How will ECHA’s proposal on the use of lead affect Europe’s net zero ambitions?
By Amit Panday, Senior Research Analyst, Emobility and Powertrain, S&P Global
Read more at AutoTechInsight by S&P Global
Inclusion of lead in REACH Annex XIV would not only overregulate the existing lead supply chain, discouraging new investments, and hindering growth prospects, but it would also disrupt Europe’s well-established lead economy
The proposal by the European Chemicals Agency (ECHA) to include lead as one of the eight new substances of very high concern (SVHC) in the REACH Authorisation List can hurt the growth potential of manufacturers using lead metal, reduce the competitiveness of an existing supply chain and negatively impact Europe’s well-established circular economy, Dr Steve Binks, director, regulatory affairs at International Lead Association (ILA) said in an interview.
ILA, which had issued a position paper in response to the ECHA recommendations in February 2022, had made its stance clear that including lead metal in REACH Annex XIV would impede the delivery of EU policy objectives for a strategically autonomous, sustainable, and carbon-neutral future, hindering the continent’s transition to a net zero economy by 2050.
On 2 February 2022, ECHA, which is an agency of European Union, had put out its recommendations on eight new SVHC for the European Commission to include in the Authorisation List.
Notably, the Authorization List aims to minimize the risks related with the SVHC by ensuring these are controlled well throughout their lifecycle, with usage allowed only under specific permissions. ECHA, which implements EU’s chemicals legislations to protect public health and environment, had listed lead, citing ‘toxic for reproduction’ as the intrinsic property that can cause severe health hazards. Other substances listed by ECHA as SVHC include ethylenediamine, glutaral, orthoboric acid, and sodium salt.
ECHA had invited further information on the uses of these substances, including lead, their possible exemptions from the authorization requirement, and on the structure and complexity of their supply chains over a three-month period. The agency had said that it planned to collect and evaluate the information before taking the final decision on its proposal by 2 May 2022.
Where is lead used in automotive?
To begin with, the 12V lead acid batteries are an essential component in internal combustion engine (ICE), as well as electrified cars, as they power several components, such as interior lights, instrument panel, door locking system, navigation system, and engine control unit (ECU). Moreover, there is an emerging trend of installing energy storage systems at the electric vehicle (EV) charging stations to make the charging network independent while reducing the load on the power grid. Besides batteries, the metal is also used in manufacturing of solar panels, cable sheathing, soldering, vehicle component manufacturing, and machines.
The lead metal is also used in reducing friction during the high-precision machining of steel, brass, and aluminum alloys wherein a lot of steel-based components using lead are used in car manufacturing. According to Lead Matters, a collaborative campaign managed by the ILA, small amounts of lead added to steel reduces the energy requirements of machining the resulting compounds, as well as optimizing it for use. As a result, lead is also critical to supporting steel as one of the key industries in Europe, which produced more than EUR148 billion (over USD160 billion) worth of steel in 2018 alone.
Moreover, lead is also used in production of other metals, such as zinc, copper, and platinum-group metals. According to ILA, lead is also a key enabler of metals recycling in Europe, which is regarded as the world leader in circular economy of metals. Notably, the continent has a well-established supply chain system, including the start-of-the-art recycling facilities that are able to recover more than 20 metals from scrap, according to Lead Matters.
What does inclusion of lead in REACH Annex XIV imply?
While ECHA’s proposal on lead usage cannot be understood as a suggestion to impose a blanket ban on the metal, ILA’s Binks explained that the immediate consequences of the EU agency’s recommendation for Europe’s battery supply chain is that all legal entities using lead metal to manufacture batteries would need to submit an authorization application that would be considered by the ECHA. He estimates that under this process, the applicants would need to demonstrate that risks are controlled and that there are no technically and economically feasible alternatives.
“Authorization, if granted, would be time limited and information would need to be reviewed periodically, probably every 3–5 years,” Binks said, adding that as authorization is intended to encourage the replacement of substances of very high concern in the EU. In the medium term it could make it more difficult for EU companies in the lead battery supply chain to obtain necessary investment and hinder their ability to compete globally.
According to the senior ILA executive, ECHA’s prioritization process is based on set criteria that include total annual volume and uses in the EU.
“Although disappointing, it is not unsurprising ECHA has proposed lead metal considering the high volume of lead metal placed on the EU market each year and the broad range of applications it has,” he said, adding that even if the lead metal were to be included in ECHA’s 11th recommendation, there is no guarantee that the European Commission will ultimately include lead in REACH Anne XIV.
How will Europe’s well-established lead acid battery supply chain be impacted?
According to ILA’s position paper, the EU lead battery industry is the largest-volume user of lead in Europe. It estimates that lead battery production in the EU currently represents about 90% of the EU use of lead metal, and approximately EUR2 billion (USD2.17 billion) worth of lead from recycled sources is used per year for EU lead battery production alone.
According to a report titled ‘Economic Contribution of the European Lead Battery Industry’ jointly prepared by the ILA and the Association of European Automotive and Industrial Battery Manufacturers (EUROBAT), the downstream industry activity enabled through the usage of lead batteries amounts to EUR7.3 trillion worth of Europe’s GDP. It also estimates that about EUR2 billion of EU-27 country exports of lead-acid batteries are consumed by non-EU countries, such as the United Kingdom, the United States, Russia, Switzerland, and China.
Further, the report estimates that the European lead battery industry supports EUR14.7 billion in GDP and EUR36.5 billion in output, besides providing a direct employment to about 31,700 workers.
Inclusion of lead metal in the REACH Authorisation List would clearly disrupt the smooth functioning of an already well-established and strictly regulated battery industry. Disruptions are expected to not only undermine the ongoing research and development (R&D) initiatives in the lead battery supply chain but will also discourage investors in putting new investments in this area.
“We are currently trying to identify how many companies in the EU would be required to apply for REACH authorization, if mandated. But we expect that there would be a significant number–possibly thousands of companies– given the number of articles reported to contain lead in the ECHA SCIP database. Lead metal is used in brass and other metal alloy production, and we expect that this sector is likely to result in many applications for authorization,” Binks clarified.
How lead’s inclusion in REACH Annex XIV will impact Europe’s circular economy?
ILA’s position paper claims that on an average, a lead battery made in the EU today contains more than 80% recycled materials and more than 80% of the lead in European lead batteries is produced from recycled sources. “Lead and lead batteries can be recycled infinitely with no loss of quality or performance,” the document quotes.
Almost all end-of-life lead batteries manufactured in Europe are recycled, conserving natural resources, and minimizing waste by returning the metal to the product cycle an infinite number of times. As a result, EU’s lead battery value chain is seen as an economically self-sustaining, closed-loop lead battery industry. Consequently, this circularity of lead metal in the supply chain also makes it one of the most cost-effective solutions for renewable energy storage applications, which are expected to gain more traction under the EU’s commitments on its ‘Fit for 55’ package.
Moreover, while it is understood that lead is inextricably linked to the manufacturing and recycling of key metals that are directly used in making a range of automotive components, Binks pointed at the metal’s unique properties, which remain irreplaceable.
“The carrier metal properties of lead make it an effective enabler of the circular economy—providing the EU with the ability to recover in an energy-efficient way a variety of valuable metals from post-consumer and industrial waste streams, including scrap, catalytic converters, e-waste, and other increasingly complex products at end-of-life,” he explained.
Notably, Europe has a well-established and highly effective collection infrastructure and high recycling rates for lead-containing products. Explaining lead’s strategic autonomy and circularity in its position paper, ILA said, “Lead’s closed loop economy provides the raw materials needed locally to make new products, and it limits the potential for environmental exposure by keeping lead in the value chain and out of Europe’s waste stream, indefinitely.”
What are ILA’s recommendations for the EU over lead’s inclusion in REACH Annex XIV?
While lead continues to be heavily regulated in Europe, Binks said that proper enforcement of the existing and extensive lead-specific legislation framework is the best regulatory management tool for managing risks related to exposure to lead and lead compounds.
He suggested that if specific activities or products using lead metal are identified, where there remains an unacceptable risk arising from exposure to lead, targeted REACH Restrictions could be more effective and proportionate. Citing the European Pollution Release and Transfer Register (E-PRTR), he said that 65% of yearly lead emissions to air in the EU come from activities that do not use lead metal and are not in the scope of REACH Authorisation. For example, lead emissions from thermal power stations, during pig iron and steel production, and waste management.
That said, recent E-PRTR data indicates that across the EU-27, there was an 88% reduction in emissions of lead to air and an 80% reduction in emissions to water between 2007 and 2020.
ILA, in its position paper on lead’s inclusion in the REACH Annex XIV, has made the following recommendations that the European Union:
- Recognizes the social and economic benefits of lead, which is strategically autonomous and key raw material that is essential for many value chains, including battery production and associated industries that support low carbon objectives and electrification across the EU. The carrier metal properties of lead remain a key enabler of the circular economy by allowing recovery of a wide range of critical and essential raw materials, including those that are key to electric mobility and energy transition.
- Works with industry to identify more effective and proportionate measures to address any uses of lead metal, which the EU believes present a residual risk not already addressed through the existing framework.
- Considers targeted REACH Restrictions, if specific activities or products are identified where there remains an unacceptable risk arising from exposure to lead.
- Understands the complexity of many lead-using value chains across the EU, which would result in very high volumes of applications for authorization, including from many small and medium-sized enterprises (SMEs), if lead metal were included in REACH Annex XIV.
Significance of ECHA’s proposal
While it seems unsurprising that an increasingly environmentally focused policy agenda in the EU will continue to look for ways in which to incrementally improve natural environments, an understandable reaction from affected industries is to outline positives, due process, and a lack of alternatives. Demand for lead acid battery technologies will likely continue to grow 13% over the coming five years as an increasing number of auxiliary applications demand lead acid batteries. Indeed, while certain automotive OEMS—such as Tesla and Hyundai-Kia—have looked to phase out the use of the conventional lead acid battery on the vehicle, there remain applications where their technical parameters, not least the cyclability, can make lead acid technology superior. The industry also has a well-established and highly effective supply chain, including the aftermarket.
In response to the proposed policy initiative, S&P Global Mobility SCT Director Graham Evans stated “The intention of the proposed legislation here is admirable. However, the strong efforts of the lead acid battery industry to demonstrate compliance with circularity initiatives, combined with its sheer scale and broad importance, mean the need and the timeframe to explore alternatives demands attention. Likely, the industry will resist such initiatives and continue to rumble on ‘as is’. Furthermore, unknown supply chain constraints in the short, medium, and long terms for lithium-ion batteries already growing at 32% annually for light passenger vehicles, would not be helped by an additional 6.3GWh Li-ion battery demand if all 12V lead acid batteries in Europe were to be replaced over the next decade. This assumes that lithium-ion would be the default technology of choice as a replacement and would be subject to the implementation timing of any legislation.”