The European Union is fundamentally reviewing its policy for handling critical raw materials and is imposing restrictions on imports from countries such as China while subsidies and other financial incentives are unleashed to ramp up domestic production, according to angry MEPs.
The plans of the European Commissionthe executive arm of the EU, are essential to move towards a climate-neutral economy while increasing its strategic independence in a changing world of geopolitical alliances.
“The EU is stepping up its game,” said Internal Market Commissioner Thierry Breton.
But they have been criticized across Europe for the danger of following China’s lead at the taxpayer’s expense.
Italian MP Marco Zanni said it was the “largest exercise” of state control over economic affairs “ever in Europe” and that it is the subsidies that bind the bloc “hands and feet” to Beijing.
Günther Oettinger, former European Commissioner from Germany, repeated: “This direction is quite dangerous.
“It’s not a single market, it’s more and more a planned economy: a centralized, planned economy. Planwirtschaft as we say in German.”
At the heart of the proposal is a commitment to produce at least 40 percent of the clean technology needed in the bloc of 27 countries by 2030, while ensuring that no more than 65 percent of the consumption of a strategic raw material comes from one third country — in practice often China.
The EU now gets 98 percent of its rare earth metals, 97 percent of its lithium and 93 percent of its magnesium from China.
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In general, critical raw materials are used in everything from solar panels to heat pumps and electric cars.
While trying to break away from Chinese dependence, the EU is trying to build a select Critical Raw Materials Club of alliances, including the United States and Canada, to further solidify the Western bloc in an increasingly volatile global environment.
“We are strengthening our cooperation with reliable trading partners worldwide to reduce the EU’s current dependence on just one or a few countries,” said European Commission President Ursula von der Leyen.
The plans still need to be approved by the EU’s 27 member states and parliament, a process that will take many months, perhaps more than a year.
To achieve its clean technology and strategic goals, the EU is making a major economic turn away from preaching the free market economic gospel for decades and accepting highly flexible state aid rules and subsidies as key ingredients to achieve its goals, as the bloc must move from a fossil fuel to a green economy.
“Private financing alone may not be sufficient and the effective roll-out of projects along the value chain of critical raw materials may require public support, including in the form of state aid,” the European Commission’s proposal said.
It added that it already had adapted state aid rules “to give Member States more flexibility in granting aid”.
The aim is to further speed up and simplify the process, with simpler calculations, simpler procedures and expedited approval.
The Critical Resources Plan will later be followed by plans for the Net-Zero Industry Act on industrial incentives.