Fair EPR Pricing for Sustainable Battery Recycling

Syllabus Areas:

GS III - Environment and Ecology.

India’s EV and renewable energy boom is driving exponential growth in lithium battery demand. Concerns have emerged about environmental risks from improper disposal and inadequate recycling, especially due to an unrealistically low EPR (Extended Producer Responsibility) floor price.

Background

  • EV growth:
    • India’s electric mobility sector is expanding rapidly due to government incentives, rising fuel prices, and environmental commitments.
    • Lithium battery demand is expected to grow from 4 GWh in 2023 to nearly 139 GWh by 2035 — a 35-fold increase.
    • This surge will lead to a proportional rise in spent battery volumes requiring safe disposal and recycling.
  • Renewable energy push:
    • India’s renewable energy expansion — especially solar and wind — needs large-scale Battery Energy Storage Systems (BESS) to store intermittent power and ensure grid stability.
    • The BESS market’s growth directly fuels demand for lithium-ion batteries.
    • This is crucial for achieving India’s Net Zero target by 2070.
  • E-waste burden:
    • In 2022, India generated about 6 million tonnes of e-waste, of which lithium batteries alone accounted for 7 lakh tonnes.
    • Without proper recycling, these batteries can leak toxic chemicals (e.g., lithium salts, cobalt compounds) into soil and groundwater, posing severe environmental and health hazards.
  • Regulatory framework – BWMR 2022:
    • The Battery Waste Management Rules aim to regulate the collection, recycling, and disposal of all types of batteries — including EV, portable, and industrial.
    • They place the onus on producers, importers, and assemblers to ensure sustainable end-of-life management.
  • Extended Producer Responsibility (EPR) concept:
    • EPR makes producers financially responsible for the collection and recycling of batteries after consumer use.
    • Since most producers lack collection/recycling infrastructure, they work with certified recyclers, who receive payments based on an EPR floor price for each unit recycled.
    • The floor price is meant to cover collection, transportation, safe dismantling, material recovery, labour costs, and technology investment.

Key Issue – Low EPR Floor Price

  • Purpose of floor price: Compensate recyclers for:
    • Infrastructure & technology investment
    • Safe transport & disposal
    • Labour & R&D
  • Problem: Current floor price under consideration is less than 1/4th of UK levels, even after adjusting for purchasing power.
  • Impact of low price:
    • Legitimate recyclers become financially unviable.
    • Informal & fraudulent recyclers flourish → false certificates, hazardous dumping.
    • Loss of recoverable rare metals → higher import dependence.
    • Economic loss: Estimated > $1 billion forex loss by 2030
Fair EPR Pricing for Sustainable Battery Recycling

Compliance Challenges

  • Large producers often adopt different environmental policies for developed vs. developing countries.
  • Resistance to compliance in India risks weakening the circular economy in the global south.
  • Price adjustments unlikely to affect consumers — OEMs have not reduced prices despite falling global metal costs.

Global Best Practice Example

  • UK: Producers pay ~₹1,600/kg for EV battery recycling.
  • India’s proposed price: less than one-fourth of this.

Way Forward

  1. Recalibrate EPR Floor Price
    • Reflect actual recycling costs (collection → recovery).
    • Move to market-driven pricing once ecosystem matures.
    • Benchmark against global best practices.
  2. Strengthen Enforcement
    • Robust audits of recyclers & producers.
    • Digitise EPR certificate issuance & tracking.
    • Penalise fraud & non-compliance.
  3. Integrate Informal Sector
    • Provide training, regulatory support & formalisation pathways.
    • Eliminate hazardous practices while expanding capacity.
  4. Strategic Imperative
    • Treat battery recycling as both an environmental and economic security

Prelims Question:

1. Which of the following are correct regarding the Extended Producer Responsibility (EPR) under the Battery Waste Management Rules, 2022?
  1. Producers are responsible for funding the collection and recycling of used batteries.
  2. EPR certificates can only be issued by informal sector recyclers.
  3. The EPR floor price is designed to compensate recyclers for full recycling costs.
  4. India’s EPR pricing for EV batteries is currently higher than that in the UK.
  1. 1 and 3 only
  2. 1, 2 and 4 only
  3. 2 and 3 only
  4. 1, 3 and 4 only

Mains Question:

  • Discuss the significance of a fair EPR floor price in ensuring sustainable battery waste management in India. How can enforcement and integration of informal recyclers strengthen the circular economy? (250 words) 15 Marks