The European Commission will next year publish game-changing legislation governing access to- and protection of- critical raw materials (CRM) for European industry. The first of its kind, EU Critical Raw Materials Act will bring bloc-wide legislation for perhaps the single most important sector for the twin climate and digital transitions.
Critical raw materials, such as lithium, cobalt, silicon or vanadium are vital to the development of solar and wind farms, the construction of electricity interconnectors and design of electric vehicle motors. Without a stable and secure supply, Europe’s transition to a digitized, interconnected and sustainable economy would be in jeopardy.
Unfortunate recent events such as the coronavirus pandemic, energy crisis and the Russian invasion of Ukraine have illustrated that EU needs a much more decisive approach to securing supply.
In 2008, the Commission launched its first Raw Materials Strategy, an early indication that Brussels was alive to the potential of long-term challenges in this important sector. The strategy had 3 pillars: (1) ensuring supply of raw materials internally, (2) fair and sustainable supply from the global markets, and (3) supply of secondary raw materials.
Since initial publication in 2008, the Commission regularly updates its list of CRM with the last update in 2020. With the publication of the Green Deal, however, and the expedition of the transition to a green and digital economy, the Commission recognised that more decisive action was needed. In 2020 the Commission therefore presented the Raw Materials Action Plan and launched the European Raw Materials Alliance to enhance supports for the increasingly important industry.
Since early 2022, talk of a more affirmative approach to the issue has gathered pace in Brussels. Indeed, both Thierry Breton, Commissioner for Internal Market, and Maroš Šefčovič, Commission Vice-President, floated the design of a Raw Materials Act earlier this year, presenting several ideas of what the legislation could look like.
On 14 September 2022, the Commission’s plans for the adoption of a Critical Raw Materials Act crystallized as Commission President Ursula von der Leyen outlined the importance of this piece of legislation in her State of the Union speech.
The European Commission has now launched a public consultation through an open ‘call for evidence’. The ideas comprised are quite comprehensive, tackling a wide series of aspects related to raw materials. The regulatory dimension foresees four main pillars:
- “Defining priorities and objectives for EU actions” – the intention is to define strategic critical raw materials and set EU objectives for increasing capacity all along the value chain.
- “Improving the EU’s monitoring, risk management and governance in the field of CRM” – the Commission wants to create a network for sharing timely information with some additional competences.
- “Strengthening the EU’s critical raw materials value chain (mining, refining, processing, recycling)”
- Identify key strategic projects internally as well as outside the EU.
- The strategic projects might have improved access to funding as well as a streamlined and predictable permitting.
- Access to funding to enable the development of the value chain.
- “Ensuring a sustainable level playing field” – the emphasis here will be on waste and circularity, but not only:
- The Commission foresees to improve coordination of strategic reserves to mitigate risks of supply chain disruptions, as happened during Covid.
- Another key objective is to have European and international technical standards available.
- There may also be obligations for recycling or improved transparency requirements for the products.
In addition, the Commission plans to follow non-legislative objectives, which aim to strengthen the EU external actions, accelerating research and innovation, and enabling the development of skills needed for the CRM value chain.
With the ‘call for evidence’ launched, the European Commission is now preparing the impact assessment which will determine in which direction the legislation will go. The consultation will run until the end of November and, at the beginning of 2023, it is foreseen that the Commission will adopt a legislative proposal.
In case this proposal impacts your activity, the Hume Brophy Energy & Environment team is available to discuss the potential implications on your business and next steps in the legislative process.
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