As we move toward a green economy, one of our biggest questions is how and where the required materials are sourced. Many detractors of the green transition often point to the inhumane working conditions many workers experience in developing countries due to the lack of a regulatory framework.
Many of these countries where we source our energy and materials are also quasi-monopolistic, meaning when their supply chain fails, we take the brunt of the damage. This fact has been highlighted in recent years with the supply-chain issues out of China when Covid-19 was raging worldwide and even more recently with the war between Russia and Ukraine sparking an energy crisis throughout Europe.
To top this off, the US has been luring green tech companies from Europe to North America to take advantage of the generous subsidies that the US offers. These factors have led to the EU drafting two new pieces of legislation to keep European green tech companies in Europe.
The two new pieces of legislation are the European Critical Raw Materials Act and the Net-Zero Industry Act. The first act calls for a diversification of raw materials being imported into the EU, as they no longer can afford to rely on any single nation for the entirety of its energy and green tech production. It also places measures to guarantee 15% of raw materials for clean energy production come from recycling, increasing the self-sufficiency of the trade bloc.
The second act concerns investment and regulatory issues coming from it. It will simplify the permit-granting process, reduce the administrative burden and enhance information for companies wanting to operate in Europe. It also proposes a production goal of 40% of the EU’s requirements for green technology domestically.
However, despite the promising actions toward securing Europe’s clean technology and energy independence, more work still needs to be done. There is no clean energy finance plan in place at the EU level securing funding for green technology companies trying to scale up production quickly. These announcements are also coming at a time when Germany is blockading the 2035 phase-out of internal combustion engines, which the T&E (transport and environment) says is undermining the critical legislation.
Europe is caught between a rock and a hard place. With the back-to-back crisis of Covid-19 and the Russo-Ukrainian war, they have been put into an unenviable position. To secure independence fully, either from the US or Asia, they have to make decisive steps to create the means of production domestically. That can only be done by encouraging European companies and organizations to operate in Europe; each nation’s solidarity with each other is necessary to guarantee that.
The new legislation is in its draft phase, so there is time to hope that more comprehensive funding initiatives will come. However, they do not have all the time in the world, as major European manufacturers have already set plans in place to begin operations in North America.