On 12 August 2026, the European Commission issued a draft implementing regulation to accompany the EU Battery Regulation, clarifying the rules for the calculation, verification and documentation of recycled cobalt, nickel, lithium and lead content. The regulatory direction has shifted: EU management of battery recycled materials has officially evolved from simple disclosure of recycling ratios to a full supply chain compliance system that is calculable, traceable and auditable.
Enterprises will no longer simply answer "how much recycled material is used in the product"; they will also need to provide complete evidence of how recycled materials flow into products and how they are allocated within factories, as well as complete third-party verification.
I. Key Timeline: Disclosure First, Mandatory Targets Later
1. Recycled material disclosure obligation
Industrial batteries with a capacity above 2 kWh (excluding those for external energy storage), EV batteries and SLI batteries shall fulfil the disclosure obligation from 18 August 2028; LMT batteries will be included in the disclosure scope from 18 August 2033.
2. Mandatory minimum recycled content targets
Material | From 18 August 2031 | From 18 August 2036 |
Cobalt | 16% | 26% |
Lithium | 6% | 12% |
Nickel | 6% | 15% |
Lead | 85% | 85% |
The 2031 requirements mainly apply to industrial batteries with a capacity above 2 kWh, EV batteries and SLI batteries; from 2036 onwards, the requirements will be further extended to LMT batteries.
II. Clarified Accounting Boundaries: Different Calculation Rules for Each Metal
1、Cobalt, lithium and nickel: The proportion of recycled elements in active materials is calculated, focusing on the cathode material and precursor stages, rather than using the total metal content of the whole battery as the statistical basis.
2、Lead: Calculated as the ratio of the mass of recycled lead in the whole battery to the total mass of lead in the battery.
Key point: Cathode active material (CAM) and precursor cathode active material (PCAM) manufacturers will become the core nodes for recycled material data compliance.
III. Core Accounting Model: Factory-Level Mass Balance
1、The new regulation abandons the previously expected per-unit battery traceability scheme and adopts a factory-level mass balance model.
2、A single manufacturing plant is taken as the accounting boundary, covering all production lines, production processes, warehousing, and input-output flows.
3、Recycled materials and virgin materials may be mixed and used without physical segregation.
4、Data on inputs, inventory, production losses and outputs must be mutually consistent and serve as the basis for recycled content declaration.
5、The accounting period shall not exceed 12 months; recycled content is calculated on a rolling average basis.
6、Practical recommendation: Conduct statistics and declarations by the dimensions of "manufacturer + battery model + year".
IV. Transitional Policy Incentive: 1.3× Correction Factor for EU Domestic Recycling
1、Policy validity period: Until 31 December 2036, cobalt, lithium and nickel produced by eligible EU-based recycling facilities can benefit from a temporary 1.3× correction factor when calculating recycled content. For example: if 100 tonnes of compliant lithium are actually recycled, it can be counted as 130 tonnes of recycled material in compliance calculations.
2、Strict eligibility conditions – all requirements must be met simultaneously
a、The recycling facility is established and operates within the EU.
b、All recycling processes for cobalt, lithium and nickel are completed within the EU; facilities that only perform disassembly pre-treatment in the EU and outsource smelting to third countries cannot benefit from the policy.
c、The correction factor can only be applied once to the same batch of material.
d、The factor only applies to the recycled material portion, and the maximum corrected recycled content is 100%.
Additional note: Recycled materials from third countries can still be counted towards recycling targets, but will not receive this additional weighting. This will significantly influence enterprises' recycled material procurement strategies.
V. Recycling Credit Allocation: Three Contract Mechanisms to Note
How can enterprises with self-built recycling networks preserve the recycled attribute value of their waste materials and prevent recycling credits from being diluted across the market? The draft specifies three contract models to help enterprises retain recycling credits:
1、Entrusted recycling model: The enterprise provides waste materials and repurchases the corresponding recycled materials.
2、Multi-party closed-loop recycling agreement: The enterprise provides waste materials, which are processed by downstream operators, and then repurchases the recycled materials.
3、Directed procurement arrangement: The directional flow of recycled materials to specified purchasers is agreed by contract.
The commercial value of closed-loop recycling systems continues to rise. In addition to deploying recycling capacity, enterprises need to plan contract structures in advance and upstream and downstream data chains.
VI. Third-Party Verification: Audit Targets the Full Data System, Not Battery Samples
Recycled content compliance is not determined by testing finished products to distinguish virgin from recycled metals. Notified bodies will focus on verifying enterprises' calculation methods, material flow data and supply chain traceability records, and the audit scope may extend to cell factories, cathode plants, precursor plants and metal refineries.
1. Four core audit points
A、Whether input, inventory, loss and output data are fully consistent with each other
B、Whether there is double-counting of recycled materials
C、Whether data is consistent across adjacent upstream and downstream supply chain links
D、Whether contracts and directed allocation mechanisms are compliant, with complete, reliable data retained on schedule
2. Mandatory requirements for enterprise documentation
Enterprises shall uniformly prepare a Recycled Content Study Report and include it in battery technical documentation. Traceability data shall be managed digitally, and records for consecutive accounting periods shall be retained for a minimum of 10 years.
In short: What EU regulators require is not a test report for a single battery, but a complete, credible and auditable data system.
VII. Implications for Chinese Enterprises
1、Cathode materials (CAM) and precursors (PCAM) become core nodes for data management The accounting boundary for cobalt, lithium and nickel lies in active materials, so upstream and downstream material enterprises must have the capacity to deliver continuous, complete and verifiable data.
2、Commercial value of closed-loop recycling systems significantly increases Through entrusted recycling, closed-loop agreements and directed procurement mechanisms, enterprises can lock recycling credits within their own supply chain and build differentiated compliance advantages.
3、Attach importance to compliance dividends from EU domestic recycling layout The 1.3× correction factor is a phased incentive policy that will have long-term impacts on recycled material procurement choices and global recycling network layout.
VIII. Four Priority Actions for Domestic Enterprises
1、Establish a factory-level mass balance accounting system 2. upstream and downstream data links across cathode materials, precursors and refinery levels
2、Design commercial contract clauses related to closed-loop recycling in advance
3、Align with notified body audit standards and build an auditable data and document management system
EU battery recycled material compliance has evolved from simple content disclosure into a comprehensive compliance system integrating mass balance, recycling credits, full-chain traceability and third-party auditing.
The future watershed of industry competition will lie not only in how much recycled feedstock enterprises can obtain, but also in whether they can rely on compliance mechanisms to fully prove the source, flow and compliance value of recycled materials.
