However, as we hear in an interview ahead of Vahle’s appearance at the ees Europe conference this week in Germany as part of the Smarter E trade event, some of the technical solutions to facilitate compliance are already available, while reporting requirements involved on things like carbon footprint and recycled content labelling should not come as a surprise for most stakeholders.
Tilmann Vahle’s team at Systemiq is part of Battery Pass, a consortium advising the EU on how to create and implement the passport, which is not only an industry first, but is also the first-ever digital tracking and traceability effort for any kind of product in the EU, if not the world.
Systemiq was founded in 2016, after the Paris Climate Agreement of a year before, by two sustainability practise partners at McKinsey and a former EU sustainability commissioner, aimed at providing advisory services and thought leadership to advance the economic side of the transition away from fossil fuels towards renewables.
Following a number of circular economy initiatives that Systemiq had done in Germany, the group’s work on batteries as a vital piece of creating a more sustainable economy took shape.
Together with fellow Battery Pass Consortium members acatech (Germany’s national Academy of Science and Engineering) and Fraunhofer IPK, Systemiq identified that accessing lifetime data on batteries, “is super-vital to actually get the most out of them,” Vahle says.
“We have to extend [battery] lifetimes or take the responsibility to remanufacture, repair, refurbish them, or repurpose them,” he says.
At that time, in 2021, the first drafts of the EU’s Batteries Regulation—marking the first major update to EU policy on batteries since 2006—had been published, and even at that early stage, it became clear that new regulations would become law, and that the EU would introduce a Battery Passport scheme by 2026.
Systemiq and its partners from industry and academic circles decided that building an independent advisory consortium could provide “technical guidance that will be open source, to help the entire ecosystem of battery passports in the EU and then beyond. To actually develop these software pieces in a way that is consistent and makes sense and is also practicable to actually implement.”
The consortium applied for and got €8 million (US$8.6 million) funding from the German government to get started, and Tilmann Vahle makes it clear that Battery Pass is not building the Battery Passport itself, nor is it part of the EU’s Battery Alliance which seeks to support and promote European battery value chain development.
“We are independent, we make contributions to try and help everybody else figure it out and build working solutions,” Vahle says.
The passport will see QR codes placed onto all batteries and components that when scanned, show a wealth of data on the device, from the aforementioned sustainability criteria to data on performance and lifetime.
Some implications of the Battery Passport for BESS developers
So, what will the Battery Passport mean for the stationary battery energy storage system (BESS) industry and its stakeholders?
First off, one thing to mention is that, as regular readers of this site will know, the EU has placed responsibility for the Battery Passport—and indeed complying with the wider Batteries Regulation—on the economic operator which places the battery into the market.
That means that rather than the manufacturer, distributor or importer that made or sold the batteries, it will be the stakeholder that puts a BESS into operation that has to ensure the passport is complied with.
That’s no different to, for example, CE marking – the safety marks that are put onto any electronic product currently sold in the EU – and the reasoning for putting the onus on the economic operator is the same as for any other product.
“Otherwise, you would have to go into industrial policy and environmental manufacturing laws,” Tilmann Vahle says.
“Of course, batteries are typically not manufactured in Germany or in Europe but in Korea, Japan, and China especially. That’s about 90% of battery manufacturing, and we [the EU] cannot execute against them, it’s not in the jurisdiction. What you can do is handle those entities that sell onto the market, the economic operators.”
Anyone procuring batteries, particularly those procuring large quantities as might be used in stationary BESS applications, should be doing plenty of due diligence on those products.
The Systemiq director says that’s a “question we grapple with,” when it comes to whether the passport could actually help streamline those due diligence processes, or should be considered separately.
“Firstly, what does the battery passport as a tool give the economic operator or consumer? What does it contribute to? And secondly, basically, what information will a supplier of batteries have at scale across all of their batteries, because they need to feed it into the Battery Passport?”
The information required should already be held by manufacturers and distributors, and the digital product passport means it should be stored and then made accessible in one place, making it easier to share data with potential buyers, for example.
That information, which under the Batteries Regulation should be public anyway “should help transactions, especially on due diligence, on carbon footprint and responsibility in mining and manufacturing and human rights due diligence questions,” Vahle says.
“It’s not that the battery passport itself makes it necessary to create a carbon footprint label, for example. The majority of the data points are required to be developed and created by the regulation anyway,” he says.
“So, the additional effort is fairly small, but it does create a collection and, therefore, easier access.”
Indeed, in a value assessment of the Battery Passport published by the consortium in April, it was pointed out that the policy requirement could help reduce procurement and recycling costs for independent BESS operators, particularly those sourcing batteries from automotive OEMs for second life applications.
It could also have a big impact on the production of batteries for stationary storage applications within the domestic sector too. In a February interview with this site, Maher Chebo, managing director for Europe at Univers (formerly known as Envision) and chair of a European Commission taskforce on making the European battery value chain more competitive and innovative, said the increased transparency and traceability the digital passport provided could give investors more clarity on the bankability of the products they procure.
‘A trajectory you can anticipate very clearly’
Earlier this year, I moderated a panel discussion on the Battery Passport at Solar Media’s Energy Storage Summit EU. Panelist Richard Wagstaff, head of procurement at BESS developer-investor Gore Street Energy Storage Fund said that the passport, as well as the regulation, was welcome, and in many ways aligned with his fund’s existing ESG remit.
However, there remained a open question, Wagstaff said, over what impact the phased-in implementation of the regulation would have on procurements perhaps being made today or in a year’s time, for projects that would be commissioned further down the line when the policy has come into place.
“The good thing is, you know that it’s going to come, there is that two-and-a-half-year lead time,” Vahle says, noting that once the European Commission makes a policy proposal decision, “it’s going to happen”.
“The details may differ quite significantly, but there will be a battery passport. That’s been clear for many years now, and also it’s been known that over time, the requirements get more stringent.
They are very rarely watered down, so there’s a trajectory you can anticipate very clearly, four, five, 10 years into the future.”
Vahle says, on the one hand, that it is quite challenging to figure out exactly how the technical details of the passport will be implemented and interpreted, such as how carbon emissions or recycled content are measured.
The fact that some of those definitions are yet to be set in stone is a “dilemma” for companies that want to get ahead of the requirements, but, again, he says that good faith interpretation of the rules will be acceptable in the meantime, even by regulators.
“I think the main message is, we don’t need to wait,” Vahle says.
“If there’s ambiguity, okay, just do as you think is right, and write it down, and make it reasonable and in the spirit of the law. Then it’s all good.”
Vahle says it is understandable that the regulation and passport may seem “overwhelming” at first glance.
“What’s important to keep in mind is that the majority of the points that the federal regulation is asking for have existed before in other places, such as transparency on hazardous chemicals that are in the EU’s REACH Regulation, or due diligence that’s in the Sustainable Supply Chain Act.”
It may, therefore, look as though the new rules add more layers of bureaucracy and compliance requirements, but in fact, it is more the case that the different laws governing products and services in the EU have been brought up to date to encompass batteries and put “all in one place.”
“It actually reduces complexity. It looks like a lot, and we identified around 90 data points that will have to be put into the Battery Passport, but the majority of the companies involved already have the majority of those data points.”
While there will be challenging aspects to the undertaking—and Vahle concedes that the development of technical software solutions is one of those challenges—there are plenty of stakeholders willing to take them on.
Engineering companies Siemens and Circulor are among those looking to develop interoperable and standardised software offerings that can be applied to collecting the necessary data, while Vahle says he has heard tech giants like Amazon, Microsoft and IBM are starting to build licensable solutions.
In an ESN Premium interview earlier this year, Wood Mackenzie senior energy storage analyst Kevin Shang said that the Batteries Regulation will give BESS industry stakeholders a need to focus on end-of-life and recycling, in a way that their electric vehicle (EV) counterparts are more commonly already doing.