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The European Union “cannot achieve” climate neutrality without critical raw materials like lithium and rare earths, says Commission vice-president Maroš Šefčovič. It now needs to be “much more strategic” in relations with supplier countries in order to ensure the bloc’s “strategic autonomy,” he argues.

Maroš Šefčovič is the EU Commissioner for foresight and interinstitutional relations, who is coordinating work on the European Battery Alliance. He spoke to EURACTIV’s energy and environment editor, Frédéric Simon.

INTERVIEW HIGHLIGHTS:

• The EU is pushing the concept of “open strategic autonomy” on raw materials, by developing its own supplies of lithium and rare earths while diversifying import supplies
• Europe can be 80% self-dependent on lithium by 2025 and have its own rare earth mining and refining capacity ready by 2030
• The EU is talking with countries like Canada, Australia Serbia, Albania and Ukraine about opportunities on raw materials and is requesting “reciprocity” in trade relations with China in return for granting access to its single market
• “Urban mining” will also contribute to the EU’s push for raw materials autonomy, with €1 billion going to recycling R&I in the next seven years (2021-2027)
• EU Commission is preparing a new regulation to ensure all batteries sold in Europe are the “greenest, safest and most sustainable on this planet,” including those imported into the bloc
• This will include a “battery passport” to ensure batteries and the raw materials they contain are sourced in an environmentally and socially responsible way
• Countries that don’t comply with new EU rules on batteries could be imposed a border carbon tax to ensure a level playing field

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Two years ago, I interviewed you on the same topic of raw materials – and you issued a stark warning back then, saying that “when it comes to the issue of dependency, Europe could end up in a situation where raw materials become the new oil.” Two years on, would you say that risk has receded or increased?

I would say we are much more aware of that risk now because the question of critical raw materials is not only related to Europe’s green ambitions, it is also closely linked to our digital strategy: nearly all the future technologies needed to build Europe’s green and digital growth are in dire need of critical raw materials.

Let me take an example. Europe’s need for lithium used in electric car and storage batteries will be 18 times bigger by 2030 and 60 times more by 2050. Industrial ecosystems, such as aerospace, construction, automotive and low-carbon energy-intensive industries – all highly dependent on secure access to raw materials – will represent altogether €2 trillion in economic activity and employ over 30 million of people by 2030.

For all of these sectors, critical raw materials are absolutely essential. Today we are acutely aware that this dependency is something we have to take extremely seriously, which is why we created this European Raw Materials Alliance in September.

Clearly the statement I gave two years ago is still valid.

You are right, the scope of our analysis is larger. And I think we all agree that the COVID-19 crisis can serve as an accelerator for the green and digital transitions. We know perfectly well that we cannot achieve our 2030 and 2050 climate targets without cutting-edge technologies and for all these we are in a big need of critical raw materials.

At the European Commission, we analysed the applications one by one and checked where we are dependent, be it on one country or one supplier.

I hope we can repeat the success of the European Battery Alliance. When we launched the alliance in 2017, there were still carmakers that were hesitant. Today, they are all on board with the transition to electro-mobility and the need to diversify battery cells suppliers.

And the supportive role of the European Investment Bank here is key in this regard. Last year, the EIB changed their energy lending mandate and started working with potential European suppliers of lithium, to invest in extraction and processing, which is very important for investors.

In Europe today, we are now investing three times more into the battery sector than in China: our investments reached €60 billion last year. China, meanwhile, invested €17 billion. And this year, Europe has so far invested €25 billion – again, twice as much as China.

Europe is really becoming a hub for investment into the battery sector – from extraction, processing, software development, manufacturing, re-use and recycling – the whole value chain is covered. So I hope we can now repeat the success.

We also have clear milestones we would like to reach by 2025 or 2030. We know 2030 is a critical deadline if we want to have everything in place to reach climate neutrality 20 years later.

This is a very important decade, which will I think, decide how Europe will fare in comparison with economies like China or the United States, and how well prepared we are in making sure that we are climate neutral by mid-century.

New EU alliance aims for 'strategic autonomy' on key raw materials

The European Commission launched a new industry alliance on Tuesday (30 September) aimed at strengthening the EU’s “strategic autonomy” on raw materials like rare earths, which are considered key for the bloc’s green and digital transitions.

The European Commission has launched an industry alliance on raw materials, which will initially focus on building “strategic autonomy” for rare earths and magnet value chains in Europe. What does this mean, are we going to start mining rare earths in Europe?

The concept of “open strategic autonomy” is now being discussed widely in the EU, for example among EU ministers at the General Affairs Council where I represent the Commission.

On the one hand, it is very clear that we will always support free and fair trade. But at the same time, I think there was a very clear signal from the ministers that we need to focus much more on reciprocity with our trading partners, and ensure open access to global markets. And that will always be the interest of the European Union.

We have to be much more strategic in ensuring Europe’s autonomy of action when it comes to raw materials. Greek MEP Anna-Michelle Asimakopoulou explained it very eloquently at the launch of the European Raw Materials Alliance: “auto” in Greek means self, and “nomia” means law. So autonomy gives us the right to decide for ourselves. This is what we have to look for.

On raw materials, it means providing our economy with adequate and more diversified supplies of primary and secondary materials to make sure we can take our own decisions.

Being self-sufficient and open to trade at the same time – isn’t this a bit contradictory?

We are doing our homework about what kind of critical raw materials we have in Europe.

For example, we have quite solid reserves of lithium in Europe. There are four mining projects now in the pipeline, and if they gain the trust and support of the local population, as well as proper financing and support of the member states, we can secure 80% of our lithium needs by 2025.

We also have rare earth reserves in Europe, which until now, have not been fully explored. We currently don’t have enough refining, processing and magnet-making capacity in Europe for instance. This is why countries like France, Germany, Portugal, Spain, Sweden, Greenland and Norway, are looking into it.

There is also a huge potential for recycling and re-use when it comes to rare earths. In at least two of these countries – France and Sweden – they are also contemplating the processing, refining and/or recycling of rare earths, which are of course needed for almost all advanced technologies.

And then of course, developing trade relationships is very important. We are for example talking with countries like Canada and Australia about trading opportunities and I am sure raw materials will be one chapter of our cooperation.

In terms of rare earths, do you know how much more autonomy Europe can gain by 2030? Currently, Europe is 98% dependent on China, which includes both extraction and processing…

I don’t know. For lithium needed for batteries and storage, we’re confident that we can be 80% self-sufficient by 2025, but for rare earths, work is in progress. The figures I roughly remember is that China extracts 70% of rare earth ores, but its share in metals, alloys and magnets has continuously expanded to 90%, while we are 100% import-dependent on rare earths.

What we need is access to the raw materials, but also need to build refining capacity. For example, even if we extract lithium, we currently still have to ship it over to China to get it refined and then the carbon footprint makes it less attractive for consumers who, for example, would like to purchase an electric car. So this is a very important task ahead of us.

We are also looking at the Western Balkans – notably, Serbia and Albania – and Ukraine. They have very solid reserves of most of these critical raw materials and I think they will be interested in developing these reserves, which could open a new positive chapter for EU integration of these partners. Ukraine’s President Zelenskyi certainly thought so when I raised this with him in the margins of the recent EU-Ukraine summit.

And if they are interested in exporting these critical raw materials to Europe, we will do our utmost on our side to ensure that all these projects meet the highest environmental and labour standards.

Breaking new ground: The EU’s push for raw materials sovereignty

A new pro-mining investment policy, more free trade deals, and an incoming

People in the industry say it takes roughly 15 years to get a new mine started – from the geological studies to the actual permits. But the Commission’s action plan says some projects could become operational as soon as 2025. What makes you think this is possible in such a short timeframe? Is it just for lithium or do you have other critical raw materials in mind?

The most advanced ones are lithium because they started earlier. But now the number one goal for the European Raw Materials Alliance is to focus on rare earths and magnets because we see huge dependency there – and real potential.

Rare earths are absolutely critical for solar and wind power, but also for electric motors and almost all digital ecosystems. They will be the first focus. And when it comes to permits, investment or research and innovation, and financial instruments, we are we are currently putting all these different things in place.

At the same time, we’re also looking very hard at urban mining. If you just collect all the old cell phones we have in our drawers, we can immediately build four million car batteries just from the cobalt.

There is also huge potential with electronic waste. Every year, the EU generates some 9.9 million tonnes of waste electrical and electronic equipment, while around 30% is collected and recycled. But the recovery of critical raw materials from this e-waste stands below 1% because we do not have the necessary technology and industrial processes in place.

This is why we’re funding research and innovation in order to develop these processes. We are currently spending almost €1 billion on raw material projects as part of the Horizon 2020 programme, with funding channelled through the Commission and EIT RawMaterials.

We are also discussing with member states to use recovery funds and the just transition fund for ‘shovel-ready’ raw material projects. And we also have these two funds under the Emissions Trading Scheme (ETS) – one on modernisation, one on innovation.

We will try to put together all of these elements to make sure there will be financial muscle behind this effort.

In parallel, we also started what I believe could be our deepest review yet of EU state aid guidelines. Here, we’re trying to address market failures on the single market. The new guidelines should be ready by June next year.

The Commission says the raw materials initiative opens new opportunities for coal regions. Have you evaluated the potential for new mining jobs in those regions?

Today in Europe, there is something like 200,000 people working in the coal mining industry. And some of the skills in coal mining could indeed be very useful for these new extractive industries.

With the €17 billion Just Transition Fund, we now have the opportunity to re-skill those people and make sure we look at other energy-intensive industries: steel, cement, and others.

In Poland, some new smart mobility projects are located in Silesia – they’re bringing the future Giga factory there and using the skill sets of that region to build something new. So I’d say they’re now going from black to green. And that is a very, very fast transition.

You say Europe should seek more autonomy from China on critical raw materials like rare earths. Yet, China will probably remain a major supplier of rare earths, at least in the short to medium term. So what is the point of shouting loudly about Europe’s “strategic autonomy”? Are you trying to provoke a trade crisis with China?

This is a very valid question. When I had the chance to talk to President Xi last year at the Belt and Road Summit, I told him what we want as Europeans – that China treats European companies in China as well as we treat Chinese companies in Europe.

So we want fair market access, we want protection of intellectual property rights, we want participation in research and innovation projects, and other things which form a good trade relationship.

We are China’s number one trading partner. They are our number two trading partner. So I think that yes, we are currently dependent on getting some of these critical materials from China, but they are also very dependent on having us as an important partner in the future.

If we want to build our own capacities when it comes to processing and refining these critical raw materials, I think it is only natural to shorten the global value chains, reduce carbon footprints and make sure supplies are not disrupted.

This is a very natural development. We are very open about it. It would be very important to be open and free traders. But at the same time, we are much more realistic about our needs.

What are you offering China in return?

The offer to the Chinese is that they will have access to the biggest trading bloc on this planet. We can see how important it is for them because we are their number one trading partner. I think they simply have to understand – and I think they do – that to have such a rich relationship, both partners have to be satisfied with the conditions.

Therefore, I think the call for fair treatment and reciprocity is well understood. We’ve got our trade to such a level that we simply have to take care of this very important relationship and the same goes for the difficult discussions.

Europe faces up to China’s supremacy on raw materials

When the flu pandemic hit Europe and disrupted global supply chains this year, the EU came to a sobering realisation – it cannot continue relying solely on imports for raw materials like lithium and rare earths which are critical for the bloc’s digital and green industries.

How can Europeans be competitive on raw materials when China has lower labour and environmental standards? Can Europe ever become competitive?

I am absolutely convinced of that because I think the world is changing, especially when it comes to global standards.

Europe is really developing the concept of competitive sustainability. We believe that sustainability will be the key selling point in the near future. Because if we are serious about tackling climate change, we have to enforce the Paris Agreement, we have to be very serious about our climate goals.

I believe that the enormous attention the European Commission is giving to the Green Deal and clean technologies is giving us the first-mover advantage. So I do believe this will be our competitive edge.

You said back in December that batteries imported into Europe could be banned if they don’t observe EU environmental and labour standards. How do you intend to put this into practice? Will it be through some kind of certification scheme which could be made mandatory?

I will tell you the concept. Currently, we are working on the battery regulation and we would like to adopt our proposal this autumn. To put it simply, we want to put the regulation in a form that would provide for mandatory requirements for the greenest, safest and most sustainable batteries on this planet.

We want to measure the carbon footprints of batteries over their life cycle. We are considering also something like battery passports that will ensure easy access to information about key parameters of batteries and their origin. We also want to make sure that we will be working with raw materials that are traceable and respect ecological, labour and other standards. This is important for European consumers.

And we want a fast process for approving this regulation. I know the German presidency of the EU Council is very much interested in that. I would be delighted if we can start to make progress at interinstitutional level with the support of Peter Altmaier. I know it will be very demanding schedule, but we definitely have a lot of support for that also from the Portuguese presidency, which starts on 1 January.

At the same time, we will start a parallel track on standardisation, clearly aiming at having the highest standards on the planet for car batteries used in Europe. The standards – the testing methods and methodologies – will be important for industry to ensure their batteries comply with the mandatory requirements in the regulation. We simply need to follow the rule that only the best available technologies are used for smart mobility.

Another very important element, which will have a very important economic impact in Europe and globally, is the carbon adjustment mechanism. There again, we want to give our trading partners a choice: either you introduce carbon pricing at home, like we have done here in Europe with the Emissions Trading Scheme (ETS), or there will be a carbon adjustment mechanism to level up the price of CO2.

Because we do not want to put our industry at risk. We’re asking a lot from them when it comes to reducing their carbon footprint and environmental standards. With the battery regulation, we are set to ensure a level playing field so that all batteries placed on the EU market, regardless of their origin, comply with the same stringent sustainability and end-of-life requirements.

In other words, we prevent that European markets will be flooded by cheaper batteries that do not respect our high sustainability requirements.

So this would be the approach that you will see through various streams to ensure we fill those three imperatives for the next decade: a green, digital and resilient EU economy.

When do you plan to have those standards for batteries coming into force?

We are aiming to have them in place as of 2023 onwards. The first Giga factories in Europe will be operational in 2021 or 2022 and we would like all batteries used in Europe to be manufactured according to those high requirements.