# Eligibility criteria

Project Developers shall demonstrate that they meet all eligibility criteria outlined in the [Rainbow Standard Rules](https://docs.rainbowstandard.io/~/changes/171/rainbow-standard-documents/rainbow-standard-rules), and described below with a specific focus on battery preparation for reuse/repurpose through either battery refurbishing or regeneration.

Eligibility criteria that do not require specific methodology instructions are not described here. This includes:

* Measurability
* Real
* Technology readiness level
* Minimum impact

{% content-ref url="../../rainbow-standard-documents/rainbow-standard-rules" %}
[rainbow-standard-rules](https://docs.rainbowstandard.io/~/changes/171/rainbow-standard-documents/rainbow-standard-rules)
{% endcontent-ref %}

## Additionality

To demonstrate additionality, Project Developers (PD) shall perform regulatory surplus analysis, plus either investment or barrier analysis, using the [Rainbow Additionality Template](https://docs.rainbowstandard.io/rainbow-standard-documents/procedural-templates/additionality-evaluation-template).

{% tabs %}
{% tab title="Regulatory surplus analysis" %}
Regulatory surplus analysis shall demonstrate that there are no regulations that require or mandate the collection and preparation for reuse/repurpose through refurbishment or regeneration, and resale of batteries. It is acceptable if regulations promote or set targets for these activities because the resulting increase in these activities shall be accounted for in the [baseline scenario](https://docs.rainbowstandard.io/~/changes/171/methodologies/ghg-quantification#baseline-scenario).

At the European Union level, projects automatically pass the regulatory surplus analysis, which has been conducted by the Rainbow Climate Team. None of these legislations require a battery second life through refurbishing or regeneration at the EU level. Project Developers are only required to provide a country-level regulatory surplus analysis.

* At the EU level, batteries incorporated in Electrical and Electronic Equipment are considered under the Waste Electrical and Electronics Equipment ([WEEE) Directive](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02012L0019-20180704), introduced by the EU, and the [RoHS Directive](http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02011L0065-20160715) to tackle the issue of a growing amount of WEEE (Waste Electrical and Electronic Equipment). According to the WEEE [Directive 2012/19/EU](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32012L0019), batteries shall be removed and recycled from any separately collected WEEE. This does not affect the additionality of projects under this methodology, because the **eligible battery types covered under this methodology are not included in the WEEE Directive** (see Eligible technologies section).
* The EU battery regulation ([Regulation 2023/1542](https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R1542)) was approved in 2023, aiming to create holistic legislation for the safety and sustainability of batteries. The regulation mandates that portable batteries should be easily removable and replaceable by end-users or independent professionals. In addition, it **sets recycling efficiency targets and material recovery targets** for specific elements in recycling and treatment facilities for batteries. These targets will apply from December 31, 2027. This regulation does not affect the additionality of projects under this methodology, because it does not require battery treatment for reuse through refurbishing or regeneration.
* The [End-of-Life Vehicles Directive (ELV 2000/53/EC)](https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32000L0053) includes provisions for the reuse and recycling of vehicle components, such as batteries. However, the directive does not require the refurbishment or regeneration of batteries. The **focus remains on recycling**, with reuse being voluntary​.

Battery reuse targets through either refurbishing and/or regeneration that are defined in these regulations will be accounted for in the GHG reduction quantification, at the country level.

{% hint style="info" %}
For example, if a national regulation mandates a minimum amount of reused components in any new battery packs, this would be accounted for in the GHGs from new battery production in the [Baseline Scenario](https://docs.rainbowstandard.io/~/changes/171/methodologies/ghg-quantification#baseline-scenario).
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{% tab title="Investment analysis" %}
Investment analysis may be used to prove that revenue from carbon finance is necessary to make the project investment financially viable.

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For example, Project Developers can apply investment analysis to the following situations to prove additionality (non-exhaustive list) :

* the development and launch of a brand new refurbishing or regeneration project, or
* an expansion to scale up activities, such as expanding battery collection capacity, or accelerating the battery second-life processes with new equipment to be able to process more batteries annually.
  {% endhint %}

Business plans must be submitted as preliminary evidence for investment analysis. These plans should demonstrate that the investment is not self-sustaining without carbon finance support and that the carbon finance required is comparable to the total investment cost through financial indicators. During the verification process, audited financial documents must be provided to validate that the initial projections in the business plan were accurate and that the carbon finance was utilized as intended.

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Examples of indicators to prove that the investment is not self-sustaining without carbon finance support are (non-exhaustive list):

* Net Present Value (NPV)
* Internal Rate of Return (IRR)
* Payback Period
* Return on Investment (ROI) with and without Carbon Finance
  {% endhint %}

Note that for investments in expansion, **only the additional carbon reductions enabled by the expansion shall be eligible for Rainbow Carbon Credits**.
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{% tab title="Barrier analysis" %}
Barrier analysis may be used to prove that the project faces financial, institutional, and/or technological barriers to ongoing operations that can only be overcome using carbon finance.

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Examples of barriers that could justify additionality include but are not limited to:

* Financial barrier: financial analysis proving that the project is operating at a loss, or not financially viable or stable, and carbon finance would make it financially viable.
* Technological barrier:
  * proof that the project suffers from a lack of skilled workers (since the refurbishment and regeneration processes are manual, technical processes), which negatively affects the overall quality or logistics of the project. Carbon finance may help overcome this barrier by providing training for employees.
  * proof that the project is unable to scale due to, for instance, lack of refurbishing/regeneration capacity since machinery and time for refurbishing/regenerating is a limiting factor.
  * Battery refurbishment and regeneration in Europe may struggle to be cost-competitive with new battery sales. Carbon finance may be used to lower the selling price of the project’s refurbished/regenerated battery, making it a more attractive and competitive option.
    {% endhint %}
    {% endtab %}
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For any type of barrier analysis, audited financial documents shall be provided as proof. These documents should either demonstrate the financial status to prove financial barriers or show that the project could not independently fund solutions to overcome institutional or technological barriers.

## No double counting

Project developers shall sign the [Rainbow MRV & Registry Terms & Conditions](https://docs.rainbowstandard.io/~/changes/171/other/terms-and-contracts/terms-and-conditions-for-project-developers-mrv-+-registry), committing to follow the requirements outlined in the [Rainbow Standard Rules](https://docs.rainbowstandard.io/~/changes/171/rainbow-standard-documents/rainbow-standard-rules/general-eligibility-criteria#no-double-counting), including not double using or double issuing carbon credits.

No additional measures for double issuance are required because double issuance among actors in the supply chain is unlikely, given that battery collectors and recyclers are not eligible under this methodology.

{% content-ref url="../../rainbow-standard-documents/double-counting-policy" %}
[double-counting-policy](https://docs.rainbowstandard.io/~/changes/171/rainbow-standard-documents/double-counting-policy)
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## Co-benefits

Project developers shall prove that their project provides at least 2 co-benefits from the UN [Sustainable Development Goals (SDGs)](https://unstats.un.org/sdgs/indicators/Global-Indicator-Framework-after-2024-refinement-English.pdf) framework (and no more than 4).

Common co-benefits of battery refurbishing and regeneration projects, and their sources of proof, are detailed in Table 1. Project developers may suggest and prove other co-benefits not mentioned here.

SDG 13 on Climate Action by default is not considered a co-benefit here, since it is implicitly accounted for in the issuance of carbon credits. If the project delivers climate benefits that are not accounted for in the GHG reduction quantifications, then they may be considered as co-benefits.

*Table 1 Summary of common co-benefits provided by battery refurbishing and/or regeneration projects. Co-benefits are organized under the United Nation Sustainable Development Goals (UN SDGs) framework.*

<table><thead><tr><th width="198">UN SDG</th><th width="345">Description</th><th>Proof</th></tr></thead><tbody><tr><td>SDG 5.1 - Achieve gender equality and empower all women and girls</td><td><p>Women are less likely to work in the technology sector, and when they do they are usually paid less than men.</p><p>Battery refurbishing/regeneration projects may promote gender parity by having a large female workforce and having equal pay between men and women for doing the same job.</p></td><td><p>Average hourly earnings of men and women by age and disabilities (if any)</p><p>Standalone official policy for equal pay or current scenario in the sustainability report</p></td></tr><tr><td>SDG 8.5 - Achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities</td><td>Battery refurbishing/regeneration projects may hire people with disabilities, who tend to have lower rates of employment (e.g. 55% activity rate of people with some disability in the EU vs 74% overall activity rate).</td><td>Official record of the number of employees with a disability vs total employees of the workforce</td></tr><tr><td>SDG 12.2 - Achieve the sustainable management and efficient use of natural resources</td><td>The project’s circularity will be measured by the Material Circularity Indicator (MCI), according to the Ellen MacArthur Foundation's methodology.</td><td>Primary data collected from the project for the GHG reduction quantification, which are also used in the Circularity Assessment</td></tr><tr><td>SDG 12.4 - Achieve the environmentally sound management of chemicals and all wastes throughout their life cycle</td><td>Batteries contain precious metals, rare earth elements, and hazardous materials. By refurbishing batteries, and recycling the precious metals and rare earth elements they contain, projects avoid the destructive mining and extraction of these finite, virgin elements.</td><td>Battery waste diverted from recycling or other waste treatment (E.g. landfill or incineration)</td></tr><tr><td>SDG 12.5 - Reduce waste generation through prevention, reduction, recycling and reuse</td><td>The project diverts battery waste from improper disposal accordingto the EU shares as presented in Apendix 2.<br></td><td>Weight of batteries refurbished by chemistry. The amount of rare earth elements avoided is calculated in Rainbow life cycle inventory models.</td></tr></tbody></table>

## Substitution

Second life batteries must be valid substitutes for new battery production as modeled in the [baseline scenario](https://docs.rainbowstandard.io/~/changes/171/methodologies/ghg-quantification#baseline-scenario) (i.e. the avoided new battery). Project developers must provide evidence proving the quality of their second life batteries, demonstrating that they are suitable replacements for new batteries of the same chemistry (e.g. Li-ion vs NiMH) and application (e.g. ESS vs EV). This evidence includes, but is not limited to, documentation of quality control inspections, the battery grading system, and the State of Health (SoH) of the battery after preparation for reuse/repurpose, ensuring it meets the necessary standards for sale rather than recycling.

**Second life batteries are expected to have a shorter lifespan and performance than new batteries**, primarily due to wear and degradation from their initial use, and therefore do not fully replace new batteries on a 1:1 basis. Two factors are considered here:

* *Battery lifespan*: indicates the anticipated remaining lifespan, which is assumed to be shorter for a second-life battery compared to a new one. Default lifespans for new and second life batteries are presented in the [Appendix 2](https://docs.rainbowstandard.io/~/changes/171/methodologies/appendix#appendix-2-lifetimes-of-new-and-refurbished-batteries).
* *Battery State of Health (SoH)*: represents the battery's performance, and is used here as supplementary information to adjust the battery's second-life lifespan. Second life batteries typically do not reach the same 100% SoH as new batteries, although it is technically possible.

Even if a second-life battery were restored to a near-perfect SoH of 100%, demonstrating a high ability to store and deliver energy compared to its original capacity, it is **still assumed to have a reduced lifespan** compared to a brand-new battery due to the cumulative wear from its previous application. In the absence of real-world data from Project Developers (PDs), this assumption will be adopted.

This performance difference is deemed acceptable as it is factored into the [GHG quantification](https://docs.rainbowstandard.io/~/changes/171/methodologies/battery-second-life/ghg-quantification), which determines the number of new batteries avoided and, consequently, the number of RCCs to be issued for a project.

The number of new batteries replaced by a second-life battery is calculated by 1) taking the ratio of the second-life battery’s lifetime to that of a new battery, and 2) multiplying this by the second-life battery's SoH.

{% hint style="info" %}
**For example**, for a refurbished, second-life Li-ion LMT battery,

* if the second-life battery has a lifespan of 5 years
* a new battery of the same type has a lifespan of 8 years
* and the second-life battery has an SoH of 80% after refurbishing

Then the number of new batteries replaced by this second-life battery is calculated using:

$$\frac{Lifespan\ second\ life}{Lifespan\ new} \* SoH = \frac{5\ years}{8\ years}\*80% = 50%$$

In this case, one second life battery replaces and avoids 0.5 new manufactured batteries.
{% endhint %}

## Environmental and social do no harm

Project Developers shall prove that the project does not contribute to substantial environmental and social harms.

Additional proof may be required for certain high-risk environmental and social problems.

The Project Developer, the Rainbow Certification Team, or the VVB may suggest additional risks to be considered for a specific project

### ESDNH risk evaluation <a href="#esdnh-risk-evaluation" id="esdnh-risk-evaluation"></a>

Project Developers shall fill in the [Rainbow- Battery second life risk evaluation](https://docs.rainbowstandard.io/~/changes/171/methodologies/battery-second-life/risk-evaluation-template), to evaluate the identified risks of battery refurbishing and regeneration. The identified risks include:

* Improper on-site storage of non-functional batteries
* Energy intensive processing
* Greenhouse gas emissions from transport for collection
* Worker health and safety
* Frequent replacement of batteries due to shortened lifetime (rebound effect)
* Frequent replacement of batteries due to economic incentives (rebound effect)
* Export of reconditioned or regenerated batteries from Europe to countries with less stringent waste treatment standards
* Release of pollutants and hazardous chemicals during the refurbishing/regeneration process

{% hint style="info" %}
All risk assessments must also address the [Minimum ESDNH risks ](https://docs.rainbowstandard.io/~/changes/171/rainbow-standard-documents/rainbow-standard-rules/general-eligibility-criteria#minimum-esdnh-risks-to-assess)defined in the Rainbow Standard Rules.
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{% content-ref url="risk-evaluation-template" %}
[risk-evaluation-template](https://docs.rainbowstandard.io/~/changes/171/methodologies/battery-second-life/risk-evaluation-template)
{% endcontent-ref %}

Project Developers shall assign a likelihood and severity score of each risk, and provide an explanation of their choices. The VVB and Rainbow’s Certification team shall evaluate the assessment and may recommend changes to the assigned scores.

All risks with a high or very high risk score are subject to a [Risk Mitigation Plan](https://docs.rainbowstandard.io/~/changes/171/rainbow-standard-documents/rainbow-standard-rules/general-eligibility-criteria#risk-mitigation-plan), which outlines how Project Developers will mitigate, monitor, report, and if necessary, compensate for any environmental and/or social harms.

Additional proof may be required for certain high risk environmental and social problems.

The Project Developer, the Rainbow Certification Team, or the VVB may suggest additional risks to be considered for a specific project.

{% hint style="info" %}
Note that the **life-cycle GHG reduction calculations account for the climate change impacts of most environmental risks**. Nonetheless, Project Developers shall transparently describe any identified GHG emission risks in the risk evaluation template.
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## Leakage

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{% tab title="Activity shifting" %}
Leakage may occur when carbon-emitting activities are geographically displaced or relocated to areas outside the project boundaries as a direct result of the project's implementation. For battery refurbishing and regeneration, this includes:

* There is a risk that a regenerated or refurbished battery is transferred to different countries with less stringent waste treatment standards than their original country. This can occur in the form of the refurbished battery itself, which will undergo waste treatment in the country where it is sold and distributed.
  {% endtab %}

{% tab title="Upstream and downstream emissions" %}
Upstream and downstream emissions shall be included by default in the GHG reduction quantification, as part of the life-cycle approach. The upstream and downstream emissions included in the quantification are detailed in the [Baseline scenario](https://docs.rainbowstandard.io/~/changes/171/methodologies/ghg-quantification#baseline-scenario) and [Project scenario](https://docs.rainbowstandard.io/~/changes/171/methodologies/ghg-quantification#project-scenario) section
{% endtab %}
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Project Developers shall transparently evaluate the likelihood of the above leakage risks in the PDD, plus any other project-specific leakage risks deemed relevant by the Project Developer, the Rainbow Certification Team, or the VVB.

## Target alignment

Battery refurbishing and regeneration projects must prove that they lead to at least a 47% reduction in GHG emissions compared to the baseline scenario. This is aligned with the [European Union’s 2040 Climate targets](https://climate.ec.europa.eu/eu-action/climate-strategies-targets/2040-climate-target_en), as described in the[ Rainbow Standard Rules](https://docs.rainbowstandard.io/~/changes/171/rainbow-standard-documents/rainbow-standard-rules/general-eligibility-criteria#targets-alignment).

The scope of the reduction is the system boundary used in [GHG quantification section](https://docs.rainbowstandard.io/~/changes/171/methodologies/battery-second-life/ghg-quantification).

This shall be proven using the GHG reduction quantification method described in the [GHG quantification section](https://docs.rainbowstandard.io/~/changes/171/methodologies/battery-second-life/ghg-quantification).