The past few years have turned the EU’s perception of raw materials on its head. The seeming stability turned into lingering insecurity. Amid global tensions, ruthless war at its borders, and price spikes, the EU needs to secure the necessary supply of materials for net zero while preventing resource depletion and ensuring a just transition.
Robin Roels and Andreas Budiman report.
For many years, European industrial policy was built on affordable and accessible energy and materials. While occasional shocks, such as China’s decision to withhold rare earths from Japan, or the Indonesia-EU conflict over nickel, did occur, access to raw materials was by and large a sure thing. Yet times change, and so do policies.
In the last three years, the EU has faced severe supply chain shocks, creating an anxiety in Brussels about the material demands of the European Green Deal. The pandemic led to a massive shortage of semiconductors used for everything from jet fighter pilots to electric vehicles. And Russia’s invasion of Ukraine increased the prices of nickel, palladium, iron and steel and rerouted many value chains.
After decades of limited investment in local extraction and refining, the EU is now busy grasping the scope of its unsettling dependence on third countries, which feeds half of its raw material demand.
The race for material independence
The EU’s effort to boost raw materials self-sufficiency is based on two policies: the Net-zero Industry Act and the Critical Raw Materials Act (CRMA). The first focuses on upscaling “green” European industries while preventing their movement to other regions. The CRMA will focus on options for securing supplies of 30 materials the EU labels “critical”.
The CRMA could become a game changer for how the EU sources and uses critical raw materials. The Act proposed by the European Commission at the end of 2022 will be debated over the next two years as it undergoes the legislative process from drafting to negotiation and adoption.
What is the Act based on? It is based on the assumption of continuous growth. Demand for base metals, battery materials, and rare earths is set to rise amid rapid electrification and digitalisation. According to LOCOMOTION research, this could result in the depletion of materials like aluminium, copper, cobalt, lithium, manganese and nickel. Mining, ironically, is one of the most carbon-intensive and polluting industries on the planet.
To secure the supply of raw materials, the EU is working on necessary risk reduction measures, stable extraction and production, and new partnerships while maintaining a level playing field across the EU Single Market. Trade deals, missions, research and innovation and labour force reskilling will also become part of this effort through delegated actions.
But this ambition comes with a caveat: a risk to the wellbeing of the environment and local communities might be compromised.
Destroying biodiversity to save the climate?
For years the mining industry in Europe has argued that its biggest obstacles are the EU environmental legislation, the lack of coherent permitting procedures, and the long process of acquiring permits. In fact, it is where procedures are not properly executed – for instance, the lack of transparency in environmental impact assessments (EIA), or even worse, a complete lack of EIAs, required by law – that slows things down. If the mining industry has its way, the time for mines to go online could be reduced threefold. We can only imagine what faster permitting would mean if this lengthy permitting process is already the result of companies cutting corners.
Natura 2000, the world’s most comprehensive network of protected areas, are located in the EU. Mining is still allowed in Natura 2000 areas, where 81% of the habitats and 63% of the species have an “unfavourable” conservation status. As protected sites across Europe are being considered for potential extraction, from the biodiverse Barroso region of northern Portugal to a freshwater lake in Sweden, we must ask ourselves if we can afford to pitch biodiversity against climate action?
Beyond social licence to operate
Precautionary measures and the maintenance of existing laws are needed for renewable energy infrastructure, where consent from the communities needs to be sought by the appropriate means and involvement. The RePowerEU plan, which aims to unlock energy savings and boost renewables deployment in the EU, includes provisions that would allow developers to build wind and solar projects without EIAs or public consultations.
Such removal of safeguards risks increasing public resistance to renewable projects and could undermine the EU’s environmental legislation. The same might become true for the CRMA. However, arguments for giving in to what is seen as necessary evil on the road to net zero are threaten to put imperial interests ahead of human rights and healthy ecosystems.
Instead of cutting corners, we need more resources and staff for permit-granting bodies, environmental assessment authorities and creating one-stop shops to streamline bureaucratic procedures. Free, prior and informed consent and the right of local communities to say no to projects that can harm local ecosystems and livelihoods should become a norm.
Meeting demand within limits
Managing demand is a unique way to achieve self-sufficiency while responsibly using nature’s resources. And one key aspect of the CRMA should be to not just react to supply changes but actively influence the demand. This means less mining and fewer ecosystems and communities grappling with irreversible disruptions.
Recent research has shown that through smaller batteries and increased public transport, the US could reduce its lithium demand by 90%. And another study found that Belgium could reduce its cobalt demand by 5–8 times using demand-side solutions. And there are very real ways to make it happen.
Setting an overall materials demand reduction target at 60% across the EU by 2050 would allow us to prioritise secondary raw materials. Meeting such a target will require a dedicated operational network to consider global justice dimensions of material consumption.
The next year will pose some tough choices, with policymakers pressured by the needs of the military, aviation, and other industries with short-term demands. None of these, however, will erase the need for aligning policies with broader long-term priorities.
Following the groundwork laid out by the battery regulation requiring recycling targets for electric vehicle batteries, we need the same in other products containing scarce metals, requirements to measure carbon footprints and broader environmental impacts for domestic and imported metals. The EU should also tighten the export ban on waste, prioritise products containing scarce metals for ecodesign, and introduce mandatory repairability scores.
Civil society to bridge ambition and reality
What lies ahead? When the Commission drafts the proposal for the CRMA, the European Parliament first reviews it. If approved, the proposal is then passed on to the Council of the European Union, representing the governments of the Member States. Further, the Commission, Council and Parliament engage in a “trialogue” discussing proposed legislation. Once an agreement is reached, the legislation is formally adopted.
The CRMA has the potential to significantly impact the EU’s sourcing and use of critical raw materials for the decades to come, and it will be crucial to listen to the voice of civil society. The effectiveness of the upcoming industrial policy will be strongly influenced by the capacity of policymakers to grasp societal demands and create policies that ensure a just transition and protect our environment.
Please contact Robin.Roels@EEB.org if your environmental organisation is interested in working on the Critical Raw Materials Act.