Most Favoured Nation: Recycling Old Material
Batteries, public attitudes to trade and wildlife smuggling
Welcome to the 105th edition of Most Favoured Nation. This week’s edition is free for all to read. If you enjoy reading Most Favoured Nation, please consider becoming a paid subscriber.
As you know, this newsletter likes to talk about car batteries. Usually this is in the context of electric vehicle rules of origin, but sometimes I like to branch out.
Today, I am interested in recycling. And by recycling, I actually mean the new EU battery and waste regulation and how it could/will contribute to forcing electric vehicle manufacturers to source more of their batteries from within the EU.
First, recycling targets. As well as car makers having a new obligation to collect waste batteries, free of charge, Article 8 of the regulation requires, begining 96 months after the regulation entered into force, EV batteries to contain the following proportions of recycled materials:
16 % cobalt;
85 % lead;
6 % lithium;
6 % nickel.
156 months after the regulation enetered into force, the proportions increase to:
26 % cobalt;
85 % lead;
12 % lithium;
15 % nickel.
From a practical point of view, the combination of the requirements to collect waste batteries from within the EU market and for new batteries made for the EU market to contain minimum quantities of recycled materials creates a fairly big incentive to make the batteries locally, or at least in the general vacinity.
This is because it would cost a fair bit of money to collect old batteries in the EU, ship them to, say, China, break them down into their component parts and then make a new battery and ship it back to the EU. I’m not saying no one will do it … but it’s quite a bit of faff.
There’s also the new obligation to account for the carbon intensitiy of carbon production.
Article 7 creates a new obligation for EV battery manufacturers to measure and declare the carbon footprint of each battery. The timelines for this are all a bit of a mess, but eventually [Article 7.3] lead to the European Commission creating a maximum CO2 threshold for EV batteries.
It is not yet clear how the carbon footprint of batteries will be calculated — this has been left for the Commission to work out — but given the focus on “footprint” it wouldn’t surprise me if transport emissions are factored in, creating a bias against using batteries created far away.
Anyway, EU: clever, very clever.
Implementing regulation
While we are on the subject of climate and trade, the Commission has — slightly late in the day given the pase one obligations kick in on 1 October — published the CBAM implementing regulation, here.
Basically this sets out what companies actually have to do to comply with the rules. If interested, EY has a useful overview. For example:
Use of default values
The Implementing Regulation confirms that declarants will be permitted to use default values to report embedded emissions of imports covered by the CBAM. However, these may only be used where actual data on the embedded emissions of specific goods at the installation level is not available. Where this is the case, the following conditions apply:
Until 31 December 2024, alternative methods covered by existing carbon pricing schemes, compulsory emission monitoring schemes or verified emissions monitoring schemes can be used to calculate embedded emissions
Until 31 July 2024, and only where the above data is not available, default values published by the Commission can be used to calculate embedded emissions
Guess the identitiy of the prohibited animal import
As you all know, one of the worst things you can ever do is engage in illegal wildlife smuggling.
Brexit has added a new dimension to this, given it is now possible to illegally trade wildlife within the UK, from Great Britain to Northern Ireland.
And, with thanks to Matt Kilcoyne for bringing it to my attention, we now have this Telegraph report of a truly terrible crime:
Hammond had failed to obtain a vets health certificate and notify the authorities in Northern Ireland of the import. Foord, Dickinson and Hammond were arrested.
The trio pleaded guilty at Lisburn Magistrates Court this week after a judge heard they had fallen foul of red tape that did not exist before the creation of the Irish Sea border after Brexit.
Foord admitted keeping a dangerous wild animal without a licence between Oct 6 and 24 2022 after telling investigators at her Belfast home she owned Queen Elizabeth, but didn’t know she needed permission and documents to bring it into Northern Ireland.
Dickinson admitted transporting the animal without authority and failing to present a health certificate for it.
Hammond, a farmer with an interest in rare breed poultry, admitted illegally importing the animal and failing to notify Northern Ireland’s Department of Agriculture, Environment and Rural Affairs.
All three defendants were given two-year conditional discharges, which means they are spared further punishment, but do now have a criminal record.
Anyway, guess the animal.
[Answer and link to the story at the end]
Ask the public
The UK Department for Business and Trade (DeeBAT, not DeeBeeTee, no matter what all the people working there say) recently published its Wave 6 Public Attitudes to Trade Tracker.
Ignoring that it has taken them about a year to publish this — the fieldwork was done between July and September 2022 — and that it is objectively funny that around 20% of respondents pretend to have heard of Mercosur, this result stood out for me:
Why? Because it’s a further data point for my long-running theory that Brits are actually quite European, rather than American, in their approach to trade. I reckon that if you asked the same question of Americans, “lower wages” and “reduces job opportunities” would be right at the top, with “reduced safety and food standards” near the bottom. “Negative impact on the environment” would probably be similar for both.
Anyhow, I do think it is interesting that Europeans, including Brits, don’t seem to be so concerned about job lossess, wheras in the US discourse it is all you ever hear about.
Best wishes,
Sam … and my little cuddly friend:
