EU Unveils Cleantech, Critical Materials Strategies

The European Commission unveiled its long awaited legislations, the Net-Zero Industry Act and the Critical Raw Materials Act, aimed at ensuring European industry can compete with the United States and China in making cleantech products, and securing supplies of raw materials needed for energy transition. The two pieces of legislation, part of the bloc’s Green Deal Industrial Plan, are laid out to ensure the bloc is not just a frontrunner in cutting carbon emissions, but also ahead on the technology required to do so. The commission sets targets for Europe to mine 10% of the critical raw materials it consumes, such as lithium and for the first time copper and nickel, with recycling adding a further 15%. It also aims to increase processing to 40% of its needs by 2030.

Global investment in the green transition is set to triple by 2030 from $1 trillion last year, the Commission says.

“The bottom line is that we want to be leaders in the green industries of the future,” Commission Vice President Dombrovskis told a news conference.

Governments and companies across the world have been looking to boost access to critical minerals, the supply chain of which is currently dominated by China. It is processing almost 90% of rare earths and 60% of lithium.

The Commission said no more than 65% of any key raw material should come from a single third country.

“We are not a resource-rich continent,” Dombrovskis said, adding that for many materials, Europe relied on a small number of partners. “This is not a stable nor reliable way to build the industries of the future. So we urgently need to diversify.”

The EU’s efforts to reduce reliance on a small number of suppliers have accelerated after Russia’s invasion of Ukraine, which has laid bare Europe’s energy dependence on Moscow.

The EU executive would recognize plans to mine or process raw materials as “strategic projects”, which would allow them to benefit from streamlined permits and access to financing.

In trade, the EU would seek to expand its network of partnerships, such as with Australia, Canada and Chile.

The EU also set a target of producing by 2030 at least 40% of the products it needs for “net-zero” technologies, such as solar power or fuel cells, partly by streamlining the granting of permits for green projects.

The bloc also announced a goal for carbon capture of 50 million tons by 2030. Carbon capture is one of a list of “net zero” technologies the EU recognizes.

Many EU officials have been worried that the U.S. Inflation Reduction Act (IRA), which offers $369 billion of green subsidies that often only apply to products made in North America, could lure companies out of Europe, allowing the United States to grow into a clean tech giant at Europe’s expense.

The bloc also wants to reduce its reliance on China in the many green tech supply chains that China currently dominates, such as solar and in processing critical raw materials.

Global demand for lithium, used in batteries, is expected to increase by up to 89-fold by 2050, while EU demand for rare earth elements for permanent magnets in wind turbines or vehicles, is seen rising six- to seven-fold.

The act sets targets for 2030. By then, the EU should extract 10% of the minerals it requires, boost recycling capacity for those materials to 15% and be able to process 40% of its annual needs of each strategic raw material.

Copper and battery-grade nickel are now considered critical raw materials, along with lithium, silicon, titanium and rare earth elements.

The Commission also outlined plans to increase production of green hydrogen with an EU-funded subsidy scheme. Investments in electrolyzers and renewable energy capacity to power them could cost up to €471 billion, it said.

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