Agreement reached on Critical Raw Materials Act

Research and innovation play an important role in reaching the circularity targets set in the deal on the Critical Raw Materials Act.

The EU aims to achieve climate neutrality by 2050, relying on a green and digital transition that necessitates secure access to critical raw materials (CRMs). To address this, the Critical Raw Materials Act (CRM Act) introduces the concept of strategic raw materials (SRMs), aiming to strengthen the entire SRMs value chain, diversify imports, enhance supply risk monitoring, and ensure free movement and environmental sustainability of CRMs in the EU market. The overarching goal is to establish a framework that ensures the EU’s secure and sustainable supply of CRMs to support its strategic objectives. The initial legislative proposal of the CRM Act was brought forward by the European Commission on 16 March 2023 (see SwissCore article). Trilogue negotiations commenced on 20 September 2023 and finally, a deal between the European Parliament’s Committee on Industry, Research and Energy (ITRE) and the Spanish Presidency of the Council of the EU was reached on 13 November 2023.

In the Commission’s initial proposal, a list of in total 34 critical raw materials is established, of which 16 are in the category of SRMs. In the provisional agreement now reached, aluminium is added to the list of strategic raw materials, leading to a total of 17 SRMs. Strategic raw materials are expected to grow exponentially in terms of supply, which have complex production requirements and thus face a higher risk of supply issues.

The agreement maintains the proposed benchmarks of 10% for raw material extraction to strengthen the different stages of the strategic raw material value chain. This means concretely that by 2030, the EU’s extraction capacity will have to cover at least 10% of the EU’s annual consumption of SRMs, provided the respective reserves allow for this. Concerning the EU’s processing capacity, the deal settles on the proposed 40% of the EU’s annual consumption of SRMs. The benchmark set for recycling is now higher than the initial proposal, now obligating EU Member States to overall recycle a minimum of 25% of the EU’s annual raw material consumption. On a global level, the regulation outlined strategies to broaden the sources of critical raw material imports, aiming to restrict any single third country from supplying more than 65% of the European Union’s consumption of each strategic raw material.

Research and innovation are essential to develop innovative solutions and sustainable processes along the value chain of CRMs. In the CRM Act deal, the European parliament thus pushed for a stronger focus on research and innovation concerning substitute materials and production processes to possibly replace raw materials in strategic technologies. Under Horizon Europe, there has been a total investment of €470 million so far in developing innovative solutions to reduce the EU’s dependency on critical raw materials. Recent projects include innovative solutions for circularity in wind energy technology or various projects under the Horizon Europe partnership on batteries. Up to €200 million under both Horizon Europe and by Member States should be mobilised to deploy ten additional Hubs for Circularity across the EU. These combined efforts will play a pivotal role in reaching the established circularity targets.

To reach the set targets, the CRM Act foresees criteria for certain projects to be considered as strategic projects, helping the EU to enhance their contribution along the supply chain of CRMs by producing innovative raw materials. Some of these criteria are the technical feasibility of the project, cross-border benefits, and a sustainable implementation. Regarding their environmental impact – again if certain criteria are met – strategic projects will potentially be considered as having an overriding public interest through their contribution to the security of the EU’s SRM supply. As one of the key targets of the Critical Raw Materials Act is to reduce the administrative burden for strategic projects, the legislation unifies the timings of the permit procedure for these projects in the different Members States. For extraction projects, the permit granting should thus not exceed 27 months, whereas, for the projects related to processing and recycling of SRMs, the timeline is set to a maximum of 15 months. Member states are then requested to provide recommendations to facilitate access to finance for strategic projects.

The provisional agreement on the CRM Act now still needs to be formally adopted by the Council of the EU and the European Parliament. After the formal acceptance of the co-legislators’ deal, the Commission has a total of 18 months until they have to present a report on the estimated consumption of each critical raw material for the next three decades, which will present crucial information in implementing the set benchmarks.