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EC introduces two draft laws in response to US subsidies for batteries and green tech

The European Commission (EC) unveiled two draft laws in response to the US subsidies that the Commission fears are luring European clean-tech companies to North America. The European Critical Raw Materials Act would help the bloc secure supply of the metals needed to build batteries, wind turbines and other green technologies.

The Critical Raw Materials Act was presented in parallel to the Net Zero Industry Act, which aims to scale up the EU manufacture of key carbon neutral or “net-zero” technologies to ensure secure, sustainable and competitive supply chains for clean energy in view of reaching the EU's climate and energy ambitions.

In addition to an updated list of critical raw materials, the Critical Raw Materials Act identifies a list of strategic raw materials which are crucial to technologies important to Europe's green and digital ambitions and for defense and space applications, while being subject to potential supply risks in the future. The regulation embeds both the critical and strategic raw materials lists in EU law. The regulation sets clear benchmarks for domestic capacities along the strategic raw material supply chain and to diversify EU supply by 2030:

  • At least 10% of the EU’s annual consumption for extraction,

  • At least 40% of the EU’s annual consumption for processing,

  • At least 15% of the EU’s annual consumption for recycling,

  • Not more than 65% of the Union’s annual consumption of each strategic raw material at any relevant stage of processing from a single third country.

The Act is intended to reduce the administrative burden and simplify permitting procedures for critical raw materials projects in the EU. In addition, selected Strategic Projects will benefit from support for access to finance and shorter permitting timeframes (24 months for extraction permits and 12 months for processing and recycling permits). Member States will also have to develop national programs for exploring geological resources.

To ensure resilience of the supply chains, the Act provides for the monitoring of critical raw materials supply chains, and the coordination of strategic raw materials stocks among Member States. Certain large companies will have to perform an audit of their strategic raw materials supply chains, comprising a company-level stress test.

The Commission will strengthen the uptake and deployment of breakthrough technologies in critical raw materials. Furthermore, the establishment of a large-scale skills partnership on critical raw materials and of a Raw Materials Academy will promote skills relevant to the workforce in critical raw materials supply chains. Externally, the Global Gateway will be used as a vehicle to assist partner countries in developing their own extraction and processing capacities, including skills development.

Member States will need to adopt and implement national measures to improve the collection of critical raw materials rich waste and ensure its recycling into secondary critical raw materials. Member States and private operators will have to investigate the potential for recovery of critical raw materials from extractive waste in current mining activities but also from historical mining waste sites. Products containing permanent magnets will need to meet circularity requirements and provide information on the recyclability and recycled content.

The EU will seek mutually beneficial partnerships with emerging markets and developing economies, notably in the framework of its Global Gateway strategy. The EU will step up trade actions, including by establishing a Critical Raw Materials Club for all like-minded countries willing to strengthen global supply chains, strengthening the World Trade Organization (WTO), expanding its network of Sustainable Investment Facilitation Agreements and Free Trade Agreements and pushing harder on enforcement to combat unfair trade practices.

Further, the EU will work with reliable partners to promote their own economic development in a sustainable manner through value chain creation in their own countries, while also promoting secure, resilient, affordable and sufficiently diversified value chains for the EU.

The proposed regulation will be discussed and agreed by the European Parliament and the Council of the European Union before its adoption and entry into force.

Lithium is the new oil and Europe needs to act quickly to source it responsibly. Provided that environmental safeguards are respected, self-sufficiency targets are the right way to make the battery supply chain clean and resilient. Europe should bring refining and processing home to kick our dependence on Asia.

—Julia Poliscanova, senior director for vehicles and emobility at European environmental NGO T&E


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