New Commission proposals on Critical Raw Materials, Net-zero Industry

On Thursday, the European Commission put forward its legislative proposals for a Net-Zero industry Act (NZIA) and a Critical Raw Materials Act (CRMA). The two proposals are set to complement both the European Chips Act and the European Green Deal as part of the Commission’s ambition to green and digitise its industry. 

In line with the ambitions of the European Green Deal, the Net-Zero Industry Act aims to scale up the manufacturing of clean technologies in the EU, rather than in the United States or China. 

For that, the Commission proposes to support, in particular, the building of 8 strategic net-zero technologies through strategic subsidies and other industrial policy measures. These include (i) solar photovoltaic and solar thermal; (ii) onshore wind and offshore renewable energy; (iii) batteries and storage; (iv) heat pumps and geothermal energy; (v) electrolysers and fuel cells; (vi) biogas/biomethane; (vii) carbon capture, utilisation and storage; (viii) and grid technologies. 

Meanwhile, sustainable alternative fuels technologies, advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle, small modular reactors, and related best-in-class fuels are also supported through specific measures. 

According to Commission President von der Leyen, “the Net-Zero Industry Act will create the best conditions for those sectors that are crucial for us to reach net-zero by 2050: technologies like wind turbines, heat pumps, solar panels, renewable hydrogen as well as CO2 storage. We are acting now to make sure Europe can meet the growing global demand with European supply.”

Meanwhile, the Commission’s proposal for a Critical Raw Materials Act aims to underscore this ambition by ensuring that the renewable energy industry has the access to the critical materials it requires. In the past years for example, the rising costs of electricity and European steel significantly undermined the global competitiveness of Europe’s wind energy sector. While demand for critical raw materials is projected to increase drastically over the coming years, European manufacturers heavily rely on imports, often from quasi-monopolistic third country suppliers such as China, Russia or countries in the global south. 

To tackle this, the new CRMA proposes to update the current list of critical raw materials, and aims to develop a new list of strategic raw materials, which are crucial to technologies important to Europe’s green and digital ambitions and for defence and space applications, while being subject to potential supply risks in the future.

Additionally, the new Regulation sets clear benchmarks for domestic capacities along the strategic raw material supply chain and to diversify EU supply:

• At least 10% of the EU’s annual consumption for extraction,
• At least 40% of the EU’s annual consumption for processing,
• At least 15% of the EU’s annual consumption for recycling,
• Not more than 65% of the Union’s annual consumption of each strategic raw material at any relevant stage of processing from a single third country.

It will also ensure secure and resilient EU critical raw materials supply chains that can mitigate potential risks, while upholding Europe’s high environmental standards domestically and around the world via increased raw material recycling obligations. 

Following the Commission’s publication this week, the Critical Raw Materials Act and the Net-Zero Industry Act will undergo the legislative process in the Council and the European Parliament over the coming months.