European Community: new critical raw material act

Published on Wednesday, 9 August 2023

This year, the European Commission launched two new legislative proposals: the Net-Zero Industry (NZI) Act and the long-awaited Critical Raw Materials (CRM) Act, aimed at boosting clean technology industries in the European Union and reducing its reliance on imported raw materials. Both proposals are part of the European Commission's Green Deal Industrial Plan, announced earlier this year in response to initiatives developed by other countries at a global level.

The proposed Act establishes clear benchmarks for national capacities throughout the strategic raw materials supply chain. To diversify its supply, the European Union must increase the utilization of its geological resources and extract 10% of its critical raw materials consumption. Additionally, it should enhance its transformation capacity along the value chain, aiming to process at least 40% domestically and secure at least 15% from recycling. Moreover, no external country can account for more than 65% of the European Union's imports of a single critical material. 

The regulation also includes a list of critical raw materials and proposes a new list of strategic raw materials, which is more focused on needs in the upcoming years.

Another important point is the definition of “strategic projects” to ensure an adequate supply of critical raw materials. The proposal also foresees the creation of “one-stop shops” to streamline the permit-granting process for these projects. The selected strategic projects will benefit from support in accessing financing and will have shorter timelines for obtaining permits.

Furthermore, the Act also proposes measures to enhance circularity and efficient use of critical raw materials by establishing value chains for recycled critical raw materials. For example, requiring operators and Member States to increase the recovery of critical raw materials from critical recycling processes based on products and waste already in the EU market.

The Act establishes actions to improve the European Union’s position to supply risks. To ensure the resilience of value chains, the proposal establishes the monitoring of critical raw material supply chains, information exchange, and future coordination on strategic raw materials stocks among the Member States.

Other actions include the establishment of a Critical Raw Materials Club with other countries to provide for a secure, sustainable, and affordable global supply of essential critical raw materials for the EU's green and digital transition, ensuring a competitive and diversified industrial base.

Before going into effect, the proposal must be adopted by the European Parliament and Council, and it is expected to undergo modifications and improvements during the process.

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