Establishing a sound battery carbon footprint management system and breaking through new green trade barriers

2024-09-26

Currently, the new energy industry has become one of the key areas for countries to promote green economic development. The scale, technological innovation, and competitiveness of China's new energy industry have significantly increased, but at the same time, it has also encountered new green trade barriers from Europe and America. For example, the EU's recently launched "Battery and Waste Battery Regulation" (hereinafter referred to as the "New Battery Regulation") aims to build a green barrier from the carbon footprint standards of batteries, and thus dominate the discourse power of the global battery management system. The Chinese government attaches great importance to the construction of a product carbon footprint management system. In June 2024, the Ministry of Ecology and Environment and 15 other departments jointly issued the "Implementation Plan for Establishing a Carbon Footprint Management System" (hereinafter referred to as the "Implementation Plan"), which clearly focuses on key products such as lithium batteries, formulates and releases carbon footprint accounting rules and standards, and will provide strong policy guarantees for the domestic battery industry to cope with green barriers in Europe and America. What is the impact of the EU's new battery regulations on China's battery industry? How to strengthen the interaction between government and enterprises, mobilize the enthusiasm of battery enterprises to participate in carbon footprint accounting, and strengthen the international recognition of carbon footprint rules in the implementation process of the domestic Implementation Plan? The author conducts an analysis through this article. The main content and potential impact of the EU's "New Battery Regulation" are that the EU was the first region to pay attention to the recycling of waste batteries and take measures. It has successively regulated the recycling and utilization of batteries through the "Directive on Batteries and Batteries Containing Certain Hazardous Substances", "Battery Directive", "Waste Framework Directive", etc., and basically formed a producer responsibility mechanism in which power battery production enterprises bear the main responsibility for battery recycling. However, EU directives generally provide policy guidance for EU member states, and member states still need to develop corresponding laws and standards based on their own national conditions. Starting from December 2020 and taking three years to come into effect on August 17, 2023, the EU's "New Battery Regulation" has elevated the battery control directive to a regulation for the first time, aiming to ensure that batteries placed on the EU market have sustainability and safety throughout their entire lifecycle, providing a stronger legal basis for the EU to comprehensively carry out battery control. The New Battery Regulations apply to the full lifecycle management of electric vehicle batteries, vehicle starting lighting and ignition batteries (SLI batteries), light vehicle batteries (LMT batteries), industrial batteries, and portable batteries. Compared with the previous "Battery Directive" which only covered the management of battery scrapping stages, it exhibits four new mandatory features in its content. One is to enforce a carbon footprint declaration. Standardize the requirements for battery carbon footprint, determine the unified calculation method, accounting system boundary, performance rating, and maximum threshold for battery carbon footprint. By setting a carbon footprint threshold, we aim to promote the EU's comprehensive layout of the battery industry chain and value chain. The second is to deepen the disclosure of battery information. Batteries must be affixed with the CE mark that meets environmental requirements. For the first time, digital battery passports, manufacturers providing battery health and lifespan, chemical symbols for over limit substances, separate collection symbols, capacity labels, basic information labels, and QR codes are required for information disclosure. By 2026, an electronic exchange system for battery information will be established, allowing regulators, consumers, distributors, and recyclers to access battery information. Thirdly, it is mandatory to improve due diligence in the supply chain. Require companies to fulfill their due diligence obligations in the supply chain through internal responsibility allocation and information disclosure, ensuring transparency and traceability of the supply chain. Integrate upstream supplier risk control measures, establish appeal mechanisms and response strategies to identify risks. Through third-party verification, provide data and evidence to regulators to form a comprehensive supply chain due diligence system. The fourth is to improve the management requirements of battery enterprises. Higher waste management requirements are proposed for battery production and recycling enterprises, including the establishment of extended producer responsibility systems, setting targets for the collection rate of waste portable and light vehicle batteries, requiring lithium recovery rates to reach 50% by 2027 and 80% by 2031, and cobalt, copper, lead, and nickel recovery rates to reach 90% by 2027 and 95% by 2031; New requirements have been added for the proportion of recycled materials used, disassembly and replaceability, harmful substance limits, electrochemical performance and durability, safety, etc. The high threshold set by the EU's "New Battery Regulation" has increased the compliance burden for battery companies and the export difficulty for electric vehicle companies. In the short term, Chinese battery companies may find it difficult to meet the minimum regulatory threshold due to insufficient supply of recycled materials, or face compliance risks due to complex information and labeling systems. There is also a risk of weakening their competitive advantage due to the relatively high carbon intensity of their own batteries. In the long run, this regulation will accelerate the zero carbon transformation of China's battery export enterprises, promote the updating and iteration of production technology, force the improvement of the domestic battery life cycle management system, and accelerate the green transformation and upgrading of the battery industry chain and supply chain. Improving the domestic carbon footprint management system is a strategic measure to break down green barriers. To actively implement the deployment requirements of the Party Central Committee and the State Council, in June this year, the Ministry of Ecology and Environment led the drafting and jointly issued the "Implementation Plan" with 14 departments including the National Development and Reform Commission, clarifying the goals and implementation paths of China's product carbon footprint management work, and proposing the overall requirements, main tasks, and guarantee measures for establishing a carbon footprint management system. Lithium batteries, new energy vehicles, photovoltaics, electronic appliances and other battery related products have been listed as key products of priority focus in the Implementation Plan, providing direction for the domestic battery industry to respond to the New Battery Regulations from aspects such as carbon footprint management, work pattern, and international mutual trust. Compared to the mandatory implementation of carbon footprint statements in the EU's New Battery Regulation, the Implementation Plan further clarifies the relevant work content and requirements. Unified requirements for the preparation of product carbon footprint accounting standards, clarifying general standards for product carbon footprint accounting boundaries, accounting methods, publication forms, data quality requirements, and traceability requirements. Following the principle of prioritizing group standards and gradually transforming them into industry or national standards, priority will be given to developing carbon footprint accounting rules and standards for key products such as lithium batteries. Based on the national greenhouse gas emission factor database, encourage and promote the participation of research institutions, industry associations, enterprises, and other parties to establish and improve the national product carbon footprint factor database. As of now, China has officially released a carbon footprint accounting system for lithium batteries, as well as group standards such as the "Carbon Footprint Quantification Method for Lithium ion Batteries for Vehicles". Compared to the carbon labeling requirements such as digital battery passports in the EU's "New Battery Regulation", the "Implementation Plan" clearly proposes the establishment of a product carbon labeling certification system. We will study and formulate management measures for product carbon labeling certification, clarify the scope of application, labeling styles, certification processes, management requirements, etc. We will also study and formulate a product carbon footprint certification catalog and implementation rules. Compared to the supply chain due diligence requirements of the EU's "New Battery Regulation", the "Implementation Plan" clearly proposes the establishment of a product carbon footprint grading management system. Government departments carry out product carbon footprint grading and management, encourage enterprises to conduct their own and supply chain related carbon footprint evaluations, propose the establishment of a carbon footprint information disclosure system, and encourage enterprises to gradually carry out environmental climate information disclosure, sustainable (development) information disclosure, or voluntary evaluation certification. Intensify financial support and encourage investment institutions and rating agencies to incorporate product carbon footprint into ESG and sustainable development due diligence. Through comparative analysis of the EU's "New Battery Regulations", the author believes that accelerating the implementation of the "Implementation Plan" and establishing a sound carbon footprint management system will promote the domestic battery industry to break through new green trade barriers, help develop new quality productivity, and achieve the "dual carbon" goals. However, in the next implementation process, it is still necessary for government regulatory departments to strengthen overall coordination and promote active participation of multiple forces in carbon footprint accounting and management. At the same time, it is also necessary to strengthen international and domestic communication and dialogue, and enhance international cooperation on carbon footprint rules. To promote the improvement of the domestic battery carbon footprint management system, the author proposes the following suggestions. First, it is suggested to improve the participation of well-known domestic Internet enterprises in the development of digital product management tools and the establishment of a basic database of carbon emissions throughout the life cycle. Internet enterprises have the advantages of digital transformation, technological innovation, data security assurance, public communication and other advantages in building a carbon footprint management system center. The research and development of relevant information systems can promote enterprises to carry out carbon emissions accounting and information disclosure efficiently, and help promote the first trial of carbon footprint accounting standards in the battery industry. In addition, most of the well-known Internet enterprises in China have set up green funds and relevant business departments in the field of ecological environment, and they are willing to participate in the implementation of the pilot demonstration of major policies on ecological environment in China. Relevant government departments can provide appropriate guidance to increase their participation in the carbon footprint management system. Secondly, it is suggested to rely on the international cooperation mechanism of multi bilateral ecological environment, promote the establishment of a carbon footprint certification system for the battery related industry, and promote the cooperation of multi bilateral rating mutual recognition. Keeping up with the new situation and rules of international trade, establishing a carbon footprint certification system for relevant industries based on international standards and domestic reality, establishing evaluation levels and corresponding indicators, and standardizing the certification process. At the same time, relying on multilateral and bilateral ecological environment cooperation mechanisms, we will promote the establishment of carbon footprint methodology and product certification testing mutual recognition cooperation between China and countries in the European Union and other regions in the battery and related industries. Domestic battery companies should also refer to the new regulations, further improve their product compliance, strengthen upstream and downstream supply chain compliance management through due diligence, enhance cooperation with local European enterprises, and maintain international market competitiveness by improving product certification and testing capabilities and transparency. Thirdly, it is recommended to attach importance to establishing and improving the recycling system for waste lithium batteries. Building a battery recycling system can promote resource recycling and reduce carbon footprint, which is a fundamental part of establishing a battery carbon footprint management system and breaking down green barriers. It is recommended that leading domestic battery companies strengthen cooperation with research institutions, prioritize the investigation and study of pollution caused by waste lithium-ion batteries, understand the characteristics of process pollution, and provide a basis for scientific policy-making. At the same time, research and formulate technical specifications and standards for the recycling, disposal, and comprehensive utilization of waste lithium-ion batteries, standardize the recycling, disposal, and comprehensive utilization of industry enterprises, and positively guide enterprises to participate in the construction of the social recycling system. Encourage the establishment of battery joint recycling and industry chain complementary recycling models led by industry associations and participated by backbone enterprises, and establish a paid collection system for small waste batteries in communities, supermarkets and other ecosystems. Combining with the prevention of battery fires and fire safety, we will increase publicity and popularization efforts, encourage the public to actively participate in recycling activities, and build a sound and effective social network system for the recycling of waste batteries. Authors: Duan Guangzheng, Zheng Jun (External Cooperation and Exchange Center of the Ministry of Ecology and Environment)

Edit:Luo yu    Responsible editor:Wang er dong

Source:China Environment News

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