Commitment issues? Will the new EP and Commission stick with critical raw materials objectives? [Advocacy Lab Content]

The Critical Raw Materials Act is still in its infancy, having been adopted at the very end of the last parliamentary term. Will the new EP and Commission remain committed to lowering EU dependency on the building blocks of the green economy?

In March, the EU adopted its landmark Critical Raw Materials Act, one of the last pieces of legislation to be formalised at the end of the 2019-2024 term. Since then, the European Parliament election has delivered a result that significantly shifts the political spectrum to the right.

With much of the overall critical raw materials strategy yet to be delivered, what’s next for the EU’s quest to lessen its dependency for the building blocks of the modern economy?

The European Parliament has held its first plenary session of the 2024-2029 term in Strasbourg, and in September they will start holding confirmation hearings for the commissioners nominated by the 27 EU member states.

By November, the composition of the new Commission will be known, having spelled out their priorities during the confirmation hearing process. Ahead of the election, MEPs were calling on the Commission to get to work implementing the strategy.

One of the primary areas where the new parliament and commission term could impact the EU’s Critical Raw Materials Act is in setting priorities for the identification and classification of critical raw materials. The parliament plays a role in determining which materials are considered critical based on factors such as economic importance, supply risk, and strategic significance.

Changes in the composition of the parliament following the election could lead to shifts in the list of critical raw materials and adjustments to the EU’s policies for promoting their responsible sourcing and sustainable use.

There are currently 34 materials on the list, including 17 strategic raw materials (SRMs). This latter category comprises materials that are expected to grow exponentially in terms of demand, which have complex production requirements and therefore face a higher risk of supply issues. Which materials would make the list, and which would be given the SRM designation, was a contentious process which will still be subject to more debate.

For instance, the provisional agreement reached by Council and Parliament added aluminium to the list of minerals and metals covered by the CRMA. The last-minute inclusion of this metal, together with its upstream feeds of bauxite and alumina, was due to its use in cleantech. Currently, materials designated as SRMs include lithium, silicon metal, gallium, manganese and cobalt.

Using the list

Now that the list has been adopted, companies in the raw materials sectors have been pushing for it to be used. “We have over 70 projects in the pipeline ready for meeting the Act’s 2030 benchmarks, from mining to processing to recycling,” says Guy Thiran, director general of European metals industry association Eurometaux.

“Europe has a two-year challenge to turn those ambitions into final investment decisions amidst fierce global competition. This requires fast local permitting, a dedicated EU Critical Raw Materials fund, and comprehensive improvements to European competitiveness – from energy prices to regulatory load,” said Thiran.

Electric cars driving demand

Electric cars are expected to increase demand for materials that are scarce in the EU now. For instance, the EU’s lithium demand is expected to increase twelve-fold by 2030.

As things currently stand, there is no way that the EU can meet this demand without a major increase in imports, increasing dependency on other parts of the world. The International Energy Agency (IEA) estimates that the global energy sector’s need for critical minerals could quadruple by 2040.

To satisfy this increased demand, the International Energy Agency estimates that by 2030, 388 new mining sites will have to be opened.

There has been significant scepticism within the European Parliament about opening new mines, considering the environmental damage they can cause. However, it is possible that a new parliament which has shifted to the right will think differently about mining.

Moreover, the election outcome can affect the implementation of measures aimed at reducing the EU’s dependency on external sources of critical raw materials, particularly metals.

The parliament’s decisions on issues like recycling targets, resource efficiency standards, and trade policies can have a direct impact on the Union’s efforts to diversify its supply chains, promote domestic extraction and processing, and develop a circular economy for critical raw materials.

Raw trade concerns

Another area that will impact critical raw materials is trade, and this is where the new parliament and commission could have a significant impact. The Commission negotiates trade deals with third countries, which must then be ratified by the European Parliament and national governments.

There has been concern that the Commission’s recent negotiations are not fully aligned with the goals of the Critical Raw Materials Act. Eurometaux has written to the Commission to express this concern. “This misalignment could potentially harm Europe’s existing strategic raw materials production,” they said in a position paper.

They recommend that the new Commission takes a tailored approach for tariff liberalisation, paying careful attention to the EU’s existing industrial capacity for strategic and critical raw materials when negotiating trade agreements with third countries. “In order to unleash the full potential of future FTAs, a tailored approach in trade discussions is needed for the raw materials prioritised by the Critical Raw Materials Act,” they said.

Eurometaux added: “The EU Commission should distinguish between critical raw materials where the primary goal is to preserve Europe’s existing manufacturing industry and those where the EU currently lacks adequate industrial capacity.”

Carbon-neutral industry

They cite as an example the EU-India FTA, where they say opening the EU market to duty-free Indian aluminium would hinder the EU’s goals for a carbon-neutral industry and undermine its efforts to promote higher sustainability standards.

The industry would also like to see stricter Rules of Origin for metals products, with relaxation having the potential to disrupt the EU’s metal producers and recyclers. They also call on the Commission to prioritise the inclusion of clear sustainability standards in new FTAs.

Looking ahead, the European Union faces the challenge of balancing its ambition to secure access to critical raw materials with its commitment to environmental sustainability, social responsibility, and international cooperation.

In the aftermath of the European Parliament election, the EU will need to continue striving for a comprehensive approach to raw materials policy that integrates economic competitiveness with environmental protection and social welfare.

[By Dave Keating I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]

Read more with Euractiv