ECA: EU facing risk of shortage of critical raw materials for energy transition

The EU is struggling to free itself from dependence on imports from a small number of countries, and its domestic production and recycling are not taking off, which is why securing supply by 2030 appears out of reach. This is the conclusion of a new report by the European Court of Auditors (ECA).

– The EU is having difficulties securing the supply of the raw materials it needs to meet its energy and climate goals. EU action on import diversification is not producing tangible results, bottlenecks hinder domestic production, and recycling is still in its infancy. Against this backdrop, many EU-supported projects are unlikely to succeed in time – the auditors say.

The report published on February 2 says that the EU’s transition to renewable energy is heavily reliant on technical equipment such as batteries, wind turbines and solar panels, all of which require critical raw materials such as lithium, nickel, cobalt, copper, and rare earth elements. Most of these materials are currently concentrated in either one or a handful of non-EU countries such as China, Türkiye, and Chile. For example, China provides 97 % of the EU’s magnesium (used in hydrogen-generating electrolysers) and Türkiye provides 99 % of the EU’s boron (used in solar panels).

In order to diversify imports of critical raw materials, the EU is working to strengthen cooperation with countries outside the EU, including through strategic partnerships. Serbia is one of 14 countries with which the EU has established a strategic partnership in the field of raw materials over the past five years. In 2024, the EU and Serbia signed a Memorandum of Strategic Partnership on sustainable raw materials, battery value chains and electric vehicles. However, half of these countries, including Serbia, have been assessed by European auditors as having low governance performance.

– These partnerships are intended to develop integrated value chains rather than just extracting raw materials. Seven out of the fourteen partnerships are located in countries with low governance scores, according to the World Bank’s 2023 world governance indicators. The partnerships include arrangements to address certain governance challenges which affect companies operating in these countries – the report says.

Keit Pentus-Rosimannus, the ECA Member responsible for the audit, stated that, without critical raw materials, there would be no energy transition, no competitiveness, and no strategic autonomy.

– Unfortunately, we are now dangerously dependent on a handful of countries outside the EU for the supply of these materials. It is therefore vital for the EU to up its game and reduce its vulnerability in this area – she said.

ECA says that securing the supply can be achieved through diversified imports, increased domestic production, and recycling. The EU adopted its Critical Raw Materials (CRM) Act in 2024, with a view to ensuring a long-term secure supply of 26 minerals identified as critical for the energy transition. The document states that the EU’s goal is to mine at least 10% of its annual consumption of strategic materials by 2030, process at least 40% of these raw materials and recycle at least 25%. Also, a maximum of 65% of each raw material can come from a third country.

When it comes to recycling critical raw materials, ECA says that “the outlook is not promising.” As things stand, 7 out of 26 materials needed for the energy transition have recycling rates between 1 % and 5 %, while 10 are not recycled at all. The auditors highlight that European recyclers suffer from high processing costs, the small quantities available, and technological and regulatory barriers which hinder their competitiveness.

When it comes to domestic extraction of strategic materials, ECA says that exploration activities are underdeveloped, and even when new deposits are found, it can take up to 20 years for an EU mining project to become operational.

– In addition, there is still a long way to go to meet the targets, the auditors say, and the EU will struggle to secure the supply of the strategic raw materials it needs by the end of the decade – ECA says in the announcement.

European Court of Auditors

ECA

Keit Pentus Rosimannus

critical raw materials