The EU today unveiled two draft laws in response to the US subsidies that it fears are luring European clean-tech companies to North America. The proposed Critical Raw Materials Act will help the bloc secure supply of the metals needed to build batteries, wind turbines and other green technologies. The draft Net Zero Industrial Act is a positive first step to ensure that the technologies needed to transition the EU’s economy to net zero emissions are made in Europe.
T&E said the proposed goals for Europe to responsibly source more raw materials at home is key to avoiding reliance on Asia. By 2030, the EU should be able to process at least 40% of ‘strategic’ metals required, according to the draft Critical Raw Materials Act. T&E analysis shows that Europe is capable of refining more than half of the lithium it needs by then. A target to obtain 15% of metals from recycling will help to scale up the bloc’s capacity to capture scrap from battery factories and end-of-life products.
Julia Poliscanova, senior director for vehicles and emobility at T&E, said: “Lithium is the new oil and Europe needs to act quickly to source it responsibly. Provided that environmental safeguards are respected, self-sufficiency targets are the right way to make the battery supply chain clean and resilient. Europe should bring refining and processing home to kick our dependence on Asia.”
The Net Zero Industrial Act proposes a production goal of 40% of the EU’s requirements for key green technologies – such as batteries – being made domestically in 2030. T&E said the goal would boost Europe’s strategic autonomy but more actions are needed. The proposed simplification of permitting processes will help set up new projects in Europe, but the EU should provide financial aid to scale up production quickly. While state aid rules for green tech production have been relaxed, a comprehensive European climate finance plan is missing. This should have fresh money and fund best-in-class projects directly from the EU level.
Beyond finance and simplification, sending a clear signal that the future of Europe’s automotive industry is electric is the best tool to ensure investment certainty. T&E said the EU’s response to American subsidies is being undermined by Germany’s blockade of a 2035 phase-out for combustion engines.
Julia Poliscanova said: “The EU needs a sovereignty fund to compete with US subsidies, not just a patchwork of national state aid. But our best card is to give clean tech investors certainty that there will be a market for their green products. Germany’s blockade of the 2035 phase-out of combustion engines undermines investor confidence at a moment when US subsidies are luring manufacturers away.”