Critical Raw Materials for EU Energy Transition

Ensuring a secure supply of critical raw materials in the long term is essential for achieving the EU’s energy objectives, which presupposes an increasing share of renewables. As demand rises with the global shift towards a low-carbon economy, securing these materials has thus become a strategic issue for the European Union. An upcoming ECA audit report to be published in February will assess EU action in this area and analyse its ambitions in diversifying imports, increasing domestic production and improving reuse and recycling.

Lithium-ion batteries, electrolysers, wind turbines, solar photovoltaics, heat pumps… All these technologies have two features in common: they are essential for the energy transition and they all require raw materials, such as lithium, cobalt and rare earths. Ensuring the availability of critical raw materials (CRMs), so called due to their high economic importance and supply risks) is therefore crucial, and a matter of strategic security for the EU. However, the outlook is far from promising: 26 raw materials have been identified as critical for the energy transition, and the EU is highly (or even solely) dependent on third countries for most of them. In terms of domestic production, EU extraction and processing capacity for CRMs is limited. And there is little realistic prospect of reusing and regenerating materials, for which the recycling rate is currently very low or non-existent in several cases.

By way of a response, the EU has implemented various actions in recent years for critical raw materials that are essential for the EU energy transition and its competitiveness. The 2020 CRM Action Plan highlighted the need to ensure not only sustainable access but also resilience to dependency by securing a shockproof supply of critical raw materials. The EU’s flagship initiative remains the 2024 CRM Act, which aims to increase EU capacity for strategic raw materials by 2030, and sets four sub-goals in this respect.

To increase domestic production, the EU aims to extract at least 10 % and process at least 40 % of the EU’s annual consumption of strategic raw materials by 2030. To diversify imports, the EU wants to ensure that, by 2030, no third country accounts for more than 65 % of the EU’s annual consumption of any strategic raw material. Lastly, with a view to more efficient use of resources, the EU aims to be capable of recycling at least 25 % of its annual consumption of strategic raw materials by 2030. The “strategic projects” selected by the European Commission are key to meeting these targets. The projects should benefit from improved access to finance and shorter timeframes that make it possible to strengthen the EU’s supply chain security.

Can EU action ensure a secure, long-term supply of the critical raw materials it needs for its energy transition? The answer will be provided early in February, when the audit findings will be presented. The EU auditors will assess whether the EU is on track to achieve its 2030 objectives by analysing its capacity to diversify imports and reduce dependencies, enhance domestic extraction and processing, and improve circularity.

ECA Website

(Source: European Court of Auditors)