EUROPEAN COMMISSION Brussels, 10.12.2020 COM(2020) 798 final 2020/0353 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL concerning batteries and waste batteries, repealing Directive 2006/66/EC and amending Regulation (EU) No 2019/1020 (Text with EEA relevance) {SEC(2020) 420 final} - {SWD(2020) 334 final} - {SWD(2020) 335 final} EN EN EXPLANATORY MEMORANDUM 1. CONTEXT OF THE PROPOSAL • Reasons for and objectives of the proposal Battery development and production are strategic imperatives for Europe in the context of the clean energy transition. It is also a key component of Europe’s automotive sector. In the EU, transport is responsible for roughly a quarter of greenhouse-gas (GHG) emissions and is the main cause of air pollution in cities. More widespread uptake of electric vehicles will reduce GHG emissions and noxious emissions from road transport. In the EU, a strong increase in the electrification of passenger cars, vans, buses – and, to a lesser extent, trucks – is expected to take place between 2020 and 2030. This is mainly being driven by EU legislation setting CO2 emission standards for vehicle manufacturers, but also by EU legislation setting Member State minimum targets for public procurement of clean vehicles1. The electrification of some residential services, like energy storage or heating, will follow on from this and help to further reduce emissions. According to estimates from the World Economic Forum, there is a need to scale up global battery production by a factor of 19 to accelerate the transition to a low-carbon economy2. This initiative aims to modernise the EU's legislative framework for batteries. It is an integral part of the EU's Green Deal3, the EU's new growth strategy, which aims to transform the EU into a modern, resource-efficient and competitive economy where: (i) there are no net emissions of GHGs by 2050; (ii) economic growth is decoupled from resource use; and (iii) no person and no place is left behind. It builds on commitments and reports adopted by the European Commission, including the strategic action plan on batteries4, the new circular economy action plan5, the new industrial strategy for Europe6 and the sustainable and smart mobility strategy7, which aims at delivering a 90% reduction in transport-related GHG emissions by 2050. In addition to the Commission’s work, both the Council and the Parliament have called for action to support the transition to electro-mobility, carbon-neutral energy storage, and a sustainable battery value chain. The European Investment Bank also announced that it expects to increase its backing of battery-related projects to more than EUR 1 billion of financing in 20208. This initiative addresses three groups of highly interlinked problems related to batteries.  1 2 3 4 5 6 7 8 EN The first group relates to the lack of framework conditions providing incentives to invest in production capacity for sustainable batteries. These Directive 2009/33/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of clean and energy-efficient road transport vehicles (OJ L 120, 15.5.2009, p. 5) World Economic Forum and Global Batteries Alliance, A vision for a sustainable battery value chain in 2030: Unlocking the potential to power sustainable development and climate change mitigation, 2019. Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions, The European Green Deal (COM (2019) 640 final). Annex to COM(2018)293 final. COM(2020)98 final. COM(2020)102 final. COM(2020)789 https://www.eib.org/en/press/all/2020-121-eib-reaffirms-commitment-to-a-european-battery-industryto-boost-green-recovery 1 EN problems are linked to the inefficient functioning of the single market and to the lack of a sufficiently level playing field9 due to diverging regulatory frameworks within the internal market. The underlying causes of this include uneven implementation of the Batteries Directive and the lack of reliable and comparable information across the EU.  The second group of problems relates to sub-optimal functioning of recycling markets and insufficiently closed material loops, which limit the EU's potential to mitigate the supply risk for raw materials. There are a number of shortcomings in the current regulatory framework. These shortcomings include a lack of clear and sufficiently h