A critically raw situation - Part 1

EU tries for economic suicide by energy transition

• EU’s Net-Zero Industry Act calls for a substantial increase in local mining

• Processing capacity also needs to increase dramatically, and fast

• EU will penalise import dependence to encourage local content

Last week, the European Commission presented, to much and very loud fanfare, its Net-Zero Industry Act. You could call it ambitious. You could call it deranged. You could call it pretty much anything. What that legislation amounts to, however, is a death wish that the EU plans to fulfill in a most spectacular manner because simply folding would be boring.

The main goal of the act is to make the EU less dependent on imports of what the Commission calls green energy technologies, which include “technologies like wind turbines, heat pumps, solar panels, renewable hydrogen as well as CO₂ storage.” The ultimate goal, of course, remains net-zero.

It is with regard to these technologies and the goal of reducing dependence on foreign suppliers that the NZIA (Europeans will never be as good at acronyms as Americans and that’s a fact) is most ambitious. Specifically, the act proposes that by 2030, the EU produces at least 40% of the strategic technology products it would need for its transition.

In a context-free environment, the target seems unambitious. I mean, if you can do 40%, why not go above 50%? Alas, what we have here is a context-rich environment and this is what the EU itself says in the NZIA:

Europe is currently a net importer of net-zero energy technologies, with about one-quarter of electric cars and batteries, and nearly all solar PV modules and fuel cells imported, mostly from China. For solar photovoltaic technologies and their components, this dependency exceeds 90% of products in certain upstream segments of the value chain, such as ingots and wafers. In other sectors, where the EU industry is still strong, such as wind turbines and heat pumps, our trade balance is deteriorating and EU producers face rising energy and input costs.

Let’s rephrase. Currently, the EU produces less than a tenth of the solar PV products it needs. In wind technology and heat pumps it produces more (but shyly declines to mention numbers) but producers are struggling with rising energy and raw material costs. What’s an EU to do?