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 sets only non-binding targets for 2030, and these apply to just a few materials classified as “strategic” due to their significant economic importance and supply risks. The criteria for the 2030 targets remain unclear. With the deadline 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. Over the past five years, the EU has signed 14 strategic raw material partnerships, seven of them with countries whose governments are considered unreliable. Despite these agreements, imports from these partner countries have declined for about 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 remain incomplete, such as the agreement with Mercosur (including Argentina, Brazil, Paraguay and Uruguay, which are rich in critical raw materials) that still requires ratification by all EU member states.
Current recycling rates only between one and five percent
The regulation also requires that by 2030, at least 25 percent of strategic raw materials in the EU should come from recycled sources. However, the auditors highlight several issues: for seven of the 26 raw materials needed for the energy transition, current recycling rates are just one to five percent, and ten raw materials are not recycled at all. Most EU recycling targets are not specific to individual raw materials, so they do not incentivise recycling of 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 promote the use of recycled raw materials. The auditors point out that European recycling companies face high processing costs, limited available volumes, and technological and regulatory barriers, all of 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 remains underdeveloped. Even when new deposits are found, it can take up to 20 years for a mining project to become operational in the EU, making a concrete contribution by 2030 unlikely. Despite the goal of processing 40 percent of strategic raw materials within the bloc by 2030, relevant facilities are being closed, partly due to high energy costs that undermine competitiveness. The auditors warn that the EU risks entering a vicious cycle, where limited raw material supply restricts processing capacity, which in turn reduces the incentive to secure new supplies. (hcn)
