On the 8th of December, PubAffairs Bruxelles organised an afternoon discussion on how the EU can achieve the European Green Deal objectives in light of the upcoming Critical Raw Materials Act with Mr Daniel Mes, Member of the Cabinet of Vice-President Timmermans, European Commission; Ms Susana Solís-Pérez MEP (Renew/ES); Mr Giles Dickson, CEO, WindEurope; Mr Andreas Sauer, Policy Director, EU Corporate Representation, BMW.
The debate was moderated by Dr Frank Umbach, Head of Research, European Cluster for Climate, Energy and Resource Security, University of Bonn.
Frank Umbach introduced the speakers and the topic of achieving the European Green Deal objectives in light of the upcoming Critical Raw Materials (CRM) Act and clarified that critical raw material supply should be considered a fundamental element of EU energy supply security as highlighted by Commissioner Breton who stated that raw materials will soon be more important than oil and gas. However, the moderator emphasised, only in recent times has the EU and its member states been highly concerned about the external dependencies affecting the EU economy and society.
In this regard, the moderator continued, the Commission has put forward a new strategy to tackle the issue of raw materials by defining which elements are critical and by updating the list every two years, whilst also fostering cooperation agreements with countries such as the US, Canada, Australia, or Japan in order to guarantee the successful implementation of the twin digital and green transition. In addition, the moderator said, the war in Ukraine has further compromised supply chains, deepened the energy crisis, and produced an uncertain future for the green transition of the European economy. In fact, the moderator stated, since the recent geopolitical turmoil, the process of making the economy greener has become even more of a priority for the EU. He then proceeded to explain Europe’s current geopolitical and geoeconomic dependencies in more detail.
Presently, Frank Umbach attested, the EU is threatened by a shortage of both energy supplies and raw materials. For too long, EU member states have relied on too few trading partners and overlooked the question of their dependencies (with special regard to China). Indeed, he specified, 62% of critical raw materials are imported from this country, not only those which are mined, but also those which are refined and processed. According to the moderator, such a setting is already having an effect on European citizens and may result in negative effects in the foreseeable future. Particularly, amidst fears of a potential confrontation between the US and China.
In light of this geopolitical scenario, Frank Umbach highlighted the need to speed up the twin green and digital transitions. Indeed, the moderator emphasised, in the past, such decisions have had serious repercussions for the EU economy, thus the choice of trade partners must consider the risks the EU may face in the event of conflicts or tensions with third countries. In the moderator’s assessment, policy makers should pay more attention to the question of raw materials’ supply chains in the same way governments are tackling the energy crisis.
Frank Umbach subsequently asked Daniel Mes and Susana Solis-Perez MEP their respective opinions on the main challenges and opportunities of the CRM Act in light of the scenario described above.
Daniel Mes took the floor by stating that raw materials are essential for the green transition. The objectives of the European Green Deal and the green transition itself cannot be achieved without a steady access to them. Indeed, the speakers said that renewable energy production, clean mobility, and the decarbonisation of the EU economy as a whole need a stable supply of raw materials.
The recently proposed Critical Raw Materials Act is an essential piece of legislation and shall provide a legislative framework to deliver the EU’s Green Deal objectives, he continued. In addition, the speaker remarked that the CRM Act does not only address the challenges of EU industry, but also those of future trade relations. Within this context, Daniel Mes acknowledged not only the need to diversify supplies from Asia, but also to engage with the global trade environment, especially in light of the adoption of the US Inflation Reduction Act.
The speaker continued by highlighting the main aspects of the CRM Act for the green transition, with special regard to the identification and sourcing of the critical raw materials necessary to reach the EU’s climate goals. The speaker also stated that mining in the EU should not be a taboo, provided that it is conducted in a sustainable way. He subsequently said that the CRM Act also identifies several strategic aspects of European policies in order to ease the funding, projecting, permitting, and mining processes in EU member states. He stated that this would bear in mind that Europe will not be able to be completely self-sufficient. In the best-case scenario, he estimated that the EU would only be able to produce about 30% of what it needs. He then highlighted that it is within this context, that increased processing, refining, and recycling capacities are fundamental components of the EU strategy on raw materials.
Susana Solìs-Pérez MEP started by stating that the CRM Act is a strategic piece of legislation, and that the EU public debate is in its initial phase, not only for clean mobility and the automotive sector, but also for the implementation of the green transition and the digital transformation of the economy as a whole. She added that increased efforts will be required in renewable energy production sites and connected infrastructure, as well as in fostering energy efficiency, especially after the adoption of REPowerEU, whereby member states agreed on more ambitious targets.
The efforts to achieve such goals, the speaker continued, entail effective and efficient purchases and allocation of raw materials in order to secure the supply chain, in light of the fact that the lack of a single component may be critical for the whole production process, not only for the green, but also for the digital sector. The speaker also remarked that avoiding the same mistakes made with fossil fuels is similarly essential.
Susana Solís-Pérez continued by saying that the EU will need to pay more attention to raw materials to make the EU economy more resilient as it currently lacks necessary processing, refining, and recycling capabilities. Indeed, the MEP remarked, the discussion on the CRM Act should be welcomed as it addresses the question of the practical implementation of the twin transitions, as well as the question of bolstering the EU value chain. In this connection, the EU needs to strengthen the whole value chain and deliver a clear roadmap to ensure an investment-friendly environment for the industry and, at the same time, to foster both joint purchasing and measures to fight energy dumping.
The speaker ended her speech with reference to the significant potential of sustainable mining in the EU and took the case of Spain to bolster her argument by emphasising that despite having one of the largest lithium reserves in the old continent, Spain’s potential remains unexploited.
Frank Umbach turned to Giles Dickson and inquired about the CRM Act and the importance of raw materials in the deployment of renewable energy, with special regard to wind energy production.
Giles Dickson started by pointing out that raw materials are indeed essential for the wind energy sector and gave the example of wind turbines’ permanent magnets which are enabled by rare earth elements (notably neodymium and dysprosium). The speaker continued by explaining the necessity of raw material sourcing for the wind energy sector as several other elements, such as blades, made of glass fibre fabrics, are needed to build wind turbines. The speaker also stated that the wind industry is particularly strong in Europe, while adding that since nearly the entirety of the rare earth elements necessary for the wind industry are sourced, refined, and processed in China and (to a lesser extent) Malaysia, Europe is excessively dependent on too few suppliers.
The CRM Act therefore comes at a very crucial moment, Giles Dickson added. He praised the European Commission for putting forward a new strategy on raw materials to expand European industrial capacities, reduce import dependencies and foster trade cooperation, while facilitating sustainable mining and enhancing circular economy practices. The speaker then highlighted that the CRM Act also entails the public and private financial support for the expansion of manufacturing and processing which is much needed in Europe. He further said that some European companies are already planning to start refining rare earths for wind turbine magnets and highlighted that Commissioner Breton himself stated that he would like to have 60% of permanent magnets made in Europe.
The speaker continued by providing some observations on the CRM Act. He added that it should be prioritised by EU policy makers. Within this context, he affirmed that speeding up the process of expanding Europe’s raw materials capabilities is fundamental, as is widening the scope of the proposed piece of legislation, to include other critical components which are strategic, but not yet accounted for on the European Commission’s list.
Frank Umbach asked Andreas Sauer how the European automotive sector is reacting to the CRM Act and to the challenges of the trade relationship between Europe and Asia.
Andreas Sauer started by agreeing with the previous speakers about the major effects of fostering a European raw materials supply chain for the EU green transition not only for the automotive sector, but for the EU economy as a whole, as we are, notably, in the middle of a transitional process from a carbonised to a decarbonised world. He also remarked that, during the debate about the Fit for 55 package and Co2 emissions standards, one of BMW’s main stances was the need for Europe to be technologically open in order to have all available solutions on board to achieve the EU 2050 targets.
Andreas Sauer subsequently stated that the public debate has now shifted towards a new phase which focuses on the question of so-called on-shoring or friendly-shoring in order to lower Europe’s dependency from other parts of the world. He also acknowledged that this swift shift of the European and international public debate on dependencies has put the automotive industry in a position in which it would be difficult for the sector to join the choir of voices who advocate for a fast decoupling from Asia, given the global economic evolution of the last three decades.
To this end, he stated, though certainly fundamental, the question of raw materials should not only be considered from the perspective of climate action and geopolitical dependencies, but also from the perspective of a renewed EU industrial policy, market access, and international cooperation. Not least for the fact that there is no soon end in sight for both global supply chains and multinational corporation models. Consequently, he stated that the current debate should also focus on valorising and enhancing European know-how and innovation capacity, not merely on reducing or eliminating external dependencies.
He concluded by saying that the CRM Act and a comprehensive EU strategy that involves the full potential of the European industry can make the EU economy more independent, innovative, and resilient.
The moderator subsequently made some remarks about some of the critical questions emerging from the debate on raw materials, namely the excessively long time needed in Europe for the permission to deploy industrial capacities and infrastructure in a fast-changing technological landscape, the role of the circular economy models in securing supplies and the need of a multi-pillar strategy to cope with the question raw materials.
Daniel Mes reacted to the moderator’s comments by saying that recycling processes of critical raw materials are an effective way to guarantee supply security in Europe as the components themselves will not need to be imported from third countries, hence this aspect of the CRM policy is of fundamental importance. In addition, the speaker remarked that the know-how and the technology to refine and process critical raw materials can also be transferred to foster recycling capabilities of European industry and, for this reason, the industry would make “no regret” investments, as dependencies on refining and processing can also be seen as heavier than the mere supply. Indeed, the speaker added, the green transition requires new technologies to reshape the production cycle and reduce Europe’s imports of refined raw materials since, now, European industry imports more processed rare earths than pure minerals.
Daniel Mes subsequently agreed with Andreas Sauer’s assessment of the goals of the European Green Deal by stating that they should not only focus on tackling climate change, but also on enhancing production capacities in Europe. In fact, he continued, the European Commission’s strategy aims to overhaul the legal framework and has a keen interest in the greening and the digitalisation of the economy to create more investment certainty and foster jobs and growth. In this connection, he said, as with the discussion on clean mobility, the greening of the EU economy cannot afford not to go hand in hand with a renewed industrial base in order to build strategic capacities.
Daniel Mes continued by elaborating on the need to build strategic capacities and give additional certainties to investors who want to finance projects within the raw materials supply chain. The speaker added that the European Commission is aiming to speed up the permitting processes to promote investments, not only in the circular economy and the processing capabilities, but also on sustainable mining. As a matter of fact, importing more raw materials from third countries, when European industries could do the same with a lower impact for the environment, would be against the principle of the European Green Deal, while also being a way of taking further responsibility for the sustainability processes, he remarked.
The speaker also added a comment on the Inflation Reduction Act adopted by the US government saying that, for the moment, it is better to give long term stability to the industry rather than introduce subsidies which can be stopped at any time.
Solís Pérez MEP reacted to earlier comments by stating that the circular economy model is a fundamental element for the EU value chain, although it is not the silver bullet as recycled rare earths cannot substitute imports from third countries, nor the need for sustainable mining in Europe.
The speaker subsequently stressed the necessity for a secondary market strictly for components that can be recycled and/or reused which would promote circularity. At the same time, she continued, the EU should foster innovation in order to incentivise the production of goods that can be recycled by design. The speaker then explained the need to shape the CRM Act by taking into account the industrial processes needed to foster the circular economy model. Indeed, she continued, the EU should incentivise research and infrastructure development of waste collection and sorting facilities, since, as of now , the processes to recover raw materials are highly underdeveloped and partially lack the research and technology for cost-effective operations. The circular economy model, the speaker emphasised, encompasses alternative uses of waste throughout the entire value chain, thus the CRM Act should also focus on the materials left over in the mining process.
However, while outlining the importance of circular economy paradigms in the CRM Act, Solís Pérez MEP said that Europe also needs to source raw materials within its member states. She warned that recycled components will not be sufficient to guarantee supply security, therefore, the so-called “NIMBY syndrome” should be overcome and policymakers should not hamper sustainable mining in Europe. Rather, EU institutions should realise that industries can extract raw materials in Europe with valuable environmental and social sustainability standards. Indeed, she expressed her agreement on the goals of the European Green Deal by adding that the CRM Act is an opportunity to relocate strategic industries and create new jobs, especially in rural or remote areas where many rare earths deposits can be found. Solís Pérez MEP concluded her speech with specific reference to the need to speed up the permitting processes, which are necessary to engage strategic projects across Europe while respecting the highest environmental impact standards.
The moderator subsequently mentioned, inter alia, the potential of cost-effective recycling for EU industry and asked the speakers what should be done to promote circular economy models.
Giles Dickson started by clarifying that wind turbines contain a high number of components that could be recycled. He added that the wind industry is committed to enabling circular economy models in the sector and, as a matter of fact, WindEurope members decommission around one and a half gigawatts of old wind turbines every year, while stating that by 2030 this figure is set to rise to five gigawatts.
The speaker continued by contributing to the discussion on the potential of repowering older wind farms for industry. He used the example of a windfarm in Galicia in which sixty-nine first generation turbines were replaced by just seven, which produce double the electricity generated by their first-generation antecedents. Elaborating on this example, the speaker attempted to describe how technology potentially could evolve and the direction the wind sector is heading in.
The speaker added that new wind turbines will be fully recyclable only by 2040, though the leading turbine manufacturers aim to have fully recyclable blades by 2030. However, the speaker concluded, further public financial support for research and development will be essential to deploy recyclable technologies. In fact, he concluded, while circularity is a priority for the wind sector, several first-generation components, such as blades and permanent magnets, cannot yet be fully recycled, while 85% of decommissioned turbines today are fully recyclable.
Andreas Sauer replied to the question by clarifying that the circular economy model is a high priority for BMW’s corporate strategy and that, given the advantages of reused and recycled materials, it is now a strategic feature of the company overall. The speaker pointed out that BMW has also realised that the circular economy model not only fosters a valuable reduction of cost, but also reduces environmental damage and mitigates social risks. The speaker also highlighted that more sustainable production cycles are business opportunities for nearly all sectors of the European industry.
The speaker continued to highlight how the circular economy model could ultimately strengthen Europe’s resilience and avoid supply shocks, as was the case with the recent global semiconductor shortages. Andreas Sauer concluded his speech by advocating BMW’s full commitment to tackling climate change and overhauling the company’s production cycle towards sustainability and circularity.
The moderator then asked the speakers if and how policy makers can facilitate sustainable mining projects and better communicate with European citizens in order to better inform them about the potential economic and environmental advantages of sourcing raw materials in Europe, rather than exporting them.
Susana Solís Pérez agreed with the fact that Europe needs to facilitate sustainable mining and added that in Spain and Portugal several mining projects have been slowed down or blocked as a consequence of “NIMBY syndrome” without a fully-fledged discussion on what is at stake. According to the speaker, mining is an important activity that could generate employment growth in rural areas (and see population increases in areas which have suffered decades of demographic decline), while also contributing to the reduction of global emissions, as importing raw materials from outside Europe is not always environmentally friendly. For these reasons, mining should be better communicated and explained as an opportunity for growth and enhanced sustainability regionally, rather than being considered a mere national or local question.
Nevertheless, the speaker added, raw materials sourcing in Europe must entail that the highest environmental standards and respect for human rights are upheld throughout the whole value chain. Solís Pérez MEP also acknowledged that the European Parliament should start a serious discussion on sustainable mining, as well as debating the challenges and opportunities of sourcing raw materials from Europe. Indeed, EU institutions, along with national and local governments should not only set the legal and policy framework, but also effectively communicate the overall EU strategy towards a carbon-neutral economy.
To conclude, she mentioned the ambitions of the European Green Deal, saying that the CRM Act is an essential piece of legislation. She added that it should have a broader scope by further expanding the list of strategic components (such as copper or nickel), that have an impact on the value chain of essential technologies for both the green and digital transition.
Daniel Mes replied to the question by stating that sustainable mining is essential for Europe’s green transition. However, he also clarified that ethical and environmental standards must be the primary condition to enable raw materials sourcing in Europe. He continued by explaining how various stakeholders in Europe could cooperate in setting and communicating standards to tackle climate change and support initiatives which are going in this direction.
The speaker took the example of the Initiative for Responsible Mining Assurance (IRMA) standards as it is has been supported by several NGOs and some companies have already implemented its protocols in order to comply with the principles put forward with this initiative. Daniel Mes also added that the IRMA standards are an important starting point to provide guarantees such as, decent working conditions, local community involvement in decision-making processes, waste management and water use.
The speaker also mentioned the example of a mine in Sweden that has been built to the highest environmental and human rights standards. He explained that, despite its remote location, it has been able to create a solid value chain, from mining to production. Moreover, it has attracted workers from all over the country who have not only appreciated the valuable job opportunities, but also the fact that they can contribute to the fight against climate change.
Elaborating on the example of Sweden, Daniel Mes concluded his speech by highlighting the need for the EU to endorse national governments when they face harsh public debate on their methods of achieving a carbon neutral economy.
Andreas Sauer started by saying that BMW has already implemented a new strategy to diversify its supply chain and added that the company now strives to source raw materials which are produced as close as possible to production sites. He also stated that BMW delivers raw materials to battery suppliers. By shortening the supply chain in this way, they further reduce the risk of supply shocks. Andreas Sauer continued to explain BMW’s business model on raw materials, confirming the company’s commitment to establish automotive clusters within regions in which rare earths or other elements are sourced.
Our strategy, the speaker said, positively affects local communities and supports the company’s supply chain, reducing costs and fostering both efficiency and sustainability. In fact, he specified, BMW puts great consideration into the opportunities that sustainable mining implies. However, opening new mines cannot be the only solution, according to the speaker. For this reason, BMW promotes innovation development in the mining sector through the company venture capital from which new lithium extraction technology is financed throughout the world.
The speaker concluded by stating that BMW is committed to delivering transparent communication on the projects the company enacts, as it has built upon years of experience on having constructive discussions with national and local authorities, workers, and communities alike, both within and outside Europe.
Giles Dickson first clarified one point touched upon earlier by the other speakers. With respect to the reaction of the public when infrastructure is deployed to deliver the green transition, the speaker mentioned the case of Germany where the majority of citizens and policymakers are in favour of both onshore and offshore wind farms. Similar support, he noted, exists elsewhere in Europe.
As a matter of fact, communities living close to wind power plants show levels of support even higher than the rest of the population, since wind farms bring about economic benefits to the given areas, according to the speaker. However, he added that there are some groups who oppose wind turbines and, due to loopholes and a current lack of clarity on environmental rules and regulations, projects often get slowed down or even halted altogether.
The speaker then continued explaining the importance of the EU and national regulatory action, especially in the context of the REPowerEU initiative and the CRM Act, as it is the only way to avoid the exploitation of the aforementioned legal loopholes. According to the speaker, the same pattern risks may apply to sustainable mining, as some may take advantage of unclear legislation to block vital projects. Giles Dickson concluded by saying that local communities understand the need for further deployment of renewable energy infrastructures, hence Europe should have faith in its citizen’s support of this issue.
The moderator shifted the attention to another topic and asked the speakers how EU policies could help the European industry thrive, particularly in light of increased international competition, especially from Asia.
Andreas Sauer began by stating that BMW understands the challenges posed by its competitors well and does not fear them, as the company is adapting its production cycle to satisfy both a push towards sustainability and the future demands of the market. However, he also remarked that the EU policy framework and effective collaboration between private and public players are fundamental factors for a successful EU industrial policy. In this connection, the speaker said the CRM Act shall provide a good basis to enhance European industry and tackle climate change. However, he stated that innovation and both public and private investment in research and innovation are also essential.
BMW, the speaker concluded, has already started the implementation of a strategy to reduce C02 emissions as part of a broader initiative that meets both citizens’ and customers’ expectations, while other European carmakers have been doing the same. As the CRM Act is an essential part of the green transition, Andreas Sauer added, BMW can gain great advantages from a broader strategy on raw materials allocation in the EU, while strengthening company presence both in Europe and across the globe.
Daniel Mes replied by specifying that the European Green Deal aims to reshape the industrial production cycle in Europe in order to foster the EU industrial capacity also vis-à-vis the global market. In fact, he continued, the CRM Act has been designed to both provide further resources and create new opportunities for European industry. Otherwise, he added, competition in the Single Market would be stifled and European companies would lose market shares not only in Europe, but also around the world. This legislative proposal, he stated, will deliver a legal framework to empower European companies to compete against players that, for the moment, already have some valuable competitive advantages.
The speaker then shifted the attention to the question of innovation in the raw materials value chain and public support to the sector. In this regard, Daniel Mes pointed out that the EU could be a major innovation hub and some member states already provide great examples of this virtuous process. However, he also specified that further innovation capacities are needed. The European institutions, Daniel Mes concluded, will work alongside member states to simplify the procedures that allow national governments to grant additional financial support, while the European Commission will continue to assess the way forward to support research, development, and innovation of European industrial capacities, while taking into account the strategies adopted by third countries.
Do you wish to know more about the issues discussed in this debate? Then check out the selected sources provided below!
Critical raw materials, European Commission
European Raw Materials Alliance (ERMA)
The supply of critical raw materials endangered by Russia’s war on Ukraine, OECD
Critical raw materials: The EU should secure its own supply, European Parliament
Securing the EU’s supply of critical raw materials, European Parliament
Critical raw materials: Assessing EU vulnerabilities, Geopolitical Intelligence Services
Critical Raw Materials for the energy transition: Europe must start mining again, Energy Post
Geopolitical dimensions of the EU‘s future supply of critical raw materials, Euractiv
How the EU plans to win the global race for Critical Raw Materials, Euractiv
Mineral Commodity Summaries 2022, Lithium, US Government
Alloy information helps prioritize material criticality lists, Nature.com
Neue Herausforderungen für die deutsche Rohstoffversorgungssicherheit, Energie.de
