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16/04/2024
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Europe’s dependency on critical materials for green and digital transitions

The European Commission has sounded the alarm regarding Europe’s dependency on critical materials essential for the green and digital transitions. But what exactly renders these materials so vital?

The European Union has set ambitious targets for reducing greenhouse gas emissions in the transport sector, aiming for a 90% reduction by 2050 compared to 1990 levels, ultimately striving for net zero emissions by that deadline. While alternative technologies like biofuels are under exploration, it’s evident that electrification will be the primary driver toward meeting these goals.

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Although electric vehicle (EV) sales have surged in Europe recently, they still fall short of the trajectory required to meet the EU’s targets. Both European production and consumption of EVs lag behind that of China and the United States, sparking concerns within the German auto industry over the influx of Chinese EV imports.

One significant reason for Europe’s lag in an area where it once led is its limited access to the materials crucial for manufacturing electric vehicles. The lithium-ion batteries powering EVs rely on components including lithium, graphite, aluminium, cobalt, copper, nickel, and manganese.

According to a 2021 study by the NGO Transport and Environment, a typical 60 kWh capacity EV battery requires over 180 kg of critical minerals, excluding additional components like the battery casing and binder. This includes substantial amounts of graphite, aluminium, nickel, copper, steel, manganese, cobalt, and lithium.

Material sovereignty

Many of these critical materials are scarce within Europe or exist only in limited quantities. For instance, only Finland currently produces cobalt ore, albeit in small quantities. European countries rely heavily on imports, with 70% of cobalt coming from the Democratic Republic of the Congo, primarily via processing in China.

Nickel is particularly crucial for EV battery manufacturing due to its energy density and capacity retention. As EV sales surge, demand for nickel is on the rise, prompting extensive recycling efforts. However, despite these initiatives, demand for nickel continues to outstrip supply, with global demand projected to increase significantly by 2030.

In response to these challenges, the European Commission has expanded its Critical Raw Material list, now including copper and nickel as “strategic raw materials”. This list, established in 2011, identifies materials crucial for the EU’s economic sectors and outlines measures to address supply risks.

Industrial competitiveness

European industries have long expressed concerns about resource scarcity leading to a competitive disadvantage globally. The dwindling domestic mining activity within the EU, coupled with increasing resource dependency, exacerbates these concerns. While some minerals have been mined to exhaustion, others face economic disincentives for domestic extraction.

Acknowledging the strategic importance of resource access, the European Commission has identified resource security as a priority within the European Green Deal. This initiative aims to ensure the availability of critical raw materials essential for clean technologies, digital advancements, space exploration, and defense applications.

Trade tensions and strategic autonomy

Growing trade tensions between the US, Europe, and China have intensified concerns over raw material availability. This has prompted calls to expand the EU’s critical raw materials list and consider domestic mining operations to enhance strategic autonomy and reduce dependency on foreign sources.

However, Europe’s capacity to increase mining activities is constrained by limited availability and closed mines. Despite these challenges, efforts are underway to improve data collection and tracking of raw materials to support domestic mining initiatives.

Recycling for independence

Increasing reuse and recycling can bolster Europe’s industrial competitiveness and reduce dependency on external sources. However, the current recycling infrastructure remains inadequate, hindering efforts to mitigate material criticality. Nonetheless, progress is being made, particularly in sectors like steel and nickel, where recycling initiatives are gaining momentum.

Critical Raw Materials Act

The recent adoption of the Critical Raw Materials Act aims to boost Europe’s mining sector, enhance recycling capabilities, and create local employment opportunities. The Act establishes benchmarks for raw material consumption, mandates risk assessments for supply chain vulnerabilities, and sets expedited permitting processes for extraction and processing projects.

While the Act outlines ambitious goals, its successful implementation hinges on effective coordination and collaboration among EU member states. Establishing single points of contact in each country and implementing stringent benchmarks for raw material consumption will be crucial for achieving the Act’s objectives.

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