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The European Critical Raw Materials Act: Pioneering Energy Leadership

The European Critical Raw Materials Act: Pioneering Energy Leadership

In March 2023, the European Union (EU) took a significant step in shaping the future of its energy sector by unveiling the European Critical Raw Materials Act (CRMA).

The European Critical Raw Materials Act (CRM Act) is a legislative framework aimed at securing the EU’s access to critical raw materials (CRMs), essential for the green and digital transitions. This landmark legislation aims to secure access to the raw materials essential for advancing the EU's green and digital transitions. With the global demand for critical raw materials (CRMs) such as lithium, cobalt, and rare earth elements skyrocketing, this act places the EU at the forefront of energy leadership, helping mitigate supply risks and promote sustainable resource management. By 2024, the act's influence is already transforming both carbon-based and renewable energy sectors across Europe.

The act aims to guarantee the availability of key raw materials like lithium, cobalt, and rare earth elements that are vital for industries such as renewable energy, electric vehicles, and electronics. It seeks to identify and prioritize materials that are crucial to European industries.

One of the main goals is to reduce dependency on a few non-EU countries (particularly China) by diversifying imports and establishing new supply chains.

The CRM Act also promotes recycling and reuse of critical raw materials to reduce reliance on primary raw material extraction. It fosters a circular economy approach, supporting technologies that can recover CRMs from waste streams.

Key Facts and Data

1. Critical Materials Dependency: Europe imports 98% of its rare earth metals and 90% of its lithium from countries like China. These raw materials are crucial for manufacturing electric vehicle (EV) batteries, wind turbines, and solar panels, as well as traditional energy technologies. The EU recognized that its dependency on imports presents a geopolitical risk and undermines its energy security. Many critical raw materials are indispensable for manufacturing electronics, semiconductors, and advanced communication technologies. Elements like gallium and germanium are used in microchips, which power smartphones, computers, and telecommunication networks. CRMs play a key role in defense applications such as advanced radar systems, jet engines, and precision-guided weapons. For instance, tungsten and tantalum are used in military hardware due to their heat-resistant and high-strength properties. Advanced manufacturing industries, such as aerospace, robotics, and medical technologies, rely on CRMs. Titanium, for example, is used in medical implants and aerospace applications due to its strength and low weight. The availability of these materials is critical to maintaining Europe’s competitive edge in high-tech industries.

2. Targets by 2030: Under the CRMA, the EU set ambitious targets:

  • Extraction: At least 10% of the EU’s demand for CRMs should be sourced from domestic production.
  • Processing: 40% of CRMs should be processed within the EU.
  • Recycling: 15% of the EU's CRM demand should be met through recycling.

3. Financial Investment: The EU allocated significant financial resources to the implementation of the CRMA. In 2024, the European Commission announced the creation of a European Raw Materials Board and investments exceeding €4 billion to strengthen research and development in sustainable mining, processing, and recycling of CRMs. Additionally, the act calls for investment in sustainable technologies that minimize environmental impact and prioritize circular economy principles.

Concrete actions

Here are some concrete examples of initiatives and actions under the European Critical Raw Materials Act. These examples show how the EU is actively working to secure, diversify, and innovate in its supply of critical raw materials, ensuring that Europe can meet the needs of its green and digital transitions while reducing reliance on unstable or monopolistic supply chains.

1. Vulcan Energy Resources (Germany)

https://v-er.eu/

In Germany’s Upper Rhine Valley, Vulcan Energy is developing Europe’s first lithium extraction project that uses geothermal energy to extract lithium from brine. This process is more environmentally friendly compared to traditional mining methods. Lithium is a critical component for batteries in electric vehicles (EVs), and this project aligns with the EU’s goal to reduce dependence on lithium imports from non-EU countries, such as China and Chile.

2. Infinity Lithium (Spain)

https://www.infinitylithium.com/project/

In Spain, the San José project aims to extract lithium to meet the EU’s growing demand for EV batteries. The goal is to supply Europe with a domestic source of this vital material, contributing to local and secure supply chains.

3. Umicore (Belgium)

https://www.umicore.com/en/

Umicore is a global leader in materials technology and recycling. It operates one of the world’s largest battery recycling facilities in Hoboken, Belgium. This facility recycles batteries from EVs and electronics, recovering valuable critical raw materials such as cobalt, nickel, and lithium. These materials are then reused in new products, contributing to the EU’s circular economy goals.

4. Northvolt (Sweden)

https://northvolt.com/recycling/

Northvolt, a Swedish battery manufacturer, has launched the Revolt program, which focuses on recycling battery cells to recover critical materials like cobalt, nickel, and manganese. This project directly supports the EU’s initiative to boost recycling capacity and create a circular supply chain for key raw materials.

5. EU-Canada Raw Materials Partnership

https://www.iea.org/policies/15875-canada-eu-strategic-partnership-on-raw-materials

The EU has signed a strategic partnership with Canada, one of the world’s richest countries in terms of mineral resources. This agreement focuses on securing sustainable supplies of key raw materials such as nickel and cobalt. The partnership aims to develop projects that ensure ethical sourcing and reduce reliance on materials from politically sensitive areas.

6. EU-Australia Raw Materials Alliance

https://ec.europa.eu/commission/presscorner/detail/en/ip_24_2904

The EU has partnered with Australia to diversify its sources of rare earth elements and other critical minerals. Australia is a major producer of raw materials, and this partnership helps reduce Europe’s reliance on China for rare earth supplies, which are essential for electronics, wind turbines, and EV motors.

7. Horizon Europe Research Grants

https://hadea.ec.europa.eu/news/discover-how-hadea-managed-projects-contribute-implementation-state-union-initiatives-european-2023-09-11_en#:~:text=Funding%20under%20Horizon%20Europe%20and%20Horizon%202020&text=For%20the%20period%202021%2D%202024,supply%20chain%2C%20and%20policy%20support.

The EU’s Horizon Europe research program funds projects that focus on finding alternatives to critical raw materials. For example, some projects are developing alternatives to cobalt in EV batteries, which is often sourced from countries with unstable political situations, like the Democratic Republic of Congo (DRC). By finding substitutes, the EU can reduce its reliance on politically sensitive sources.

8. European Raw Materials Alliance (ERMA)

https://erma.eu/

ERMA was created to support the development of alternative raw materials and technologies. One of its projects is researching ways to reduce the use of rare earth magnets in wind turbines and EVs. The goal is to develop alternative materials that are more abundant and easier to source within Europe.

Challenges and the Road Ahead

Despite the CRMA’s positive impact, several challenges remain. Extracting and processing raw materials domestically can be costly and face public opposition due to environmental concerns. Moreover, transitioning to a circular economy requires significant investment in infrastructure for recycling CRMs at scale. However, the EU is well-positioned to address these challenges by harnessing its innovative capacity and political will.

The European Critical Raw Materials Act is a pivotal moment in Europe’s energy leadership. By securing the supply of CRMs, the act not only bolsters the traditional carbon-based energy sector but also accelerates the renewable energy transition, putting Europe on the path to energy independence and sustainability by 2050.

Without CRMs, progress toward carbon neutrality and technological innovation would stall, making the push for renewable energy and digital transformation much harder to achieve. Hence, securing sustainable and reliable sources of critical raw materials is not just an environmental and technological priority but also a strategic one.

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