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News 16 October 2023

Unravelling Europe’s critical raw materials challenge: Insights from EERA’s policy analysis



 Based on a range of studies from authoritative international agencies, research institutions, and think tanks, EERA has just published a report providing a reliable and detailed analysis of the state of play of the collective knowledge base on CRMs. Leveraging the wide-ranging expertise of the EERA scientific community in the field of low-carbon technologies, the analysis provides incremental intelligence on how vulnerabilities of the CRM supply chain could affect the EU’s clean technology industry and CET process. A deep dive is provided into five technologies that are central to the CET, namely, solar photovoltaics (PV), wind turbines, batteries, electrolysers and power electronics, analysing how these technologies could potentially be affected by disruption of CRM value chains. The report concludes with a set of policy recommendations aimed at addressing both the geopolitical challenge of securing the supply of CRMs as a whole and the specific details of the five technologies analysed. It ultimately emphasises the central role of research in most of the mitigation strategies available to manage the systemic risks posed by CRM supply security.

In the lines that follow, the core insights and recommendations of the report are outlined.

Setting the scene

Europe’s journey towards climate neutrality significantly relies on the extensive deployment of low-carbon technologies, which is anticipated to result in a substantial surge in the usage of Critical Raw Materials (CRMs). Lithium, nickel, cobalt, manganese, and graphite are, for example, crucial to battery performance, longevity, and energy density. Rare earth elements are essential for permanent magnets that are vital for wind turbines and EV motors. Electricity networks need a huge amount of copper and aluminium, with copper being a cornerstone for all electricity-related technologies. In this context, a central concern arises regarding Europe’s profound import dependency on these critical materials, which poses a significant vulnerability to the successful execution of the Clean Energy Transition (CET).

The European Energy Research Alliance (EERA) is well aware of these challenges.

In this context, the decision to conduct a policy analysis on how to secure a sustainable critical raw material supply for clean energy in Europe by highlighting the role that research and innovation (R&I) can play within it is particularly topical and timely. It aligns, in fact, with a political landscape characterised by a race against climate change paralleled by a race for industrial domination in the clean technology sector—a dynamic leading to profound implications for the supply of CRMs.

Assessing Europe’s position on Critical Raw Materials

The report starts by thoroughly analysing the importance, risks and policy context surrounding CRMs in Europe’s energy transition. The emerging scenario depicts a continent becoming increasingly aware of a profound CRM dependency on imports. This reliance is driven by the relative scarcity of CRM supplies within its territory, accentuated by various socio-economic considerations that complicate internal sourcing. This situation unfolds in an environment where CRM supplies are concentrated, with only a handful of countries controlling their mining and processing, with China taking the lion’s share and other countries such as Russia, Turkey, and the Democratic Republic of the Congo (DRC) having key stakes in the game.

Moreover, the document emphasises that CRM production carries significant environmental risks, encompassing issues such as water consumption, contamination, and hazardous waste generation. Social impacts are also underscored, including poor working conditions, human rights concerns, and conflicts arising from CRM extraction, especially in mining countries outside the EU. Specifically within the European context, while the importance of certain raw materials for various industries and technological advancements is acknowledged, concerns about environmental impacts and the well-being of local communities significantly influence public opinion.

In an effort to address this intricate landscape, the European Commission introduced the European Critical Raw Materials Act (CRMA) in March 2023. This ambitious proposal, currently navigating the EU legislative process, aims to secure a sustainable supply of CRMs in the EU. However, at the EU level, coordination to date has been insufficient to effectively monitor, manage the risks of, and proactively address potential disruptions in CRM supply, thereby revealing significant knowledge gaps that will be key to fill.

The CRMA also acknowledges that, despite all efforts deployed, the European Union will continue to depend heavily on external partners for its CRM supplies. Consequently, pivotal roles are assigned to initiatives like free trade agreements, the “Critical Raw Materials Club” fostering collaboration with external countries in CRM supply chain development, and the “Global Gateway” framework promoting investments in global connectivity links to achieve the desired objectives.

Exploring five key technologies: CRM challenges and R&I alternatives

The core of the analysis is dedicated to presenting the challenges linked to a secure and sustainable CRM supply in Europe and exploring R&I avenues to overcome them for five pivotal technologies crucial to the clean energy transition—namely, solar photovoltaic, wind, hydrogen, batteries, and power electronics. Before delving into the specifics of each technology, particular focus is given to the concepts of circular economy, substitution and alternative materials as key levers through which R&I can enhance the sustainability and security of the EU’s CRM supply. In particular, concerning the circular economy, the so-called R-ladder framework—R0: Refuse, R1: Rethink, R2: Reduce, R3: Reuse, R4: Repair, R5: Refurbish, R6: Remanufacture, R7: Repurpose, R8: Recycle, and R9: Recover energy—is advocated to inform CRM-related policies.

Transitioning to the specifics of the five technologies analysed, the solar photovoltaic (PV) sector faces challenges due to its heavy reliance on CRMs such as silver, bismuth, indium, and tellurium. The push for climate neutrality by 2050 requires a significant increase in global PV module production, intensifying the demand for these CRMs. Research and development (R&D) efforts will therefore need to focus on reducing CRM usage per gigawatt (GW) of silicon PV module production, exploring material substitutions, and ensuring full recyclability of PV modules. Enforcing CRM usage limits per GW production will also be an essential strategy for sustainable solar PV growth.

For its part, wind energy is set to become Europe’s primary electricity source, potentially supplying up to 50% of the EU’s power consumption by 2050. Ensuring its development requires the essential supply of rare earths elements (REEs), nickel, manganese, copper, and aluminium, along with secondary materials like ferrous scrap, glass fibre, and carbon fibre. Therefore, securing comprehensive access to these CRMs within the EU’s borders is an absolute priority. Reducing demand for REEs and copper will also be key: an objective attainable through investment in the recycling of permanent magnets such as the Permanent Magnet Direct Drive - a key element of offshore turbines’ generators set to experience a sharp market increase over the next few years.

Regarding hydrogen production, highly promising membrane electrolysers (proton exchange membrane electrolysers, PEMELs) have already been developed and are now taking over the hydrogen market, mainly thanks to their compact design, low environmental footprint, and versatile operational features. However, these electrolysers pose several CRM-related challenges as they depend heavily on platinum group metals (PGMs). Reducing this dependence is, therefore, a high priority for R&I, particularly concerning how to increase the mass activity of platinum or iridium used in cathodes and anodes. It is also crucial to support the development of other cell types, such as alkaline cells, for which the need for PGMs is greatly reduced.

On the batteries side, lithium-ion batteries are currently experiencing a stark expansion, in line with the increasing demand for electric cars on Europe’s roads. However, this technology relies on CRMs such as lithium, nickel, cobalt, graphite, and vanadium, whose sourcing and processing are linked to complex geopolitical aspects, including China’s dominance in the field and precarious extracting conditions in the DRC. In this context, it will be crucial to relocate a sustainable battery production chain within Europe and steadily work on the utilisation of alternative materials - a field in which R&I will play a pivotal role, for example, by continuing to explore silicon-rich anodes in EV batteries and lithium metal all-solid-state batteries. Moreover, implementing a circular framework for this energy storage type, along with advancing through the various stages of the R-ladder process, will mitigate the socio-economic and environmental impact of batteries.

The last technology analysed is power electronics, whose dependence on CRMs is primarily located in the semiconductors, the components used to cool them, and the passive components for filtering current and voltage. The focus in this sector must be on system efficiency and improving yields. Promoting wide-bandgap semiconductors will have, for example, a considerable impact on reducing losses and, thereby, increasing resource efficiency. In addition, the adoption of direct current for power transmission and distribution networks (instead of alternating current) or the incorporation of superconducting components should be swiftly implemented across Europe with the aim of achieving more efficient electronic systems with optimised material requirements.

A preview of the proposed policy recommendations

The analysis ultimately advocates for a comprehensive, multi-pronged approach to addressing the challenge of securing a sustainable CRM supply in Europe, underpinned by a robust political investment in research and innovation to achieve the EU’s climate and energy goals. This primarily involves (1) promoting a circular economy based on the R-ladder principles, (2) exploring alternative materials, and (3) prioritising R&I initiatives aimed at reducing CRM dependency across all Technology Readiness Levels (TRLs). Ensuring fair global supply chains and establishing effective economic mechanisms for European competitiveness are also crucial. Additionally, international collaboration and strategic partnerships will be essential to enhance CRM supply resilience.

Click here to read the full report.