[Battery Passport Special Analysis (Part 1)] The EU's "Rebuilding Against the Wind" in the New Energy Era

In-Depth Special Report on Battery Passport: The EU's "Invisible Game" of Reshaping the Global New Energy Supply Chain Through Institutions

This article focuses on the origins of EU battery regulation, a comprehensive breakdown of battery passport rules, and the "regulatory divergence" between battery passports and global new energy powerhouses.

1.1 Global Energy Landscape: Resource-Driven or Institution-Driven?

In the 21st century new energy industry, there are two main competitive points: either control resources or set the rules. The EU lags behind in almost all core industry chains, including global solar energy, power batteries, and material manufacturing. Its previous strategies relying on market adjustments and green subsidies failed to establish key competitiveness. Faced with China's vast, systematic, and highly cost-advantaged supply chain system, the EU does not even have the possibility of building a complete local industry chain. Therefore, since 2021, the EU has begun transitioning from "industrial policy" to an "institutional industrial system," systematically integrating five major tools—climate policy, trade rules, environmental standards, supply chain transparency, and data sovereignty—to form a new energy industry institutional system centered around the Battery Regulation.

In this system, the Battery Passport is the foundation, the digital infrastructure supporting all subsequent regulatory and trade measures. It is not merely an environmental protection tool but the institutional hub for the EU to reconstruct the supply chain.

Before starting the discussion, we must first clarify: What is a battery passport?

The Battery Passport is one of the core requirements of the EU's Battery Regulation, essentially a digital life cycle file for batteries. Using a uniquely traceable QR code as the entry point, it digitally records the entire life cycle data of batteries—from raw materials, manufacturing, and use to recycling—in a unified standard, with mandatory disclosure in the EU market. The Battery Passport serves as a digital ID for the battery industry and represents the world's most stringent supply chain transparency requirement to date. After full implementation in 2027, all power batteries and ESS batteries entering the EU must provide a battery passport; otherwise, they cannot be sold on the market.

1.2 2006–2023: The Shift in EU Battery Regulation from "Waste Battery Management" to "Supply Chain Control"

The 2006/66/EC directive primarily focused on waste battery recycling, with almost no regulatory requirements for power batteries, materials, or source transparency. However, by 2020, with the rapid rise in EV penetration rates, sharp fluctuations in critical mineral prices, and continuously compressed carbon neutrality timetables, the EU realized that the battery industry had become a strategic issue at the geopolitical level.

Following the enactment of the 2023 Battery Regulation, the European Union achieved for the first time: 1) full life cycle supervision (from mine to recycling); 2) mandatory disclosure requirements (carbon emissions, traceability, material composition); 3) mandatory recycling targets (including the proportion of recycled materials); 4) digital supervision (battery passport). This represents a typical policy evolution from environmental protection to industrial control.

2.1 Disclosure Logic of the Battery Passport: Three Major Modules, Twelve Data Categories

The EU categorizes the data structure of the battery passport into three main types:

I. Basic Information (Identification), including: 1) battery manufacturer; 2) battery model and chemical system; 3) production date and location; 4) rated capacity and performance indicators; 5) unique digital ID. This section appears simple but forms the "indexing system" for subsequent supervision.

II. Carbon Footprint Disclosure, where the EU's carbon emission regulations are far stricter than commonly understood: (1) Full life cycle boundary (Cradle-to-Grave) covering ore extraction, smelting and processing, material manufacturing, battery manufacturing, transportation, use, and recycling. (2) Disclosure by production batch, not by product type. For example, the carbon emission differences between LFP batteries produced in Sichuan and those produced in Morocco must be disclosed separately. (3) Adoption of the EU's unified calculation system (PEFCR, ISO 14067) to prevent companies from obfuscating data using different LCA methodologies.

III. Proportion of Recycled Materials. The EU mandates that from 2031 onwards, power batteries and industrial batteries must meet mandatory recycled content thresholds:

This serves as the institutional pivot for the EU to shift the value chain back to Europe because: 1) Europe's strongest link is recycling; 2) Europe's weakest links are mining and material manufacturing. Mandatory recycling ratios are essentially a means for the EU to reconnect the new energy value chain back to Europe.

2.2 Battery Passport Platform (Digital Product Passport), The Technical Foundation for Policy Implementation

The battery passport is not a PDF, nor an Excel file, but a standardized, auditable, and updatable digital platform. Its operational mechanism includes: (1) Data Schema, where the EU uniformly specifies field formats, data types, and update frequencies. (2) Primary Data, requiring enterprises to provide actual production data, rather than industry default values. (3) Third-party Verification, where independent bodies such as TÜV, SGS, and DNV review data reliability. (4) Blockchain record (optional), used to ensure data immutability and life cycle tracking. In the future, the EU's digital regulatory legislation may incorporate the battery passport into a data sovereignty framework.

2.3 Battery Passport Implementation Timetable (2025–2035)

In the future, the battery industry will shift from being "technology-driven" to "institution-driven."

Next, we will explain battery regulations by country. The European Union introduced the Battery Passport, whose regulatory intensity far exceeds that of major economies such as the US, Japan, and South Korea. Without understanding this difference, one cannot comprehend the future competitive landscape of the global new energy supply chain. Many popular views regard the EU Battery Passport as an "international common practice," which is actually a misunderstanding—the Battery Passport is essentially a unique EU regulatory system characterized by institutionalization, strong quotas, auditability, and digitalization, with almost no comparable counterparts among major global economies.

3.1 US: Supply Chain Reshaping Based on Subsidies, Not Mandatory Disclosure Based on Regulation

(1) The Goals of the IRA Are Entirely Different from Those of the EU

The logic of the US Inflation Reduction Act (IRA) is: 1) Use substantial subsidies to attract the industry chain to establish factories in the US; 2) Use "Foreign Entity of Concern (FEOC)" restrictions to limit Chinese participation; 3) Use tax incentives to promote the domestic material supply system. In other words, the US approach is a classic combination of industrial subsidies and quasi-trade barriers.

The EU is entirely the opposite: 1) It provides no subsidies (or very few); 2) It directly uses regulations to force enterprise compliance; 3) It locks the value chain within Europe through institutional means.

The US uses money to attract enterprises; the EU uses institutions to drive enterprises.

(2) The US Has No "Battery Passport" and Does Not Require Disclosure of Material Sources

The US lacks a digital disclosure system similar to the EU's Battery Passport; instead, US requirements are more "coarse-grained": 1) Only require determining whether the country of origin is an FEOC (especially for Chinese enterprises); 2) Do not mandate carbon footprint disclosure; 3) Do not impose hard requirements on recycled material proportions; 4) Also lack cradle-to-cradle (c2c) level traceability requirements for supply chain transparency. The core of the IRA is "money" and "prohibiting China's participation in the supply chain," while the EU's focus is on "institutions" and "gaining data sovereignty over the supply chain." The US does not need a battery passport because its strategy is supply chain decoupling; the EU must have a battery passport because its strategy is supply chain restructuring.

(3) The US carbon emission requirements are a "bonus," while the EU's are an "entry threshold."

The US only encourages low carbon emissions without imposing mandatory limits, whereas the EU has clearly stated: 1) full disclosure by 2027; 2) limits starting in 2030; and 3) a mandatory "carbon emission cap" phase after 2035. The US encourages but does not enforce; the EU enforces and requires compliance. Therefore, the EU will lead the global supply chain system, while the US will lead the localization of the global supply chain. Together, they will drive the fragmentation of the global supply chain, and China will face the challenge of simultaneously adapting to two systems.

3.2 Japan: High-Tech Route + Single Supply System, Will Not Adopt EU-Style Regulation

Japan's METI has long managed its domestic battery industry through technical roadmaps and industry standards rather than mandatory regulatory systems.

There are three main reasons for this: (1) Japan's supply chain is highly vertical and stable, requiring no transparency system. The characteristics of Japan's battery industry chain are: ① high reliance on resources, but with a stable long-term contract system; ② unlike Europe and the US, Japanese enterprises expanded internationally early (Sumitomo Metal, Panasonic, Toray); and ③ the supply chain is short and highly transparent, requiring no additional disclosure. For Japan, the EU's "mandatory disclosure + audit" system would instead increase costs. (2) Japan relies more on technological leadership than institutional competition. Japan's new energy strategy is "technological suppression + supply chain continuity," not "institutional restructuring." Japan believes it can maintain influence in technologies such as: ① solid-state batteries, ② high-nickel ternary preparation, ③ in-situ solid-liquid interface control, ④ high-voltage cathodes, and ⑤ low-expansion anodes, without needing to establish advantages through institutions. In other words, Japan believes technological leadership can bring market share and influence, while the EU believes that becoming the rule-maker first is essential to gaining influence. (3) Japan also lacks a unified "carbon footprint system." Japanese enterprises value carbon emissions, but their focus is primarily on: ① corporate ESG disclosure; ② customer requirements (automakers); and ③ pressure from long-term investors. Japan has not established a unified regulatory framework like the EU. Therefore, Japan will not follow the EU battery passport.

3.3 South Korea: Semiconductor-Style Industrial Consortium, Not an EU-Style "Regulatory State"

South Korea is highly likely to be the first country to establish a "mutual recognition system" with the EU in the future, but it will not create an EU-style battery passport. The reasons are as follows: (1) South Korea's new energy strategy is enterprise-led. The South Korean government sets high-level goals, while the three major battery manufacturers—Samsung SDI, LGES, and SKO—actually lead the implementation. This is entirely different from the EU's approach of "driving industrial change through regulation." South Korean enterprises have already formed a standards alliance and do not require EU-style mandatory regulation. (2) South Korea resembles China more than the EU in terms of "low-carbon manufacturing." South Korea's manufacturing energy consumption structure is highly dependent on: ① fossil fuels; ② LNG; and ③ imported materials (precursors, cathodes, and lithium chemicals). The EU's carbon emission limits will place significant pressure on South Korea, making it unlikely for South Korea to proactively establish a "restrictive" regulatory system. Instead, South Korea is more likely to: ① maintain existing supply chains; ② negotiate "mutual recognition of carbon emissions" with the EU; and ③ build local factories in Europe to meet local requirements, rather than directly emulating the EU. (3) South Korea may not accept EU-level supply chain disclosure. South Korean enterprises are highly dependent on Chinese materials (especially precursors, graphite, and separators). Disclosing supply chains would mean revealing trade secrets, making it highly unlikely for South Korea to proactively establish a battery passport system.

3.4 Southeast Asia and India: Will Choose the EU System Over the US System

Southeast Asia (particularly Indonesia, Malaysia, and Vietnam) and India are more likely to follow the EU because: 1) the EU is their primary battery export market; 2) the EU's recycling system is more conducive to Southeast Asian participation; 3) compared to the US's "selectively stringent subsidies," the EU's regulations are more transparent; and 4) Southeast Asia intends to become a "low-carbon manufacturing base" and needs EU certification. It is expected that after 2026, Southeast Asia will gradually achieve "mutual recognition" with the EU battery passport.

3.5 Global Trend Summary: The EU Will Become the "Supply Chain Regulatory Leader"

Overall:

Thus, the EU will become the de facto setter of global new energy supply chain regulatory authority over the next 10 years. The battery passport may become a "digital pass" for global battery trade.

In the following article, the author will further analyze the actual impact of battery passport disclosure requirements on the industry chain (including mines, the four major components, batteries, and end-users), as well as related carbon emission models.

SMM New Energy Analyst Yang Le +86 13916526348