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Three-Year Rules Of Origin Extension Proposal For Electric Vehicles And Batteries Needs To Be A One-Off

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Our European chemicals industry fully supports the EU policy goals aiming to establish and maintain a competitive, integrated and circular European e-mobility/battery value chain. Following the release of the Commission’s proposal for a one-off extension of the current rules of origin for electric vehicles and batteries under the EU/UK Trade and Cooperation Agreement (TCA), Cefic does not oppose the proposed three-year extension, provided that the permanent EU/UK TCA rules of origin apply from 2027.

To provide our businesses with long-term planning security we need a stable and predictable policy framework. There cannot be any further extensions or weakening of already agreed rules of origin in the future. The new funding instrument must be quickly rolled out with additional support from Member States. And we call on value chain partners to act now to support meeting this target.

Marco Mensink, Cefic’s Director General reacted to the proposal highlighting:

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There can be no doubt that the proposed extension can only be a one-off. Come 2027 the permanent rules of origin need to apply with no ifs or buts. All value chain partners need to act now to make a competitive European battery value chain a reality. There can be no ‘kicking the can down the road’ mentality.

No further extensions or weakening of already agreed rules of origin in the future

The proposed extension of three years is not an easy decision for European battery material producers as the rules of origin are an important lever to foster the European battery value chain. However, mindful of the “hiccups” during the ramp-up of the European battery value chain due to unforeseen events such as the Covid-19 pandemic, Cefic will not oppose the one-off three-year extension of current rules of origin until the end 2026. This will give all value chain partners sufficient extra time to prepare themselves to meet the permanent and stricter TCA rules of origin applying as of 2027.

Against this backdrop, it is now fundamental that all value chain partners work towards meeting the 2027 headline target of at least 70% of the demand for batteries through TCA originating materials. The European chemical industry stands ready to do its part and calls on all value chain partners, in particular the European Automotive Industry, to join us now in meeting this target. To keep track, Cefic fully supports the proposal to establish semi-annual dialogues of the value chain with the Commission to monitor the progress ahead of 2027 deadline.

Cefic fully supports the intention of the Commission proposal to ensure that there are no mechanisms to reopen this one-off extension. Cefic, however, regrets that the proposal does not entirely meet this ambition as it leaves the door open for potential changes to the permanent rules of origin after 2032. We believe that this sends the wrong message, and we call on the Commission and Member States to make the proposed lock-in clause in TCA Article 68 permanent.

New funding scheme to include battery materials and rapidly rolled out

Cefic further welcomes the Commission’s intention to set up an additional funding instrument of up to € three billion to boost the EU’s battery manufacturing industry. This laudable intention now needs rapid implementation underpinned by additional support from Member States.

For the European chemical industry, it is key that the instrument targets especially the upstream part of the battery value chain, notably the battery materials production as it is faced with a stiff global competition. This is further compounded by sky-high European energy prices, which are particularly challenging for the very energy intensive production of cathode active materials (CAM). CAM play a strategic role in the development of the European battery and e-mobility value chain as they are the most valuable component in an electric vehicle battery. Access to enabling CAPEX and OPEX funding is therefore key to ensure the uptake of this value chain in Europe.

Other important issues that need addressing beyond the proposed measure are business conducive permitting procedures, precise HS/CN codes, reliable access to competitively priced raw materials as well as end-of-live battery material (i.e. black mass) from EU battery recycling capacities.

 

Source: Cefic

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