On 16 March 2023 the European Commission proposed the Critical Raw Materials Act and the Net-Zero Industry Act. What they set out and what is still needed before they apply.
On 16 March 2023 the European Commission presented two proposals for regulations: the Critical Raw Materials Act and the Net-Zero Industry Act. They form part of the Green Deal Industrial Plan and aim to reduce the EU’s dependence on a handful of suppliers for the materials and technologies of the energy and digital transition. The Commission justifies them by today’s dependencies: for some critical raw materials, more than 90% of EU supply comes from a single third country, and demand for lithium for electric-car batteries and energy storage could grow twelvefold by 2030. These are proposals, not laws in force: the European Parliament and the Council must negotiate and approve them before they apply.
The Critical Raw Materials Act
The proposal writes into law a list of critical raw materials and a shorter list of strategic raw materials: those most important for green and digital technologies, defence and space, and at risk of shortage. It sets benchmarks for 2030 on the EU’s annual consumption of each strategic material: at least 10% extracted in the Union, 40% processed, 15% recycled and no more than 65% coming from a single third country at any stage of processing.
To get there, strategic projects, inside and outside the EU, would receive support in accessing finance and shorter permitting times: 24 months for extraction permits and 12 for processing and recycling permits. Each member state would have to offer a one-stop shop for permits and draw up national programmes for geological exploration.
The proposal also looks at supply chains. The Commission and member states would monitor supply risks, coordinate strategic stocks and provide a mechanism for joint purchasing for those who wish to take part. Large companies that make strategic technologies using these materials would have to audit their supply chains every two years and present the results to their board.
The Net-Zero Industry Act
The second proposal aims for the EU’s manufacturing capacity in net-zero technologies to approach or reach at least 40% of the Union’s deployment needs in 2030. It covers, among others, solar and wind power, batteries, heat pumps, electrolysers and fuel cells, carbon capture and storage, grids and advanced nuclear technologies.
As with the raw materials act, the proposal simplifies procedures and gives priority, with shorter permitting times, to strategic projects, including those for the safe storage of CO2. It also sets a goal of having an injection capacity of 50 million tonnes of CO2 a year in 2030, with a proportionate contribution from EU oil and gas producers; asks public authorities to take sustainability and resilience criteria into account in public procurement and auctions; and provides for training academies and regulatory sandboxes.
What to review
While they are negotiated, the 2030 targets are benchmarks for the Union as a whole, not obligations for each company, and the text may change in Parliament and in the Council. Even so, they signal the direction: more scrutiny of where materials come from and who processes them.
Companies that make or use batteries, vehicles, electronics, renewable equipment, magnets or alloys should know which raw materials they use, in which countries they are extracted and processed, and which suppliers concentrate their supply. Large companies that make strategic technologies can start preparing for the supply-chain audit that the proposal envisages. Ask your adviser how it applies to you.
The transition needs minerals, and the EU is trying for the first time to secure them by law.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
