In her State of the Union address, European Commission President Ursula von der Leyen paid close attention to energy issues and outlined several possible future energy security policies within the Union. While the presentation of some of these was expected in the light of current events and the war in Ukraine, one energy policy trend, in particular, stood out in the speech, which came into the spotlight for the first time, as it has been considered rather controversial until now – the emphasis on EU security in the area of raw critical minerals.
As expected, a significant part of the address was mainly concerned with reducing the EU’s dependence on Russian fossil fuels, combating the current energy crisis, or investing in renewable energy sources in line with the RePowerEU programme. This programme was introduced in the wake of the Russian invasion of Ukraine to reduce dependence on Russian oil, coal, and gas in the short term and accelerate the transition to green energy sources. The first results can already be seen today, with the EU’s dependence on Russian gas reduced from 40% at the start of the war to 8% of total imports in 2022.
The increased focus on EU security in the area of critical raw minerals is quite a novelty. It is not exactly a new topic on the EU’s agenda, though, as the European Raw Materials Alliance (ERMA) was created back in 2020 and the EU regularly publishes a list of critical minerals, which currently includes 30 elements. However, the crisis and the apparent partnership between China and Russia have given the issue new impetus and the EU is now coming up with the Raw Materials Act. It is precisely the dependence on Chinese supplies of critical raw materials that is striking, as it reaches up to 98% in the case of rare earths, which are important for the production of batteries or panels in the renewable energy sector.
The Act could lead to the removal of the legal, financial or technical obstacles that have existed in this area up to now. Thierry Breton, Commissioner for the Internal Market, after presenting the State of the Union report, mentioned some of the problems, such as the establishment of EU environmental standards. Now, projects aimed at building EU capacity in the raw materials value chain will be given IPCEI status – Important Projects of Common European Interest. This can attract additional investment – primarily for exploration work, which is the most costly part of the chain. The EU will thus strengthen cooperation in this area with countries that have either reserves of these raw materials or refining capacity, which does not necessarily mean only China, but also Australia or the US, which have been called “like-minded” partners. In recent years, the EU has also established cooperation in this area with, for example, Canada. This Act could also bring a solution to the currently lengthy permitting processes for projects that are hindering larger investments.
However, such projects may face a major obstacle within the EU itself in the form of public and activist opposition because of their potential environmental impacts. Therefore, the EU and especially the Member States should work hard on strategic communication on the importance of independent energy security in the field of raw materials and also look at the possibility of building such capacities directly in the EU, if they meet the highest environmental standards.
More importantly, however, it will be crucial to grasp the end of the whole chain, especially the recycling of products made from critical materials. While companies are already able to recycle the metals in batteries and maintain their efficiency, there are still gaps and shortcomings in the policy area. This relates, for example, to requiring recycling or creating financial incentives for such projects. The implementation of the Raw Materials Act thus has the potential to bring about fundamental changes that will in turn enable a faster transition to renewable energy production and directly strengthen the EU’s energy independence.
Photo credits: European Parliament, Flickr