From Smartphones to Power Tools: Understanding California’s New Fee on Embedded Lithium-Ion Batteries
For those who read my articles and research know that I support streamlining and harmonizing regulations for the collection and recycling of lithium-ion batteries. One of the regulatory mechanisms I have written about is the advanced recycling fee (ARF). California implemented this exact model on January 1, 2026, by expanding the Electronic Waste Recycling Act to cover products with non-removable batteries.
This update requires a 1.5% fee at the point of sale, with a $15 cap, on items ranging from small electronics to portable tools. By pulling these embedded batteries into the state’s established e-waste program and requiring clear chemistry labeling, the law creates the kind of consistent, state-wide system that can be adopted nation-wide to fund and manage the lithium-ion waste stream.
An ARF is different from a core fee, such as the refundable deposit applied to an automotive lead-acid battery. It is a one-time, non-refundable fee assessed at the point of sale, set by statute or regulation, and typically calculated as a percentage of the total sale price or as a fixed amount per unit.
While sometimes compared to a value-added tax, the comparison is not exact. A value-added tax is applied at multiple stages throughout a supply chain, whereas an ARF is applied only once at retail. Proceeds are designated specifically to fund collection, recycling, and program administration, not general revenue.
Many states already include them in electronic sales, such as TVs and other large electronics containing valuable or toxic metals. These fees fund state-wide collection programs, approved recyclers, transportation, and public information, ensuring products are managed responsibly rather than landfilled or exported. Previously in California, this framework applied to electronic waste and certain batteries, providing a funding source for collection and recycling. However, the system was limited in scope and often excluded newer lithium-ion battery-embedded products.
The new bill expands this system to address that gap. A “covered battery-embedded product” means a product containing a battery from which the battery is not designed to be easily removed from the product by the user of the product with no more than commonly used household tools.
Products not included:
Medical devices (Class II or III as defined in 21 USC 360c)
Energy storage systems, as defined in PU Code 2835(a), including utility-scale, commercial, or residential ESS
Electric vehicles, including hybrid and plug-in electric vehicles
Electronic nicotine delivery systems
Electronic nicotine delivery systems, such as e-cigarettes and vape pens, are specifically excluded from the SB 1215 battery fee because they are classified as a different type of waste stream. The Department of Toxic Substances Control (DTSC) and program advocates noted that these devices often contain residual nicotine, which is a hazardous substance. This makes them incompatible with the standard e-waste collection and recycling systems designed for consumer electronics.
Additionally, California already regulates these products under the California Electronic Cigarette Excise Tax (CECET), which was established to manage the specific public health and environmental impacts associated with nicotine products.
Removable vs Non-Removable Batteries
Removable if:
Can be detached with common household tools
Designed to be removed without breaking seals or damaging the device
Removal does not void warranty
Examples of removable batteries:
Slide-in or snap-in battery packs for power tools
Bolt-on or clip-in power tool batteries
Separate battery packs that attach without specialized tools
Non-removable (covered) batteries:
Sealed inside a device with no user-accessible panel
Require breaking housing or special tools to access
Integral to the device’s structure
The ARF applies only to products with non-removable batteries, targeting devices where end-of-life recycling is otherwise not feasible.
The specific lithium chemistries used in these products vary significantly based on the application. Lithium Cobalt Oxide (LCO) remains the standard for high-density consumer electronics like smartphones and tablets. While Lithium Manganese Oxide (LMO) is typically reserved for specialized equipment like medical devices.
Lithium Nickel Manganese Cobalt Oxide (NMC) has been the dominant chemistry for high-drain applications like power tools. However, many manufacturers are now transitioning to Lithium Iron Phosphate (LFP) for consumer goods due to its superior safety profile and lower production costs. Under the new California law, identifying these specific chemistries is now a mandatory part of product labeling or must be clearly provided on the manufacturer’s website to ensure that recyclers can properly sort and process the expanding waste stream.
How the Advanced Recycling Fee Works
Under SB 1215, a covered battery-embedded product triggers a one-time, non-refundable fee at retail, set annually by CalRecycle. For 2026, the rate is 1.5%. Example: a $1,000 device with a non-removable battery incurs a $15 ARF.
Collection and remittance:
Retailers add the ARF at checkout, show it separately on the receipt, and may retain 3% for administration.
The remainder is remitted to the California Department of Tax and Fee Administration (CDTFA) on a regular reporting cycle.
Funds are deposited into the Covered Battery-Embedded Waste Recycling Fee Subaccount, continuously appropriated for recycling program use.
Use of funds:
Reimburse approved recyclers for collection and processing
Support authorized collection sites and transportation
Cover program administration and compliance
Example flow: $1,000 device -> $15 ARF -> retailer keeps $0.45 -> $14.55 goes to subaccount -> recycler reimbursed for processing costs -> remainder supports program infrastructure.
Consumer Information, Outreach, and Market Creation
SB 1215 requires manufacturers to provide consumer information on how to return and recycle covered products. Under the law, CalRecycle uses program funds for public information programs, including:
Informing the public on proper disposal and recycling of covered products
Providing guidance on returning devices for recycling
Offering materials to increase participation in collection programs
These measures help create a stable market for recyclers. The combination of ARF funding and consumer compliance provides predictable volumes of battery-embedded products for recycling. This allows:
Approved recyclers to plan operations and scale processing capacity
Collection sites to invest in infrastructure and transportation
Material recovery networks to operate efficiently, increasing the supply of reclaimed lithium and other metals
This system not only helps to divert lithium-containing electronics from landfills but also supports the development of a domestic lithium recovery and battery recycling market. Programs such as Redwood Materials’ network of consumer drop-off boxes and Call2Recycle’s collection points are examples of existing infrastructure that can be leveraged under SB 1215. These services provide convenient ways for consumers to return batteries and small devices, increasing collection rates and ensuring materials enter the recycling stream rather than ending up in landfills.
If you found this article valuable, consider becoming a subscriber. The Critical Materials Bulletin is supported by readers, and for $5 a month or $55 a year you can help fund research that produces clear, no nonsense reporting that informs and advances the discussion on critical materials and battery metals.
DISCLAIMER: This article should not be construed as an offering of investment advice, nor should any statements (by the author or by other persons and/or entities that the author has included) in this article be taken as investment advice or recommendations of any investment strategy. The information in this article is for educational purposes only. The author did not receive compensation from any of the companies mentioned to be included in the article.