The Sustainable Rhythm of Critical Raw Materials Exploitation

The Sustainable Rhythm of Critical Raw Materials Exploitation

The European Union (European Commission) has taken some baby steps towards bridging the gap between its poorer member states and the developed ones in its effort to become a regulator of the international economic system by proposing to the European Parliament and Council a Regulation, establishing a framework for ensuring a secure and sustainable supply of critical raw materials (European Critical Raw Material Act).

Could this Regulation be an important tool for the economic development and energy autonomy of Europe? Is it possible for member states not to enforce this Regulation considering that the strategy for exploiting critical raw materials is strictly connected with a state’s sovereignty and ultimately, is this Regulation necessary? Will it succeed in its purpose or at least act as a catalyst for each member state to synchronize and amend the related strategies, guidelines and national legal frameworks regarding critical raw materials?

At this point it is crucial to state that Europe is ready to embrace strategic decisions, characterizing raw materials, projects and partnerships as strategic under the respective Regulation. Europe is prepared to include under this critical raw material umbrella the strategic ones by regulating the process of their characterization and recognizing that a European strategy alone is not sufficient for Europe to be competitive, let alone secure, which is its ultimate purpose. This Regulation is the proof that Europe is ready to take action.

The Regulation outlines the process for recognizing strategic projects with total respect for member states’ objections to this characterization! Another critical point is the option for recognizing a strategic project located in a third country, only if the third country explicitly approves this characterization. While these processes may contribute to upgrading Europe’s role, they also highlight the weakness of the European Union in acting and negotiating as a state does in the global community.

The above Regulation has been approved by the majority of the European Parliament members, while awaiting approval from the European Council, which is expected next week. This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Extraction, Processing, Recycling Standards (EPR Standards)

This Regulation aims i) to strengthen the strategic raw materials value chain by ensuring at least 10% extraction, 40% processing and 15% recycling by 2030. This includes Union extraction capacity, Union processing capacity and Union Recycling capacity. The goal is for Union extraction capacity to reach at least 10% of the Union’s annual consumption, Union’s processing capacity to reach at least 40% of Union’s annual consumption and Union recycling capacity to reach at least 15% of Union’s annual consumption. Additionally, by 2030 the Regulation aims to ensure that the Union will import strategic raw materials from several third countries, with none providing more than 65% of the Union’s annual consumption. It also seeks to improve the Union’s ability to monitor and mitigate supply risks related to critical raw materials, as well as ensure the free movement of these materials and relevant products in the Union, while concurrently ensuring a high level of environmental protection by improving their circularity and sustainability.

It appears that with this Regulation, Europe anticipates that certain factors may cause unexpected significant decrease in the availability of raw material or affect the price of a raw material (supply disruption) and with this Regulation ensures that a strategic stock of raw material/s will be released in such cases. This strategic stock of raw material/s will be stored by a public or private operator.

Anyone can understand the impact of COVID-19 period on this decision.

State Sovereignty

What if a State does not enforce the provisions of this Regulation? What penalties will apply?  ­­Should a member state overcome the fact that its sovereignty and policies are valid inside Europe too? Should a member state adopt and act in total compliance with this Regulation to be secure and competitive in the global market by taking advantage of its European membership, or its time for us to start the conversation about Europe’s sovereignty?

According to article 194 of the Treaty on the Functioning of the European Union and Europe’s Policy on Energy, the aim is, in a spirit of solidarity between member states, to ensure the functioning of the energy market and security of energy supply in the Union, promote energy efficiency and energy saving and the development of new and renewable forms of energy, and promote the interconnection of energy networks. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish the measures necessary to achieve these objectives.  Such measures shall not affect a member state’s right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply without prejudice to Article 192 par.2. Is article 192 par. 2 of the Treaty on the Functioning of the European Union adequate for the latter to enforce this Regulation based on the reformation of the general structure of Europe’s energy supply? This question could serve as a good starting point for discussing European sovereignty and its aspects.

Necessity and European Policymaker

Τaking into account the active players in the global market nowadays i.e., U.S.A., Russia, China, Turkey, Iran, India, Arab Emirates and Europe’s dependence on critical raw materials’ imports from third countries such as China and Turkey, it’s one way street for the member states, especially for those who do not have nuclear energy and a strong economy to serve the purpose of this Regulation.

In parallel the acceptance of the necessity of critical raw materials exploitation for Europe to access green energy is actually a huge milestone. However, the strategic implementation needs to be more accurate. For example, Europe needs to examine in which countries it is crucial to operate recycling or refinery facilities and examine the option to use these facilities not only as borders of development but also as strategic points to attract third countries.

It’s time for Europe to enforce a united framework on critical raw material exploitation and understand its own structure, aim, strength and need for change. Otherwise, Europe will not be competitive tomorrow and certainly not secure.

European borders define Europe, and we need to reform our frameworks, set up new guidelines and goals as a quick response to global challenges. 

Μariana Mantzari, Lawyer, Owner at mM Law Yard