The energy transition in the EU depends heavily on technical components such as batteries, wind turbines and solar modules. All of these require raw materials including lithium, nickel, cobalt, copper and rare earths. Most of these resources are currently found in only one or a handful of non-EU countries such as China, Turkey and Chile. To address the resulting vulnerability, the EU adopted a regulation on so-called critical raw materials in 2024. The regulation aims to secure long-term supply of 26 raw materials deemed essential for the energy transition.
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“Without critical raw materials, there will be no energy transition, no competitiveness and no strategic autonomy. Unfortunately, our supply of these raw materials is dangerously dependent on a handful of countries outside the EU,” said Keit Pentus-Rosimannus, the Court member responsible for the audit. “It is therefore vital that the EU steps up its efforts and reduces its vulnerability in this area.”
2030 target remains a distant prospect
According to the auditors, a secure supply could be achieved through diversified imports, increased domestic production and recycling. However, the regulation on critical raw materials only sets non-binding targets for 2030, and these apply only to a few materials classified as “strategic” due to their significant economic importance and supply risks. It is also unclear on what criteria the 2030 targets were set. Moreover, as the deadline is still some way off, it will be challenging for the EU to secure supplies of the required strategic raw materials by the end of the decade.
Resilience of supply chains as Achilles' heel
The regulation on critical raw materials is intended to reduce the EU’s dependence on a small number of supplier countries. However, efforts to diversify imports have yet to yield tangible results. For example, over the past five years the EU has signed 14 strategic raw material partnerships, seven of which are with countries whose governments are considered unreliable. Imports from these partner countries, however, have declined for around half of the raw materials examined between 2020 and 2024. Other EU initiatives are currently on hold, such as negotiations with the USA (suspended in 2024), or are still not fully finalised, such as the agreement between the EU and Mercosur (including Argentina, Brazil, Paraguay and Uruguay, which are rich in critical raw materials), which still requires ratification by all EU member states.
Current recycling rates only between one and five percent
The regulation also stipulates that by 2030, at least 25 percent of strategic raw materials in the EU should come from recycled sources. Yet, the auditors note several problems here as well: for seven of the 26 raw materials needed for the energy transition, current recycling rates are between one and five percent, and ten raw materials are not being recycled at all. Furthermore, most of the EU’s recycling targets are not specific to individual raw materials, and therefore do not create incentives to recycle particular materials—especially those that are more difficult to recover, such as rare earths from electric motors or palladium from electronic devices. Nor do they encourage the use of recycled raw materials. The auditors emphasise that European recycling companies are hampered by high processing costs, low available volumes, and technological and regulatory barriers, which undermine their competitiveness.
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The EU also aims to mine more strategic raw materials domestically to cover 10 percent of its consumption. In practice, however, raw material exploration is underdeveloped. Even if new deposits are discovered, it can take up to 20 years before a mining project becomes operational in the EU, making a concrete contribution by 2030 a remote prospect. In addition, despite the goal of processing 40 percent of the strategic raw materials consumed in the EU within the bloc by 2030, relevant plants are being shut down. This is partly due to high energy costs, which negatively affect competitiveness. The auditors warn that the EU could fall into a vicious circle, where insufficient supply of raw materials hinders the expansion of processing capacity, which in turn reduces the incentive to secure supplies. (hcn)
