A JRC assessment of raw materials as potential bottlenecks and drivers of innovation in the decarbonisation of the European energy system

Critical materials for the European economy

The EU relies on imports for many of the raw materials that are vital to the strength of European industry, which is a key enabler of growth and competitiveness in the EU. The global increase in raw material demand, the price volatility for some of these materials and the market distortions imposed by some producer countries have all raised concerns within the EU about securing reliable access to raw material resources.

The main challenge for Europe is to tap the full potential of primary and secondary materials through the creation of a pan-European raw materials knowledge base; developing innovative sustainable technological solutions to access raw materials; and establishing a production-friendly legal framework and economically attractive environment across the EU, taking into account environmental and social aspects.

In response to these concerns, the European Commission established the European Innovation Partnership (EIP) on Raw Materials¹. Its aim is to promote both technological and non-technological innovation along the entire value chain of raw materials (i.e. raw materials knowledge base, exploration, licensing, extraction, processing, refining, re-use, recycling, substitution) involving stakeholders from relevant upstream and downstream sectors. The JRC provides scientific support to enable the Commission to implement the monitoring and evaluation scheme of the EIP on Raw Materials.

Another measure is the instigation of the Raw Materials Initiative² to help the EU develop a common approach on raw materials issues. Among the actions taken is the regular publication of a list of 'critical' raw materials, which can be used to identify priority actions. This list identifies materials of high economic importance to the EU, which have a high risk associated with their supply. In the most recent critical raw materials list, compiled in 2014³, twenty raw materials from a list of 54 potential candidates have been identified as critical. These are: antimony, beryllium, borates, chromium, cobalt, coking coal, fluorspar, gallium, germanium, indium, magnesite, magnesium, graphite, niobium, platinum group metals, phosphate rock, rare earth elements, silicon and tungsten.

The importance of raw materials for the energy sector

The transition to a low-carbon economy, a central priority of the EU, necessitates the large-scale deployment of energy technologies that can significantly reduce the carbon footprint across the energy system, such as wind, solar photovoltaics, nuclear fission and carbon capture and storage in power generation; electric vehicles in transport; and more efficient appliances and lighting to reduce energy demand. It is frequently overlooked that vital components of these energy technologies are manufactured from imported raw materials. For example, some rare earth elements (REE) such as neodymium (Nd), dysprosium (Dy) and praseodymium (Pr), are key ingredients of permanent magnets used in high-performance wind turbines and electric vehicles. These raw materials are currently only produced in China and their exports are regulated. The following figures illustrate the magnitude of the challenge that may lie ahead. A typical 3 MW wind turbine may contain 120 kg of neodymium in the permanent magnet of the generator; while an electric vehicle may contain from 0.4 kg of neodymium (in a mild hybrid electric vehicle) to 2.6 kg (in a battery electric vehicle). Scenarios for the decarbonisation of the European energy system indicate that about 350 GW of wind energy and 60 million electric vehicles could be deployed in Europe by 2030. The demand for neodymium by the European energy system alone could then reach about 8000 tonnes in 2030, which is about one third of the current annual global production or about 10% of the projected production of neodymium in 2030. The supply of neodymium will also be targeted by other regions of the world, which will also deploy low-carbon energy technologies, and by other applications, such as ICT, thus intensifying the challenge.

The JRC analysis

The JRC has been carrying out regular analysis to identify the raw materials that could become a bottleneck in the supply chain of various low-carbon energy technologies⁴. The JRC methodology follows a three-step approach, which is illustrated in Fig.1:

• Materials inventory: An inventory of raw materials used in the manufacture of energy technologies is compiled and quantified using appropriate functional units, e.g. kg/MW. The latest JRC analysis, published in 2013, identified 60 raw materials that are used in low-carbon energy technologies (this list does not include construction materials such as iron and aluminium, and fuels).
• Significance screening: The current and forecasted demand for each raw material in the inventory, taking into consideration anticipated technology developments and technology deployment scenarios, is compared to current and future materials supply. Figure 2 shows a sample of results from this significance screening. The forecast demand for six raw materials used extensively by the European energy sector: dysprosium (Dy), lithium (Li), graphite, tellurium (Te), neodymium (Nd) and indium (In) ranges between 6% and 26% of global supply. Moreover, with the exception of Li, China is the main producer these materials; and for four of them China dominates global supply.  

• Criticality screening: The raw materials, for which the ratio of EU demand for energy applications to global supply exceeds a given threshold, as calculated during the significance screening, are further evaluated to identify the critical materials for the EU energy sector. This assessment is based on market factors (i.e. limitations to expanding supply capacity and the likelihood of rapid global demand growth) and geopolitical factors (cross-country concentration of supply and political risk related to major supplying countries).

Eight metals were classified as ‘critical’. These include six REEs (dysprosium (Dy), europium (Eu), terbium (Tb), yttrium (Y), praseodymium (Pr) and neodymium (Nd)), as well as gallium (Ga) and tellurium (Te). Six materials were classified as ‘near critical’ (graphite, rhenium (Re), hafnium (Hf), germanium (Ge), platinum (Pt) and indium (In)) implying that their market conditions should be monitored closely. The results are summarised in Table 1.

According to the JRC analysis, the technologies that are most vulnerable to potential disruptions of raw materials supply are (Fig. 3):

• Lighting: State-of-the-art lighting uses four critical materials (three REEs used in phosphors: Y, Tb, Eu, and Ga) and two near-critical materials: Ge and In.
• Wind energy and electric vehicles use 3 critical raw materials for permanent magnets: the REEs Dy, Nd and Pr. Furthermore, electric vehicles use the near-critical graphite in the battery packs.
• Photovoltaics use two critical materials Ga and Te.
• The nuclear industry uses the near-critical materials Hf and In.
• The fossil fuel power sector uses the near critical Re for the production of superalloys.
• Fuel cells use the near-critical Pt as a catalyst.

The above classification should be regarded as an indication of possible supply-chain bottlenecks that could occur under business-as-usual conditions, as they are subject to the following uncertainties:

• the penetration of low-carbon technologies;
• the technology mix between competing energy sub-technologies (e.g. wind generator or electric vehicle types);
• the materials composition and associated quantities of some components;
• the substitutability of key materials in certain technologies;
• the projected supply of various metals.

The JRC investigated the sensitivity to these sources of uncertainty for hybrid and electric vehicles and lighting. For hybrid and electric vehicles, the analysis highlighted the sensitivity of the results to REE substitution rates. The share of permanent magnet motors and induction systems in the technology mix was also found to be a key sensitivity, as to some extent was the choice of battery chemistry. For lighting, a key sensitivity was found to be the timing and penetration of LED lighting versus phosphor lighting.

Mitigation of supply risk

The JRC has identified three main avenues to mitigate supply-chain risks for critical materials in the energy sector:

• Increasing primary supply: The development of REE mines within Europe is in its early stages. The Norra Kärr deposit in Sweden is relatively attractive given its high proportion of heavy rare earths. An alternative option in the short term is to process REE concentrates from tailings, by-product sources or from mines opened outside Europe. For gallium and tellurium, the data indicate that Europe already has a degree of self-sufficiency; however, opportunities may exist to create further refineries to boost recovery of these materials.
• Reuse / recycling and waste reduction: Significant improvements have already been made in the recycling of post-industrial waste streams such as magnet, semi-conductor and photovoltaic scrap. Recycling post-consumer waste streams is more challenging due to issues with collecting, sorting and pre-processing, as well as the long lifetimes of certain product groups. Nevertheless, there are short term opportunities and initiatives for the recovery of rare earth magnets from hard disc drives and rare earth phosphors from lighting.
• Substitution: The increased price of these materials has resulted in a significant reduction in materials intensity for some applications, such as the reduction of dysprosium and neodymium in rare earth magnets, or terbium and europium within rare earth phosphors and the minimisation of the thickness of cadmium-tellurium thin films within solar panels. Systemic approaches to materials substitution are also being widely considered including alternative motor technologies as well as alternative lighting technologies e.g. LEDs, OLEDs and quantum dots. There are also opportunities to substitute the current use of critical materials from traditional applications where other materials are suitable e.g. eliminate tellurium from steel alloys. Currently the JRC is carrying out a study to identify substitution opportunities for critical raw materials used in wind energy, electric vehicle and lighting applications.

Raising awareness

In response to the need for raising public awareness about the important link between raw materials and energy technologies, the JRC developed a Materials Information System (MIS). MIS aims to gather, store and disseminate information about materials that are used in low-carbon energy technologies through a user-friendly, easily navigable web-based system, to improve the knowledge base on raw materials in Europe. MIS aims also to provide a common framework to understand material needs and applications, enable in-depth understanding of the whole material supply chain, and contribute to the early identification of upcoming issues in the supply chain and to the formulation of sound recommendations. A further goal of the MIS is to raise awareness among policymakers, industrial stakeholders, academia and the public. MIS brings together publicly available information on current and future materials supply and demand and the main applications. Its contents are updated regularly based on the outcome of JRC assessments. It can be visited via the SETIS website: http://setis.ec.europa.eu/mis.

¹ See https://ec.europa.eu/eip/raw-materials/en

² See COM(2008) 699 final and COM(2013) 442 final

³ See COM(2014) 297 final

⁴ See: Critical metals in the path towards the decarbonisation of the EU energy sector (2013), available from