The World Meteorological Organization, a specialized agency of the United Nations, reported in January 2023 that “the past eight years were the warmest on record globally, fueled by ever-rising greenhouse gas concentrations and accumulated heat”. It is a stark warning that climate change is affecting societies globally and is moving ahead fast. Urgent action is required.
How can the EU’s Critical Raw Materials Act reach its full potential?
Mark Mistry and Marco Vallini argue that for the EU Critical Raw Materials Act to fulfil its promise to address the energy transition, industry needs planning security for both ‘critical’ and ‘strategic’ raw materials.
Nickel and strategic raw materials for the energy transition
An energy transition is at the core of climate change mitigation strategies. Low-carbon power generation, a shift towards sustainable transport and green hydrogen production are critical to ensure the decarbonization of the energy supplied to industry and society.
A key element in the energy transition
This energy transition is linked to a significant demand for raw materials. Numerous studies (e.g., KU Leuven University, International Energy Agency) show that nonferrous metals – including nickel - will be required for decarbonization technologies.
Due to its outstanding and unique physical and chemical properties, nickel is a key element in the energy transition: it is essential in sustainable transport (as part of cathode materials in Li-ion batteries, to store electricity), in low-carbon electricity supply and in green hydrogen production (as an alloying element in stainless steel used in demanding environments). It is clear that the energy transition relies on a raw materials strategy focused on the secure, safe and sustainable supply of metals such as nickel. And this is what the European Commission placed at the core of its proposal for a Critical Raw Materials Act (CRM Act).
Nonferrous metals – including nickel - will be required for decarbonization technologies
We are at a pivotal crossroads in the nickel industry and many investment decisions are being taken now.
Planning security
The production of nickel is highly capital intensive. It can take up to 12 years until a mining project produces its first ton of nickel. For recycling, the situation is similar. Besides the investment costs that companies face, they are exposed to high operational costs (such as energy and labour costs). We are at a pivotal crossroads in the nickel industry and many investment decisions are being taken now. Nickel producers need long-term planning security and a stable and predictable legislative framework to be confident of a positive return on investments over the next 25-30 years.
Coherent regulatory framework required
For the CRM Act to reach its promise, we believe that in parallel, there is a need to define a coherent EU regulatory framework that is built on agreed principles: science and evidence, full life cycle thinking, impact assessments and stakeholder consultation. If these agreed principles are consistently applied, the mining and metals industry will have the enhanced planning security it needs to secure funding from investors for mining and recycling projects.
Unfortunately, we are still seeing proposals for new legislation or updates of existing legislation that are not fully in line with “better regulation” principles. Proposals are sometimes made without considering the latest scientific data and without providing scientific evidence showing the need for action. This can result in measures which are not justified and can create regulatory uncertainty, resulting in planning insecurity.
Unfortunately, we are still seeing proposals for new legislation or updates of existing legislation that are not fully in line with “better regulation” principles.
A recent example is the revision of the existing EU Environmental Quality Standards for Nickel proposed in October 2022 under the Water Framework Directive. This is the third time, since 2008, that a nickel EQS has been proposed under EU law. While we acknowledge the need to review EQS values periodically to keep the legislation up-to-date, there was no need to review the nickel EQS at this time. The standard was already made more stringent during the last revision of the EQS Directive in 2013, which set a protective and state-of-the science standard for nickel. The scientific evidence suggests that actual risks of nickel to aquatic ecosystems are very low and the existing standard adopted by the EU in 2013 is sufficiently protective, when properly implemented. Therefore, rather than a revision which adds to the administrative and cost burden for Member States and industry with no discernable benefit for the environment, the EU’s focus should be on supporting the correct implementation of the current protective standard. This is important to safeguard the environment while providing regulatory certainty for Member States and businesses, at a time when the EU is striving to boost its “strategic autonomy” on battery raw materials such as nickel, and investment in the value chain.
No added value to reinventing the wheel
Furthermore, there is a need to take advantage of what is already available rather than reinventing the wheel or creating new requirements. We fully support taking sustainability into account. At the same time it is important to acknowledge what industry has already done and is still doing. Our member companies have been collecting and updating environmental footprint data for more than 20 years. The implementation of standards and schemes showing how environmental, social and governance (ESG) risks are identified, assessed and managed is also ongoing. Formulating additional requirements on the same topics will not create any added value but is likely to result in additional administrative burden and higher costs. This, on top of the implementation costs to ensure regulatory compliance.
There is a need to take advantage of what is already available rather than reinventing the wheel or creating new requirements.
We need appropriate framework conditions for our companies and their products.
Critical and strategic
The Critical Raw Materials Act comprises a list of critical and strategic raw materials. Nickel is for the first time identified as both a critical raw material and a strategic raw material, acknowledging the importance that nickel plays now and in future. We therefore hope that the EU institutions and member states involved in the shaping of the proposed regulation will listen to the concerns and needs of the nickel industry. We want to contribute to achieve the targets of the EU Green Deal and to achieve the energy transition. But we need appropriate framework conditions for our companies and their products.
Useful links:
- KU Leuven “ Metals for Clean Energy: Pathways to solving Europe’s raw materials challenge” (2022)
- IEA report “The Role of Critical Minerals in Clean Energy Transitions” (2021)
- World Bank report “Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition” (2020)
