Ancygier, A., Waterton, O., Most, S., Quill, E., Rabiee, S., Myer, D., Ramalope, D. (2023): Critical and strategic materials: potential bottlenecks and the EU perspective. Discussion Paper of the 4i-TRACTION Deliverable D3.7. Climate Analytics. Berlin.
Critical and strategic materials: potential bottlenecks and the EU perspective
This discussion paper introduces an approach to assess the risk of material bottlenecks in the energy transition, focusing on four materials essential for electric vehicle (EV) batteries.
While the European Union (EU) aims to reduce its reliance on fossil fuel imports, it will face an increasing dependency on a broader range of critical and strategic raw materials crucial for the energy transition. However, this transformation may be hindered by bottlenecks in the availability of essential materials, potentially slowing down the energy transition. A differentiated approach is necessary to understand and address the drivers of material bottlenecks effectively.
The proposed methodology considers near- and medium-term time horizons and emphasizes the need for adaptability to specific product characteristics. The paper provides an overview of critical and strategic materials' role in the energy transition, presents the methodology, discusses the selected materials, and highlights potential bottleneck areas. Concentration of mining and processing in a few key countries poses risks due to both supply chain vulnerability and geopolitical concerns. Moreover, the policy responses required for addressing extraction, and processing concentration and scale-up differ across different time horizons. Additionally, discrepancies between demand-driving policy measures and the speed of material supply increase can also contribute to bottlenecks.
This paper emphasizes the opportunities and challenges associated with the EU's transition away from fossil fuels and highlights the importance of understanding the drivers of potential critical and strategic materials bottlenecks. The paper concludes by advocating for targeted policies and measures to mitigate bottlenecks, including and beyond those in the recently announced EU Critical Raw Materials Act proposal. Key policy changes include streamlining permitting processes, supporting investment in strategic projects, and supporting the development of a strong recycling sector. While at the same time, acknowledging the geological limitations to complete independence from material imports, and recognizing the need for the EU to continue to push for the highest possible environmental, social, and governance standards in raw materials extraction in Member States and in third countries.