Research reveals scale of the EU’s dependency on imports for critical minerals needed for green transition

The local weather transition is a supplies transition. A long time of worldwide diplomacy round oil, fuel and pipelines at the moment are giving option to conversations across the provide of important uncooked supplies. And never earlier than time: to fulfill the EU’s vitality and local weather targets, we have to construct the suitable applied sciences, in the suitable portions, on the proper velocity. The issue is that many of those applied sciences are constructed with supplies imported from only a handful of nations.

Important uncooked supplies are outlined as these supplies which have important financial significance and are uncovered to a excessive provide threat, typically due to a excessive focus of provide from a number of third nations.

Demand for these treasured assets is anticipated to extend exponentially within the coming years, not simply within the EU, however world wide. This may improve international competitors simply because the EU’s personal wants soar. In opposition to this backdrop, preparedness is essential.

On 23 Could, the EU’s Critical Raw Materials Act comes into power. The Act is a primary try to offer Europeans with a regulatory bedrock to develop home assets, diversify sourcing and strengthen the resilience of provide chains and the circularity of important uncooked supplies within the EU, all whereas striving to make sure the best social and environmental requirements.

The brand new guidelines define three objectives for the EU’s annual consumption of uncooked supplies: 10% are to originate from native extraction, 40% to be processed within the bloc and 25% to come back from recycled supplies. The act additionally claims that not more than 65% of a given mineral will be sourced from a single non-EU nation. As an indication of urgency, the Act was adopted in document time—solely eight months from its authentic publication.

Demand for uncommon earths for clear vitality applied sciences to extend fivefold by 2030

In our work on the EU’s Joint Analysis Middle (JRC), we confirmed that within the case of lots of the strategic clear vitality applied sciences, the bloc is solely depending on single sources—most frequently China—for uncooked supplies, and in addition for different segments of the worth chain. Our discovering that demand for rare earths will improve fivefold by 2030 to fulfill our wind turbine wants alone, was quoted by President von der Leyen when she introduced the Fee’s intention to introduce the Important Uncooked Supplies Act.

The proposed Act was revealed final 12 months alongside our comprehensive forecast on critical materials supply chains and demand. Our examine analyzes the availability chains of 15 applied sciences essential to reaching the inexperienced and digital transitions and the EU’s protection and area agenda, throughout 5 key sectors: renewables, electromobility, Info and Communication Applied sciences (ICT), trade and aerospace & protection. The examine additionally helped to determine the idea of strategic uncooked supplies, and the listing of supplies it encompasses. Strategic uncooked supplies fulfill some further standards: they’re key to applied sciences that are strategic for the EU’s vitality and digital transition and its safety objectives; their demand is forecast to extend quickly, maybe outstripping provide; choices for substitution are restricted; and scaling up manufacturing is tough.

Unprecedented demand and focus of provide

The examine reveals a fast, multi-fold improve within the demand for the important uncooked supplies that are key to the EU’s inexperienced, digital and safety objectives. The EU depends closely on imports for these supplies. In actual fact, for uncooked supplies provide, the EU share in global production isn’t greater than 7%.

For instance, whereas the EU is a worldwide chief in wind turbine manufacturing, it’s absolutely depending on China for the everlasting magnets and the uncommon earth parts utilized in them. China can be the most important world provider for crystalline silicon photo voltaic photovoltaic cells and modules, the principle expertise that shall be deployed to attain the virtually fivefold improve within the EU’s photo voltaic PV capability by 2030.

Uncooked supplies are additionally key for hydrogen electrolysers, particularly because the bloc’s plan to wean itself off Russian vitality imports by 2027, REPowerEU, requires a tenfold improve in electrolyser manufacturing capability in Europe by 2025. World shortages in supplies reminiscent of iridium loom within the 2020s and 2030s, as provide is unlikely to maintain tempo with demand except important actions are taken.

We predict a fast improve in demand for important uncooked supplies not solely within the EU but additionally in all areas of the world, precipitating competitors for them throughout nations and sectors. For instance, in comparison with 2020, lithium demand for batteries within the EU is anticipated to develop 12 occasions as giant in 2030 and 21 occasions as giant in 2050. Globally, the surge with respect to 2020 is eighteen occasions in 2030 and 90 occasions in 2050.

The same sample is discovered for graphite (pure and artificial), which is used for elements of photo voltaic and wind industries and batteries. Demand is anticipated to extend 14 occasions by 2030 and 26 occasions by 2050, in comparison with 2020.

Hope for the most effective, put together for the worst

As well as, the COVID-19 disaster, the Suez Canal obstruction in 2021 and the 2020–2023 international microchips shortages have additionally reminded us of our provide chains’ vulnerability.

The determine above reveals international shares in manufacturing for supplies and key elements in the principle renewable vitality applied sciences. It additionally reveals how dependencies propagate downstream within the worth chain, extending from uncooked supplies to elements and to the ultimate merchandise, and the way sophisticated it’s to cope with these dependencies in an built-in method. The dominant position of China raises considerations not solely in regards to the competitiveness of EU trade but additionally will increase the danger of provide disruptions, thus constituting an necessary geopolitical threat.

Propagation of dependencies alongside the worth chain

The EU wants to watch the availability disruption threat and to arrange for these occasions. Or, as Stephen King stated, “we can hope for the best for as long as we are prepared for the worst.”

The Act requires that stress assessments are carried out for the availability chain of every strategic uncooked materials at the very least each three years. These are what-if eventualities, analyzing the potential influence of extreme provide disruption occasions and the way in which provide chains would react. The EU and its Member States would want to know, for instance, what sectors can be affected by a possible disruption within the provide of a specific materials, what shortages or value spikes may comply with, and the cascading results of these. Such stress assessments should not uncommon in different sectors reminiscent of banking and vitality provide, and might present helpful insights into the resilience of provide chains.

Innovation and substitution with superior supplies

Anticipation is vital to getting this proper. New manufacturing and processing capacities take time to develop. Whereas we do not have good different supplies but, analysis and innovation in advanced materials is of paramount significance each to the EU’s autonomy and to its international management.

In actual fact, vitality is among the key analysis and innovation priorities recognized in a Communication on advanced materials supply for industry revealed by the Fee in February this 12 months.

Superior supplies might help by reducing manufacturing prices, rising effectivity, and making manufacturing extra sustainable (as an illustration through the use of decrease quantities of important uncooked supplies).

On the JRC we’re wanting carefully on the hole between demand and innovation, with a specific deal with high-impact areas and provide chain resilience. We discover that advanced materials can be good for innovation and substitution in many clean energy technologieshowever they typically face limitations to widespread adoption. We have to be certain that extra environment friendly, sustainable alternate options attain the market sooner.

Optimizing the properties and composition of supplies is already serving to cut back—and will even get rid of—cobalt and nickel from electric-vehicle batteries, and probably even changing lithium with sodium. It might additionally imply a gradual discount of rare-earth content material in everlasting magnets for wind turbine mills. And new chemical solvents for carbon dioxide seize would provide improved environmental and operational efficiency.

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