US pursues IRA, EU adopts Battery Passport... Battery Hegemony Competition

[Asia Economy Reporter Oh Hyung-gil] As global competition intensifies over battery dominance, Europe is strengthening regulations following the United States.

While the U.S. has sought to control the supply chain related to electric vehicle batteries through the Inflation Reduction Act (IRA), the European Union (EU) plans to raise the bar for supply chain management by introducing a 'battery passport.'

According to industry sources on the 11th, the EU recently announced regulatory bills under the Green Deal policy and circular economy framework to introduce the battery passport and promote recycling of battery materials, and is currently working on legislation.

Starting with batteries in 2026, the EU is expected to introduce a 'passport' system for nearly all products traded within the region in the mid-to-long term and build a digital circular economy platform.

The 'battery passport' is a system that digitally records and shares all lifecycle information of batteries, including production, use, disposal, reuse, and recycling. This aims to enhance battery safety, optimize usage, and promote recycling. The 'digital product passport' expands this concept beyond batteries to all physical goods, enabling consumers to assess the sustainability of product supply chains in advance and make informed purchases.

In response to the EU's moves, major countries such as Germany and Japan are acting swiftly. Germany was the first among EU member states to start developing a battery passport platform. Eleven companies, including BMW, Umicore, and BASF, have formed a consortium to develop the 'Battery Pass' project, which collects and utilizes battery information.

The regulatory proposal also includes requirements to disclose carbon footprints and enforce supply chain due diligence. It mandates disclosure of recycled material content in batteries and thorough verification of whether batteries are produced with carbon reduction measures.

The target includes all industrial and automotive batteries with a capacity of 2 kWh or more. The battery passport must record the origin of materials, carbon footprint, recycled material usage ratio, battery durability, and recycling history. Of course, these details must meet the standards set by the EU.

As a result, not only Europe but also Japan and China have begun preparations to attach battery passports. Japan has created its own digital platform for battery supply chains and presented it to the EU, while China has been operating a 'battery traceability platform' since 2018.

The problem is that South Korea has yet to establish a digital traceability system. This has led to calls for companies to swiftly develop battery traceability systems and for the government to support these efforts. Such systems are necessary to properly manage carbon footprints and recycling histories.

However, South Korea still has a long way to go. Even in battery recycling, batteries are collected by local governments, making it difficult for companies to recycle them. Since batteries and vehicles are integrated, managing the history of batteries alone is practically impossible.

In response, the government is preparing measures to separate electric vehicles and batteries. The industry views this as a starting point and believes that regulatory relaxation should follow to enable companies to manage batteries more actively.

The Korea International Trade Association's International Trade and Commerce Research Institute recently suggested in a report that "the government should strengthen institutional support for building digital traceability platforms, and participating companies in the supply chain should expand efforts in recycling and ESG (Environmental, Social, and Governance) compliance."

This content was produced with the assistance of AI translation services.