Battery storage: end-of-life responsibilities for battery producers

The increased use of energy storage systems (in conjunction with the rising uptake of electric vehicles) brings associated challenges in recycling. The development of the recycling industry will also be key to the attempts to address scarcities of raw materials. Failure to appropriately deal with batteries at the end of their useful life would not only be wasteful, but it would also undermine environmental gains linked to battery storage. 

If incorrectly disposed of, lithium-ion batteries are toxic and cause a significant fire risk. Toxic chemicals can enter water supplies and animal food chains if they leak. Quite apart from commercial and resource concerns, a successful recycling system is therefore essential. However, for commercial reasons as well as the difficulties, the rate of lithium-ion battery recycling is currently very low and obtaining materials from recycled batteries remains generally unprofitable. 

However, more and more batteries used in energy storage systems will reach an end to their useful life in the next decade. Currently, the UK does not have the infrastructure to deal with the number of lithium-ion batteries that will reach end-of-life within the next couple of decades. The regulatory regime for waste industrial and EV batteries at the moment is fairly limited, because current systems are thought to be working well. However, as the need to recycle grows, regulatory changes may be needed to ensure that the 'producer pays' principle remains effective and that policy aims are met.

The current regulatory regime

Utility-scale energy storage batteries fall within the scope of the Waste Batteries and Accumulators Regulations 2009 (WBAR 2009), a piece of EU-derived legislation which provides a system for the separate collection, treatment and recycling of waste batteries. WBAR 2009 is part of the 'producer responsibility' regime, aiming to minimise the impact of batteries on the environment by encouraging re-use/recycling and ensuring that those who place battery products on the market bear the associated cost. 

The obligations vary depending on how the battery is categorised. Batteries used in energy storage projects are likely to be classed as "industrial batteries". Industrial battery producers must take back (or collect) waste batteries free of charge from end users in any of the following circumstances:

1. Where it has supplied the end user with new industrial batteries during the compliance year.
2. Where, although it did not supply the end user with the battery, the end user is unable to return the waste battery to the original producer and the battery is of the same chemistry type as batteries placed on the market by the producer.
3. Where, although it has not supplied to the end user, the end user is not able to return the waste battery to another producer for any other reason (i.e., where the end user is unable to dispose of the batteries under either option (1) or (2) above).

WBAR 2009 bans the disposal to landfill or incineration of industrial batteries. In addition to the obligation to take back or collect batteries in the above three circumstances, industrial battery producers must also:

• Ensure that all waste batteries they take back or collect are delivered for treatment and recycling to an approved battery treatment facility (ABTF) or an approved exporter for treatment outside the UK.
• Keep records and report on the amount (in tonnes) of batteries placed by them on the market for the first time in the UK and the amount of waste batteries collected by them and delivered for treatment and recycling in each compliance period.
• Be registered with the Department for Business, Energy and Industrial Strategy (BEIS).

So, who is a "producer" under WBAR 2009? The term is given a wide definition, namely an entity with a UK presence who places batteries on the UK market for the first time on a professional basis. This can include manufacturers, distance sellers and importers of batteries. For instance, the definition captures:

• Developers, EPC contractors or other suppliers who import batteries into the UK and then sell them wholesale in the UK.
• UK manufacturers of batteries or battery storage units that sell to retailers or end-users.

What is happening in the market?

At present, the regulations provide that waste industrial batteries must be recycled by producers through their take-back obligations, and limited detail is provided on how this should be achieved. There is no explanation of how these batteries may be re-used (i.e., used again for the same purpose after refurbishment/repair) or re-purposed (to provide energy in less demanding applications once their value has diminished in their original capacity). Both re-use and repurposing are currently more efficient processes than recycling.

Not many utility scale batteries have yet reached end-of-life, but useful insights can be drawn from the market for retired EV batteries (which are also likely to be categorised as "industrial batteries" under WBAR 2009).

Whilst re-use/re-purposing schemes have an important role to play, batteries will eventually reach an end to their useful life, so an effective battery recycling system is fundamentally important. At present, the vast majority of end-of-life lithium-ion batteries are transported to the EU for recycling (as is permitted under the current regulations). Clearly, this system is unsustainable. Unfavourable costs, the complexity of deconstructing batteries and a lack of infrastructure are the current barriers to large scale battery recycling in the UK, rather than a lack of innovative solutions. There have been suggestions that government subsidies will be required to drive the uptake of recycling schemes across the UK battery storage sector.

There has been encouraging recent activity in this space with a number of plans for recycling facilities in the pipeline, but the cashflow worries of Britishvolt show that the attempts to kickstart a circular economy for batteries in the UK face significant challenges.

Are the current regulations fit for purpose in light of these market developments?

As re-use/re-purposing schemes are not specifically dealt with under WBAR 2009 there is uncertainty around the application of the regulations to such schemes. Since the first limb of the relevant provision refers to producers who have supplied "new industrial batteries", original producers may be deemed to retain responsibility in subsequent lives of batteries until they are eventually recycled or scrapped. Producers therefore need to take note that they may have statutory obligations to take back batteries even after they have been re-used or re-purposed several times.

Another issue is that re-use/re-purposing may be inhibited where a battery is classified as "waste" at the end of its first life. WBAR 2009 uses the Waste Framework Directive's loose definition of "waste"; as a result, there is a lack of clarity around when energy storage and EV batteries can actually be re-used or re-purposed.

As a result of the significant safety concerns surrounding the handling of lithium-ion batteries, there have been calls for regulations to go further to ensure safe practices and limit harm to human health and the environment. For instance, the Faraday Institution has highlighted that energy storage applications within home living spaces are "wholly unsuitable as a second use".

Unlike portable (household) batteries, industrial battery producers are not required to join a battery compliance scheme. This was considered in 2008, but a Government consultation found that there was already an established market for, and a high rate of, recycling of the batteries falling within the "industrial batteries" category at that time (due to the value of the materials in such batteries). However, the influx of lithium-ion batteries in recent years for energy storage and EV applications suggests this status quo won't last forever.  As recycling facilities grow and the market for industrial batteries changes, it seems likely that compliance schemes will be needed as a matter of practicality, so that there can be clear signposting of when and how recycling can happen. Trading of recycling evidence on a secondary market may well also become prevalent.

So, are regulatory changes on the horizon?

A circular economy for industrial batteries needs to be established as part of the UK's transition to net zero. The Faraday Institution, the UK's independent research programme for electrochemical energy storage, has highlighted the need for updated policy and a revised regulatory framework to address the current recycling issues. It suggested the pace of technological advancements in this sector has created a need to introduce more robust regulations.

To support sustainable energy storage, the UK needs to act on the issue of waste batteries. The EU's current negotiations on new regulation include the introduction of targets for recycled content in new batteries and carbon footprint declarations. That may speed up a move to recycling, but it could also make European production less competitive. Given the pace of innovation in this sector, it would not be surprising to see the UK also update its regulatory regime in the near future.

Our team of experts at Foot Anstey are on hand to help clients navigate through the waste battery regulatory landscape as the market for energy storage evolves. If you have any queries or require any support, please get in touch with a member of our team.