Energy Transition: the strategic importance of metals and minerals

Europe is pushing forward with its most ambitious energy transition in history, aiming to cut carbon emissions, scale up renewable energy, and reduce reliance on fossil fuels. The vision is clear, but the reality is more complicated. The foundation of this transformation depends not just on policies and investments but on something far more tangible—raw materials. The metals and minerals that power electric vehicle batteries, wind turbines, solar panels, and energy storage systems are in short supply. Europe does not produce enough of these resources and depends heavily on imports, creating a new vulnerability that threatens to slow its green ambitions.

Lithium, cobalt, nickel, and rare earth elements are essential for modern clean energy technology. The demand for these materials is rising at an unprecedented pace, but their supply is not keeping up. Some estimates suggest that by 2030, shortages of materials such as nickel and rare earth elements could reach fifty to sixty percent, creating a bottleneck for the production of electric vehicles and renewable infrastructure. Unlike fossil fuels, which can be sourced from a broad range of suppliers, critical minerals are highly concentrated. China dominates refining and processing, controlling more than seventy percent of global lithium refining and eighty percent of rare earth element processing. This dependence on a single country poses a strategic risk, as trade restrictions or geopolitical tensions could disrupt supply chains and send prices soaring.

European policymakers recognize the challenge and have taken steps to secure access to critical materials. The European Union’s Critical Raw Materials Act, introduced in 2024, is designed to boost domestic mining, expand recycling efforts, and establish partnerships with resource-rich countries. The act sets ambitious targets, including a goal for at least ten percent of Europe’s mineral needs to be met through domestic extraction and forty percent through refining within the bloc. However, these measures will take time to bear fruit. Opening new mines in Europe is a complex process that involves strict environmental regulations, lengthy permitting procedures, and public opposition. Even if the political will exists, it could take more than a decade before any new mining operations significantly contribute to supply.

The environmental impact of increased mining also raises concerns. Extracting lithium and other critical minerals requires large amounts of energy and water, contributing to emissions and environmental degradation. Some mining projects have faced backlash from local communities who fear pollution and habitat destruction. Expanding mining activities within Europe must strike a balance between securing resources and maintaining high environmental standards, a challenge that has already slowed some proposed projects.

Recycling could help alleviate some of the pressure on supply, but it is not a short-term fix. Unlike aluminum or steel, which have well-established recycling systems, many battery materials are difficult to recover efficiently. The current recycling rate for lithium-ion batteries remains low, and most used batteries today were not designed for easy material extraction. Improving recycling technology and creating better collection systems will be crucial, but scaling up these solutions will take time.

In response to these challenges, Europe is seeking partnerships with countries that have abundant mineral reserves. New trade agreements with Canada, Australia, and parts of Africa aim to diversify supply sources and reduce dependence on China. However, competition for these resources is fierce. As global demand for electric vehicles and renewable energy grows, the United States and other industrial powers are also racing to secure access to the same materials. The global supply chain for critical minerals is becoming more politicized, and nations that fail to secure stable access could find themselves at an economic disadvantage.

The transition to clean energy is not just about switching from coal and gas to wind and solar. It requires a complete restructuring of the materials that power the economy. Without a steady and sustainable supply of critical minerals, the energy transition risks delays, price volatility, and an overreliance on a few dominant suppliers. Europe must navigate this challenge carefully, balancing the urgency of decarbonization with the realities of mineral extraction, processing, and trade. The stakes are high, and the decisions made in the coming years will determine whether the green energy revolution moves forward smoothly or faces critical roadblocks.