Circularity strategies and sustainable resource management to safeguard the clean energy transition

AUTHORS: Eline Blot, Emma Bergeling, Emma Watkins, Elena Marchetti

This report discusses the EU’s clean energy transition plans, highlighting how circular economy strategies and sustainable resource management can support strategic autonomy while being Paris-compatible.

This policy report aims to inform stakeholders about the EU’s plans to safeguard its clean energy transition ambitions. Specifically, it highlights how the uptake of circular economy strategies can contribute to the strategic autonomy agenda while being compatible with the Paris Agreement and the Sustainable Development Goals (SDGs). The report also reflects on the EU’s overall material footprint in the context of global equities as the Union transitions to a climate-neutral and circular economy.

Industrialised countries are increasingly investing in their domestic capacities to secure strategic autonomy in producing key technologies for the clean energy transition, resulting in a global surge in demand for critical raw materials (CRMs). Not being self-sufficient in the supply of CRMs, the EU published the European Critical Raw Materials Act (ECRMA) in March 2023 to ensure a stable supply of CRMs. The ECRMA sets targets to strengthen the EU’s position by increasing internal CRM sourcing through extraction, processing, recycling, and diversifying imports via Strategic Partnerships.

This policy report is the final deliverable of the project “Review and assessment of EU policies for the use of Critical Raw Materials”, made possible with the financial support of the Finnish Innovation Fund Sitra. This project’s first deliverable “Circularity and the European Critical Raw Materials Act” explores how circularity can support ECRMA targets and recommends measures to achieve these targets while promoting a circular economy. The second deliverable “Sourcing critical raw materials through trade and cooperation frameworks” examines existing frameworks for CRM trade and cooperation and their role in a global just and clean energy transition.

Considering the speed at which not only the EU but all industrialised countries aim to boost their strategic autonomy and secure a stable supply of CRMs, this report highlights the intricacies of maintaining an equitable share of demand for CRMs and safeguarding the clean energy transition to remain compatible with the Paris Agreement.

Though CRMs represent a small share of the EU’s total material footprint, their price volatility and soaring demand garner more attention than traditional metals. Moreover, their central role in the clean energy transition only further highlights existing material footprint inequities between the Global North and South. However, it is important to keep in mind that decarbonisation and material footprint reduction are not at odds with one another and that a decarbonised economy will require fewer materials overall than the current fossil-based economy. Yet, until the uptake of more circular economy strategies becomes more mainstream in our economic models, the demand for CRMs will continue to increase before it decreases.

However, as the EU’s overall circularity rate has remained relatively stable over the past decade fluctuating between 11-11.5%, significant efforts are needed to promote the adoption of circular economy strategies. This report presents the application of the 9Rs list of circularity strategies to increase material usefulness, extend product lifecycles, and encourage smart product use and production. Recovery and recycling are the most widely applied in the linear economy, the latter being especially important as secondary CRMs retain their value which is relevant for materials facing price volatilities. Considering this value retention, the EU must consider guaranteeing its ability to process these secondary materials as opposed to exporting them for End-of-Life (EoL) treatment.

Re-use, repair, refurbish, remanufacture, and repurposing aim to extend product lifecycles, the first four Rs are most relevant for the Ecodesign for Sustainable Products Regulation (ESPR) which aims to enhance a product’s durability, reusability, repairability, recyclability, upgradability, and environmental impact. The uptake of the latter strategy, repurposing, is not as common throughout EU legislative proposals as it is a bit more creative, for example repurposing a household storage battery with an EV battery.

The final three circularity strategies focus on smarter product use and manufacturing. Reducing material use can be encouraged by setting minimum recycled content rates and incentivizing businesses to innovate production methods for greater efficiency and product longevity. Rethinking how goods are bought and used can increase product use intensity, with circular business models like product-as-a-service and sharing platforms playing a key role. Refusing is linked to demand-side solutions that maintain or improve well-being while reducing planetary pressure.

This report also reflects on the EU’s overall material footprint. Though CRMs are used in relatively small quantities, their use is still coupled with that of other materials to produce key defence, space, digital and clean energy technologies. Considering that the EU has transgressed the planetary boundaries for five impacts and the effect of material overuse on achieving the SDGs, this report highlights the policy option to design a long-term sustainable resource management strategy. Such a strategy could address the triple crises of climate change, biodiversity loss, and pollution and promote industry-wide and societal shifts to circular practices. It should include ambitious but feasible targets for material footprint reduction, acknowledging varying material impacts and evolving practices and innovations.

Maintaining a dual focus on decarbonisation and reducing material footprint, this report offers several recommendations for EU policymakers to meet climate and circularity goals within planetary boundaries:

Address gaps in the Strategic Project and Partnership approaches to ensure mutually beneficial economic and environmental outcomes for both Parties, prioritising high ESG standards and global green industrialisation.
Tackle circularity gaps in the general approach to managing CRMs by ensuring policy coherence among ECRMA, ESPR, EU Batteries Regulation, Waste Framework Directive, and Waste Shipment Regulation to maximize CRM usefulness, improve material efficiencies, and manage high-value EoL CRM-products and scrap metals.
Encourage the uptake of the 9Rs circular economy strategies in CRM-relevant sectors and products, support EU secondary raw material processing, innovative product design, and ambitious circular business models.
Contribute to closing the circular divide by pursuing multilateral cooperation, financing, and capacity building, addressing the Global North’s accumulation of CRMs from the Global South.
Evaluate material footprint levels and benefits of a sustainable resource management strategy to address climate change, biodiversity loss, and pollution.

Read the report.

Image by Nazrin Babashova on Unsplash

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