. Overall, automotive producers are in favour of Option 3 (second-life batteries are not waste but become new products), as it would generate lower administrative costs than Option 2 (batteries become waste). Recyclers, however, expressed concern about the delayed availability of automotive batteries for recycling and the possibility of "losses" through (illegal) exports.

With regard to environmental impact, for the same level of market uptake, both options give a significant advantage. Estimates show an overall gain in global warming potential savings (up to 400,000 tonnes of CO2 per year by 2035), equivalent for Options 2 and 3.

Stimulating a market for the second life of industrial batteries could generate a positive environmental and economic impact. In particular, the economic impact would depend on the level of market penetration, but if it reaches 25 %, it would generate around €200 million in 2030 and create around 2000 FTE jobs, for both Option 2 and Option 3.

Options 2 and 3 bring in equivalent costs to place the batteries on the market again (i.e. costs related to the conformity processes). They differ however, in the administrative costs they would entail. The administrative costs for Option 2 would be high, because operators would need specific licences to manage hazardous waste. The administrative costs for Option 3 would be lower, because the applicable procedures for hazardous goods are less cumbersome than for waste. The lower cost of Option 3 would thus be more likely to facilitate the market penetration of this technology.

Measure 2 includes provisions that should provide legal certainty to facilitate the development of a market for second-life industrial batteries. To this end, Option 2 proposes to follow the provisions in the Waste Framework Directive and let batteries go through waste status, only allowing the battery to be classed as a "new product" when the waste battery is prepared for reuse or has undergone other transformations to have a second life. Option 3, by contrast, only lets batteries become waste when the battery holder decides to discard the battery. Otherwise, second-life batteries are automatically classed as new products, and therefore the product compliance requirements restart. This option requires additional regulatory provisions to specify the conditions under which it will be implemented, namely to prevent unduly classifying waste batteries as second-life batteries with the aim only to circumvent heavier administrative and technical procedures (e.g. for export).

The stakeholder consultation showed clear support for creating sub-categories or sub-classes in the current industrial batteries class. Producers of batteries and equipment were in favour of using a weight threshold to distinguish between portable and industrial batteries, a practice already in use in some Member States. Stakeholders also supported the development of the new calculation method for portable batteries. They argued that, due to the increasing lifespan of batteries and the significant changes in the market, the current "placed on the market" methodology (based on a three-year average) is no longer suitable and does not allow collection schemes to properly plan operations or report on their efficiency.

Option 2 is not expected to have a direct environmental impact, but it will indirectly facilitate the increased collection of waste batteries. Currently some batteries (e.g. e-bikes and e-scooters) may, for example, be placed on the market as belonging to one class and be collected and recycled as another, which distorts producer obligations and the funding of collection and recycling schemes. To set the threshold at 5 kg, a sensitivity analysis was carried out based on a 2 kg threshold. It found that a 2 kg threshold would classify small industrial batteries as portable and could artificially split product lines, i.e. batteries using the same chemistry and placed on the market by the same producer would be classified differently, making it more difficult to manage the system (batteries of e-scooters and of power tools are examples).

This measure is not expected to have any significant economic or social costs, or bring about significant additional administrative burden (given that similar provisions already exist). A new calculation methodology based on "available for collection" would provide a better picture on the mass flows of battery raw materials, but will require collecting some additional information and some further assessment.

More specifically, for this measure Option 2, the medium level of ambition option, proposes to create a new battery category for EV batteries and to set a 5 kg threshold to distinguish portable batteries. Option 3, the high level of ambition option, proposes to introduce a new calculation methodology for the collection rate of portable batteries based on "batteries available for collection" (to replace the current methodology, which is based on "batteries placed on the market").

The purpose of Measure 1 is mostly to clarify the current provisions on the categories of batteries and to update them to the latest technological developments. This will help identify and apply specific provisions applicable to different types of batteries.

This section presents a summary of the assessment of the impact of the measures, focusing on the economic impact (including administrative costs/burden and social impacts when relevant), environmental impact, feasibility and stakeholder acceptance. It provides an analysis of Options 2, 3 and 4 compared to Option 1, the business-as-usual scenario. A more detailed analysis for the different measures is provided in Annex 9.

4)All measures except Measure 11 on design requirements for portable batteries and Measure 13 on due diligence will be fleshed out in secondary legislation, which may be accompanied by a specific and proportionate impact assessment.

3)Similarly, the estimated direct economic and social impact from the measures are rather low compared to the indirect economic benefits of having a stable regulatory framework to facilitate the development of a new value chain in the EU. For example, the direct impact on jobs of the measures assessed in this impact assessment are never higher than 3,000 additional jobs. By contrast, according to the JRC, creating a competitive lithium-ion cell manufacturing capability in the EU is expected to create between 90 and 180 direct jobs per GWh/y production volume and the additional jobs created both upstream (e.g. cathodes and anode production) and downstream will likely be equally significant. Another report estimates that 15 jobs are created for the collection, dismantling and recycling per ton of lithium-ion battery waste.

2)With regards to the environmental impact, it is important to note that this impact assessment only included direct environmental impact, such as reduced GHG emissions, human toxicity or resource depletion. However, the indirect environmental benefits that these measures will bring about by accelerating the greening of mobility cannot be accurately quantified but should also be taken into account. For example, note that in the EU, transport generates roughly a quarter of greenhouse gas emissions and is the main cause of air pollution in cities.

1)To ensure the robustness of the findings, assumptions have been made in a way that they produce conservative estimates. One example is the measure on recycling efficiency and material recovery: the estimations are based on the assumption of closed loop recycling (i.e. recycled materials are only used in batteries), while in practice open loop processes are legally allowed and used, which yields additional volumes of recovered materials.

To put the findings into perspective, four important qualifications need to be made:

For the measures for which this was relevant, a mass flow model was constructed to allow for quantification based on type of batteries, and their treatment. This mass flow model enables a number of impacts to be quantified for different measures. Annex 4 provides further methodological details.

The impact of the two policy options and their constituent sub-measures have been analysed based on the main problems and drivers identified (see Section 2) and the general objectives (see Section 4).

Early analysis showed that there is no evidence supporting that setting mandatory levels of recycled content for graphite would be environmentally beneficial. For auxiliary materials (steel, copper and aluminium used in the casing and periphery) early analysis showed that setting a target for recycled content would not be effective, as it would just lead to a redistribution of recycled content from non-regulated applications to batteries.

Stakeholders pointed out during the consultation period that this sub-measure would not be sufficiently effective to promote recycling activities within the EU.

5.d) Add Co, Ni, Li, Cu and Graphite to the list of substances to be recovered to the highest possible technical degree (without quantified targets)

Early analysis showed that this sub-measure would imply a strong market intervention that could have unintended negative impacts. At the same time the objective can also be achieved by Measure 11 and product policy measures.

Early analysis showed that this measure would not be very (cost-)effective, as it would lead to a multitude of requirements (different containers, collection points, management measures, …), which would increase costs without significantly contributing to the objective of increasing resource efficiency.

Early analysis showed that this sub-measure would lead to major challenges related to costs, implementation, voluntary collection, tourism and the market of fake batteries.

Carried out as a sensitivity analysis. Not included in the options because environmental benefits are non-linear (i.e. significantly higher when the target is increased to 65%).

Early analysis showed that this sub-measure would lead to some contradictions and possible divergent interpretations, because batteries would be neither waste nor a new product. This would not provide legal certainty to economic operators.

2.c) At the end of the first use cycle, batteries are not waste but second life batteries would not be considered a new product and the product compliance requirements would be kept by the producer

Reason for being not being included in the Options

Setting up an electronic information exchange system for batteries and a passport scheme (for industrial and electric vehicle batteries only) (c)

Carbon footprint performance classes and maximum carbon thresholds for batteries as a condition for placement on the market (b)

At the end of the first life, used batteries are not waste. Repurposed (second life) batteries are considered as new products which have to comply with the product requirements when they are placed on the market. (b)

At the end of the first life, used batteries are considered waste (except for reuse). Repurposing is considered a waste treatment operation. Repurposed (second life) batteries are considered as new products which have to comply with the product requirements when they are placed on the market (a)

New calculation methodology for collection rates of portable batteries based on batteries available for collection (d)

·Given that the scope of the measures is different, for some measures no "high" or "very high" level of ambition was identified.

·Option 3 should be seen as a higher level of ambition than Option 2. The level of "disruptiveness" is not the same across all measures.

·To limit the scope of the analysis, only the most relevant sub-measures are included in Options 2, 3 and 4. For some measures, additional sub-measures were assessed in the form of a sensitivity analysis (e.g. a 55% collection rate target for Measure 3). Table 4 provides an overview of the reasons why certain sub-measures are not included in the Options. A further analysis of these measures is included in Annex 9.

·A cross-reference to the sub-measure letter (a, b, c, …) used in Table 2 and Annex 9 is given in brackets;

Table 3 presents an overview of the different sub-measures included in the policy options. A number of observations:

·Option 4¸ with a very high level of ambition, is similar to option 3 but proposes a few even more ambitious targets: mandatory second-life readiness, increase the collection rate for portable batteries even further, set an explicit collection target for industrial, EV and automotive batteries and a complete phase-out of portable batteries. These measures are designed to achieve extremely ambitious environmental benefits.

·Option 3, with a high level of ambition, is an approach that changes some of the current provisions, for example in terms of the calculation method for the collection rate of portable batteries and further increasing some of the current targets such as for recycling efficiencies and recovery of materials. It also sets some new mandatory targets rather than proposing information requirements, for example as regards collection rate for automotive and industrial batteries, carbon footprint, performance and durability, supply-chain due diligence and the use of non-rechargeable portable batteries. This option is clearly more disruptive and is more ambitious in its objectives and for many measures indeed it is expected to achieve more significant results.

·Option 2, with a medium level of ambition, builds on the Batteries Directive, but gradually strengthens and increases the level of ambition. For the earlier stages in the value chain for which there is currently no EU legislation, the proposed change is to bring in information and basic requirements as a condition for batteries to be placed on the EU market.

·Option 1, business-as-usual, keeps the Batteries Directive, which mostly covers the end-of-life stage of batteries, unchanged. For the earlier stages in the value chain, there is currently no EU legislation in place and so this will remain unchanged. Further details on this option are given in Section 5 on the baseline and in Annex 9.

To facilitate the analysis, the sub-measures listed in Table 3 are grouped into three main policy options, which are compared against a business-as-usual scenario.

Annex 9 also includes a short synthesis of issues related to safety. It also clarifies how the assessment of chemicals in batteries will be carried out within the REACH framework, namely with the involvement of the European Chemicals ECHA agency. That said, for reasons of legal certainty, the new regulatory framework will extend the existing ban on mercury and cadmium-containing batteries.

Annex 9 also includes some further details about the issue of green public procurement (GPP) as an enabler that is not tabled as a measure in this impact assessment. GPP is a route to ensuring that the best performing batteries are procured and used by public authorities, which often have significant weight to shift the market in terms of demand. GPP criteria and the approach to using them will be assessed in line with current approaches i.e. with the involvement of stakeholders, and with the consideration of making the criteria mandatory and setting targets.

Overall, over 50 sub-measures are tabled. All sub-measures are analysed in proportionate detail in Annex 9, with an assessment of their impacts compared to the business-as-usual or baseline scenario.

The sub-measures are in many cases alternatives to each other (e.g. for Measure 3, the remedy could be to set collection rate targets for portable batteries of either 65% or 75% by 2025, but not both). In other cases, the sub-measures are designed so that they can be cumulative and/or complementary, or a different sub-measure is proposed for different categories of batteries (e.g. for Measure 13, a battery passport for industrial batteries works on top of information obligations).

Setting up an electronic information exchange for batteries and a battery passport (for industrial and electric vehicle batteries only) (+)

Clear specifications for Extended Producer Responsibility obligations for all batteries that are currently classified as industrial

Add Co, Ni, Li, Cu and Graphite to the list of substances to be recovered to the highest possible technical degree (without quantified targets)

Material recovery rates for Co, Ni, Li, Cu: resp. 90%, 90%, 35% and 90% in 2025 (a-1), 95%, 95%, 70% and 95% in 2030 (a-2) (+)

At the end of the first use cycle, batteries are not waste but second life batteries would not be considered a new product and the EPR and product compliance requirements would be kept by the producer

At the end of the first life, batteries are not waste, second life batteries are considered new products, and therefore the EPR and product compliance requirements restart

At the end of the first life, batteries are considered waste (except for reuse) and therefore the EPR and product compliance requirements restart when they ceased to be waste and a new product is placed on the market

New calculation methodology for collection rates of portable batteries based on batteries available for collection

Under each of the broad policy measures set out above are several sub-measures, which are presented in Table 2 .

Table 1 gives an overview of the measures that contribute most strongly to the objectives.

This impact assessment includes 13 measures to address the problems and their negative consequences identified in Section 2 and to reach the objectives set out in Section 4. They are based on the analysis carried out as part of the evaluation of the Batteries Directive, the public consultations on this initiative, multiple support studies and political commitments such as the Green Deal, which are listed in Section 1.1. The measures reflect the fact that a series of responses are needed along a complex value chain.

With regard to research and innovation, the EU is mobilising all its channels of support covering the entire innovation cycle, from fundamental and applied research to demonstration, first deployment and commercialisation. It is expected that this will facilitate breakthroughs in terms of battery materials and components, battery performance and durability, new chemical systems and even alternatives to currently used batteries. More details about the EU's research and innovation support for batteries can be found in Annex 8.

In terms of the inefficiencies across the supply chain, it is very likely that the problem will lead to many missed opportunities to increase resource efficiency, namely as regards material recovery. An increasing volume of batteries will fall outside the scope of the collection targets under the Batteries Directive. In addition, because the Batteries Directive mostly covers the end-of-life stage of the batteries value chain, the problem of misaligned incentives across the value chain (e.g. changes in design than can facilitate reuse or recycling) is unlikely to be resolved.

In terms of social and environmental risks (including waste management), due to complex global value chains, it is unlikely that unguided market forces will lead to sustainable outcomes. On the contrary, investment in sustainable sourcing or investment to reduce the environmental impact of production (including the carbon footprint) may not be made at all.

Furthermore, to reach a market optimum, all actors across the value chain need to have sufficient, comparable and reliable information to make efficient choices. Most participants in the public consultation on the evaluation of the Batteries Directive agree that, although there have been advances in labelling and information, this is still insufficient, especially given the changes expected in the market.

In the absence of a regulatory framework and common rules for all batteries that are placed on the EU market however, a lack of a level playing field may result, especially for producers or recyclers who are subject to stricter environmental rules. This may prevent the investments needed to boost battery production capacity. More importantly, it would also have negative environmental consequences, because it would create lock-in and fail to steer the market towards adopting the best environmentally performing batteries.

Currently, there have been announcements for investments in several battery factories, and four companies have announced investments in the production of cathode materials.

Similarly, after an initial stall due to the lockdown and retail store closures, sales of e-bikes and other light means of transport are now booming. Many brands have reported increased sales that have already compensated for the losses incurred during the lockdown weeks.

The upward trend in sales of EVs is likely to continue in the future as all but one Member States have put in place some form of incentive for EV purchases, including purchase tax or VAT exemptions, car ownership tax reductions, company car deductibility and purchase incentives. Additional public measures include increasing availability charging facilities, access to restricted traffic and free parking.

While European sales of passenger cars fell by about 50%, sales of electric vehicles increased and in March 2020, they reached an all-time high market share of 10% of all passenger car sales.

The COVID-19 crisis has had an impact on the uptake of e-transport, both for cars and light means of transport as e-bikes. As carmakers must meet the EU’s CO2 targets, sales of electric cars are booming in Europe.

Driven by the transition to a low-carbon, circular economy, demand for batteries is set to grow rapidly. This trend will be exacerbated by the recent COVID-19 crisis, which has given a strong boost to sales of EVs (see text box below). Unless the problems and their drivers identified above are addressed, the negative consequences they create will only worsen.

This scenario involves taking no action at EU level. The situation would evolve as described in Section 2.4, which outlines several ways in which the problems inherent in the life cycle of batteries are likely to worsen in the absence of EU action.

oReducing risks to public health and to environmental quality and improve the social conditions of local communities.

1.Strengthening the functioning of the internal market (including products, processes, waste batteries and recyclates), by ensuring a level playing field through a common set of rules;

1.Areas of action under the Treaty, namely on internal market and, to a lower extent, on the environment;

The objectives are broken down into three levels of action:

The aim of the regulatory action is to foster the production and placing on the EU market of high performing, sustainable and durable batteries and components, produced with the lowest environmental, social and human health impacts possible along the entire battery lifecycle and in a way that is cost-effective.

The instrument will also mandate the Commission to develop implementing measures to flesh out the Regulation further, where necessary, allowing for common rules to be set swiftly. This will reduce uncertainty over the timescale during the transposition process in an area where time and legal certainty are of the essence due to investment-related issues and expected increases in market size.

Differing national measures on waste collection and recovery have led to an uneven regulatory framework. The existing barriers in the form of differing national regulatory frameworks can only be removed by more detailed, harmonised rules on the organisation of collection and recovery processes and related responsibilities, including rules that should apply directly to economic operators.

In line with the one-in-one-out principle, the proposed regulation should replace the current Batteries Directive.

A regulation would set direct requirements applicable to all operators, thus providing the necessary legal certainty and scope for enforcement of a fully integrated market across the EU. A regulation would also ensure that the obligations are implemented at the same time and in the same way in all 27 Member States.

The evaluation of the Batteries Directive and the analysis preceding the impact assessment revealed that harmonisation is necessary in the form of a regulation, rather than a directive, as used in the previous and more limited approach.

As demonstrated above, and thereby fulfilling the requirement of Article 114(3) TFEU, the Commission’s proposal related to the functioning of the internal market is based on a high level of protection in terms of health, safety, environmental protection and consumer protection.

The transition to a circular economy, including fostering innovative and sustainable business models, products and materials, requires setting common binding provisions. The aims cannot be sufficiently achieved by the Member States but can be better achieved at EU level given the scale and effects of the action. EU action is therefore justified and necessary.

The proposed measures do not go beyond what is necessary to provide the regulatory certainty required to stimulate large-scale investment in the circular economy while ensuring a high level of protection of health and the environment.

Harmonisation supports investment as the batteries value chain is capital-intensive and thus needs economies of scale. Achieving this requires a harmonised and well-functioning internal market across all Member States and, therefore, a level playing field for businesses operating in the battery value chain in the EU.

There is clear added value in setting common requirements at EU level that cover the full lifecycle of batteries.

In addition, the evaluation of the Batteries Directive showed that the legislation did not meet its objectives. In light of the exponential increase in demand for batteries and fundamental changes to the batteries market, the evaluation identified the need to modernise the legislative framework to adequately support the circular economy and low-carbon policies and to adapt to technological and economic developments in the battery market.

In the absence of EU level action to set harmonised rules, action at national level would lead to a divergence in the requirements for economic operators.

The necessity test is the question of whether the objectives can be sufficiently achieved by action taken by the Member States alone. In this case, they cannot. It is essential to ensure a level playing field for manufacturers, recyclers, importers and economic operators more broadly in terms of the requirements to be met when placing a battery on the EU market by putting in place a common set of rules within the EU internal market and by providing reliable information to end-users. For these reasons, EU-wide legislation is necessary.

The manufacture and use of batteries, the underlying value chain, and the processing of end-of-life batteries are cross-cutting issues, relevant to many policy areas of policy. Therefore, in addition to pursuing internal market objectives, the proposal will also contribute to objectives related to environment, transport, climate action, energy and international trade. The analysis of the impact of the proposed measures (see Section 7) demonstrates that in most cases, the internal market objectives are predominant and the environmental benefits are complementary. Therefore, it is appropriate to use Article 114 TFEU as the sole legal basis.

The objective of this proposal is thus to ensure the functioning of the internal market for economic actors operating in the market. The measures lead to further harmonisation of product requirements for batteries placed on the EU market and the level of waste management services provided by economic operators. The proposal will also set requirements to create a well-functioning market for secondary raw materials. In addition it will create a regulatory framework that will prevent and reduce the environmental impact from the production and use of batteries as well as their processing, including recycling, at their end-of-life. This will promote a circular battery industry and avoid market fragmentation due to diverging national approaches.

Section 2 also set out a number of environmental problems related to the production, use and end-of-life management of batteries. It is important to note that the environmental problems that are not directly covered by EU environmental law and that thus require regulatory action can all be linked to the functioning of the internal market. One example is the adverse impacts of hazardous substances contained in batteries when they are not properly disposed of, a problem that can be solved by proper battery collection and recycling. One of the reasons why collection levels are so low is that setting up collection systems has a cost, and the internal market is not providing an adequate and harmonised implementation of the polluter pays principle. Sub-optimal levels of collection are also problematic from a business profitability perspective, given that recycling technologies are rather capital-intensive and thus require significant economies of scale, in some cases beyond what EU national markets can provide. Another example is the untapped potential of lowering the total environmental impact of batteries by increasing the circularity of the battery value chain. Here the main driver is again market failure, i.e. the lack of alignment of incentives (and information) between different operators across the value chain, or, in the case of the market for second life EV batteries, a lack of legal certainty.

Section 2 of this impact assessment demonstrated that there are a number of key problems related to the internal market. These include barriers to the functioning of recycling markets, uneven implementation of the Batteries Directive, the imperative need for large-scale investment to respond to the changing market, the need for economies of scale, and the need for a stable fully harmonised regulatory framework.

The current Batteries Directive 2006/66/EC is based on Article 175 TEC (now Article 191 TFEU) and on Article 95 TEC (now Article 114 TFEU) for the identified product-related provisions, namely restrictions of certain hazardous substances and labelling. For the current Directive, the Commission in its proposal had identified the situation of diverging national measures on, for example, marketing restrictions or marking obligations, which constituted barriers to trade and, if not addressed, potentially compromised the functioning of the internal market.

It is the intention to adopt the proposal on the basis of Article 114 of the Treaty on the Functioning of the European Union (TFEU), which is to be used for measures that aim to establish or ensure the functioning of the internal market.

-Material recovery. Key players at this stage of recycling are mostly large companies who source their feed at international level. These companies are affected by the sub-optimal levels of collection as their operations are very capital-intensive and thus require economies of scale.

-Dismantling and pre-processing. This usually takes place at local, regional or inter-regional level, involving small and medium enterprises, but also some large waste companies. Businesses operating at this stage are affected by the lack of alignment of incentives across the value chain (e.g. irremovable batteries), which affects profitability.

-Waste battery collection. This usually takes place at local or regional level and commonly involves small and medium enterprises. Logistics and funding are usually organised by producer responsibility organisations. Collection is currently covered by the provisions in the Batteries Directive, which are insufficiently precise to be effective.

Brands. Producers of appliances that include battery production with links to human rights abuses, dangerous working conditions or harm to the surrounding environment and which are called into question by NGO campaigns carry the risk of significant reputational damage.

Downstream industries. Notwithstanding the importance of global value chains, clustering or integrating certain production stages is common. The COVID-19 crisis has demonstrated that disruptions in upstream segments of the value chain can have significant negative implications on downstream producers. In addition, for downstream producers proximity to the supply of battery cells and modules contributes to lower transport costs, closer collaboration on the design and quality of the cells, innovation and the development of know-how.

Battery producers. Battery producers that apply high environmental standards face unfair competition from producers that are not subject to the same rules. The lack of a stable and predictable regulatory framework is also a barrier to making the investment needed in sustainable battery production in Europe.

Public authorities. Public authorities are currently in charge of monitoring, reporting and enforcing the Batteries Directive. Some uncertainties about batteries classification may result in higher administrative costs and uneven approaches taken in the different Member States.

Non-EU citizens. The environmental and social risks inherent in extracting the raw materials needed to produce some types of batteries significantly affect citizens in non-EU countries where these materials are extracted in an unsustainable manner. This includes workers in supply chains, who may experience labour rights violations, in particular in conflict-affected regions.

EU consumers. EU consumers currently lack sufficient, reliable and comparable information to be able to make informed purchasing choices about batteries, e.g. regarding their carbon footprint, expected lifetime, etc.

Society as a whole (general public). If the environmental burden inherent in battery production is not factored into the market price, they represent a hidden cost to society, either now or in the future (e.g. public health, environmental remediation etc.).

Although it is expected that there will be changes to the products and batteries placed on the market (e.g. more efficient and durable batteries), these changes will not fundamentally affect the sustainability and market-related problems across the batteries life cycle as described above. On the contrary, some problems are expected to become more pronounced due to the expected exponential growth in demand. This applies in particular to new technologies and applications that are not yet specifically regulated such as second-life for industrial batteries or the collection of small industrial batteries (i.e. batteries used in light transport or energy small storage applications).

Driven by the transition to a low-carbon economy and by consumer demand, the use of batteries in the EU is set to continue to increase significantly.

In sum, the current regulatory framework for batteries is not sufficiently powerful to drive the EU battery market towards higher levels of sustainability, neither in terms of production processes (manufacturing, use and end-of-life battery processing) nor in terms of products (reliability, durability, etc.).

The Batteries Directive is also not well equipped to keep pace with new technological developments. An example is lithium-ion batteries, which are becoming the most important battery chemistry in the market, but are not specifically covered by the Directive. Another example is the development of the second-life market for industrial batteries, where the lack of a regulatory framework leads to diverging national approaches and thus market fragmentation. Another example are new products or appliances such as e-bikes, which are currently classified as "industrial batteries" even though they are used by consumers. As a consequence, these batteries may not be properly collected or recycled.

Another shortcoming is the lack of sufficient detail on certain provisions, which leads to a lack of harmonised rules across the EU and hampers the functioning of recycling markets. Examples include labelling, removability requirements and requirements for producer responsibility organisations.

One such shortcoming is that the Batteries Directive mostly focuses on the end-of-life phase of batteries and does not sufficiently cover other sustainability aspects related to the production and use phases of batteries such as durability, GHG emissions or responsible sourcing, for which there are currently no legal provisions in the EU. This is out of step with current EU approaches on sustainable management of materials and waste, which focus on optimising products and production processes.

Reports on implementation and evaluation of the Batteries Directive found that the Directive has yielded positive results in terms of a better environment, the promotion of recycling and better functioning of the internal market for batteries and recycled materials. However, limitations in some legal provisions or their implementation prevent the Directive from fully meeting its objectives, particularly as regards waste battery collection or efficient recovery of materials. In response, the reports propose setting new targets for collection and recycling.

The current regulatory framework comprises (specifically) the Batteries Directive and (more generally) the Waste Framework Directive, the Industrial Emissions Directive and chemicals legislation.

·Lastly, they lead to a number of environmental and social risks along the supply chain. As well as generating impact in Europe, there are resulting risks outside Europe given that the upstream part of the value chain is predominantly located outside the EU. The environmental impacts include increased greenhouse gas emissions. Social impacts include child labour, severe health and safety risks, and hazards to workers.

·In addition, the problems identified lead to an inefficient use of resources, which hampers the development of a proper circular economy, increases the need for primary raw materials and leaves the potential to mitigate supply risk and increase value chains' resilience untapped.

·The problems identified have negative impacts on the functioning of the internal market. This can, for example, result in under-investment in capacity and innovation and act as a drag on productivity growth in the market and higher costs for consumers.

These problem drivers lead to three main groups of consequences, as set out in the problem tree ( Figure 7 , p. 17):

The second problem driver is information failure, i.e. situations where not all market players have the same information available, preventing them to make informed choices. This can lead to unfair competition or to sub-optimal levels of material recovery (e.g. battery removal is difficult because it is unclear where the battery is located).

The first problem driver is market failure, i.e. situations where the market outcome is su