How will the EU digital battery passport impact manufacturers?

As environmental, social, and corporate governance (ESG) has risen in corporate agendas in recent years, the impetus for greater sustainability and circularity has grown across various sectors. Aware of the environmental impacts of industrial battery production, the EU recently took aim at the battery sector.

In June, the European Parliament approved new rules for the design, production, and waste management of all types of batteries sold in the European Union. These new rules, which aim to improve the sector's sustainability, environmental and recyclability attributes, mandate the use of Digital Battery Passports for all industrial batteries above 2kWh.

What do these rules entail?

To better inform consumers, batteries will need to carry labels and QR codes with information related to their capacity, performance, durability, and chemical composition, as well as the "separate collection" symbol, the European Parliament points out. 

Coming into effect at the beginning of 2024, the law's key components include a compulsory carbon footprint declaration and labels for certain vehicles; the use of rechargeable industrial batteries with a capacity above 2kWh; and a digital battery passport for LMT (light means of transport) batteries, industrial batteries with a capacity above 2 kWh, and electric vehicle (EV) batteries.

The regulation covers the entire battery lifecycle—from design to end-of-life. It also outlines stricter waste collection targets; minimum levels of materials recovered from waste batteries; and minimum levels of recycled content from manufacturing and consumer waste for use in new batteries.

All new industrial batteries will have to include physical labels that link those batteries to their Digital Battery Passports. Populated with dynamic data, the passports must be stored in the cloud for easy access by authorized users. To meet this requirement, companies will need cloud-based solutions that can generate the battery passports and print systems to mark or label every battery with its unique digital passport. 

The impact on the battery supply chain

In essence, this regulation means that, from 2024, it's up to the manufacturer to trace batteries from the source right through to reuse and recycling. Without the correct infrastructure in place, this is likely to be onerous and time-consuming for manufacturers.

Hosted in the cloud so as to be accessible to various authorized users, the passport will consist of a series of webpages containing dynamic data and information related to the battery lifecycle. These webpages serve as a comprehensive traceability network that enable users to trace batteries from manufacturing sites throughout the supply chain.

Users will be able to identify the raw materials used, which components are recyclable, the current battery health, as well as the battery's model, capacity, chemical composition, and intended use. At the battery's end-of-life, supply chain partners can then trace the product all the way back to the manufacturer to find and follow that manufacturer's specific instructions for recycling.

The strategic importance of end-to-end traceability

Consumer engagement, anti-counterfeiting, and regulatory requirements such as the introduction of this Digital Passport are driving conversations around traceability. Today's global supply chain requires new levels of visibility as companies add new partners, expand into new regions, and attempt to meet increasing regulatory and customer demands.

In fact, according to Loftware's 2023 annual survey, 70 per cent of global business leaders pointed to global traceability as a key business priority. Ultimately, enabling transparency throughout the supply chain has become a necessity so that companies can ensure quality, safeguard products, streamline the location of inventory, and guarantee on-time delivery to market, all of which is critical to the bottom line. From a sustainability perspective, being able to trace products both upstream and downstream is becoming increasingly important, enabling manufacturers to ensure sustainable sourcing and that all products are made, shipped, and delivered to the right place.

To improve the ability to track and trace products throughout their lifecycle and across the global supply chain, businesses must embrace advanced technologies. From a labelling perspective, this means leveraging a standardized and centralized software platform for all labelling, coding, and marking requirements.

Gaining momentum

The EU's new regulations mark a pivotal stride towards sustainability and transparency in the battery sector. By fostering end-to-end traceability and emphasizing proper waste management, these regulations herald a transformative shift that is gaining momentum not only in the EU but also across other regions. As the industry adapts to comply with these measures, embracing cloud-based labelling becomes crucial for ensuring a greener and more accountable battery lifecycle.

Photo by CHUTTERSNAP on Unsplash

Paul Vogt is VP, Partner Strategies, at Loftware

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