COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid Accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) 168/2013, (EU) 2018/858, 2018/1724 and (EU) 2019/1020
Date: 2023-03-16
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: aerospace industry, healthcare industry, import (EU), information technology industry, raw material, security of supply, surveillance concerning imports, sustainable development, value chain, waste recycling

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 16.3.2023  SWD(2023) 160 final  COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid Accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) 168/2013, (EU) 2018/858, 2018/1724 and (EU) 2019/1020 {COM(2023) 160 final} - {SEC(2023) 360 final} - {SWD(2023) 161 final} - {SWD(2023) 162 final}  
 
 
Subsidiarity Grid 

1.  Can the Union act? What is the legal basis and competence of the Unions’ intended action? 

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative? 

The legal basis for this proposal is Article 114 TFEU1, which allows the European Parliament and the 
Council to adopt measures to establish and ensure the well-functioning of the internal market. 

1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in 
nature? 

In  the  case  of  the  approximation  of  laws/the  internal  market  legal  basis,  the  Union’s  competence  is 
shared.  

2.  Subsidiarity Principle: Why should the EU act? 

2.1  Does the proposal fulfil the procedural requirements of Protocol No. 22: 

-  Has there been a wide consultation before proposing the act? 
- 

Is  there  a  detailed  statement  with  qualitative  and,  where  possible,  quantitative  indicators 
allowing an appraisal of whether the action can best be achieved at Union level? 

The  Impact  Assessment  accompanying  the  Critical  Raw  Materials  Act  was  subjected  to  a  thorough 
consultation  process  to  gather  the  views  of  different  stakeholders  across  Europe.  The  consultation 
activities carried out were:  

-  A call for evidence published for feedback from the 30th of September to the 25th of November 

2022 in the “Have your say” portal. The Commission collected 310 answers.  

-  A public consultation published in the “Have your say” portal containing multiple choice and 
open questions covering regulatory and non-regulatory measures, running in parallel with the 
call  for  evidence. The  public  consultation  received  250  contributions  and  52  stakeholders 
attached  a  policy  paper.  A  factual  synopsis  report  summarizing  the  outcome  of  the  public 
consultation activities is of public access at the “Europa” portal3.  

-  Questionnaires on “Permitting in the EU Member States” and on “Stockpiling of raw materials 
in the EU Member States” shared on the 28th of October with the Raw Materials Supply Group 
(RMSG)  which  consisted  of  an  online  questionnaire  of  more  detailed  nature  to  collect 
specialised feedback. The Commission received input from 9 Member States, 2 non-Member 
States and 4 business associations. 

Around  30  additional  policy  papers  were  submitted  by  email  from  a  wide  variety  of  stakeholders 
groups.  
A  synopsis  report  summarizing  all  the  stakeholders  positions  and  contributions  to  the  critical  raw 
materials act is attached as Annex 2 to the Staff Working Document on the Impact Assessment report. 
Chapter 3 of the Impact Assessment report and Section 2 of the proposal’s explanatory memorandum 
contain a section on the principle of subsidiarity as presented in question 2.2 below. 

2.2  Does  the  explanatory  memorandum  (and  any  impact  assessment)  accompanying  the 
Commission’s proposal contain an adequate justification regarding the conformity with the 
principle of subsidiarity? 

1 EUR-Lex - 12016E114 - EN - EUR-Lex (europa.eu) 
2 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN  
3 European Critical Raw Materials Act (europa.eu) 

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The objective of the  Critical Raw Materials  Regulation is to ensure the EU’s access to  a secure and 
sustainable  supply  of  critical  raw  materials.  There  is  a  clear-added  value  to  establish  a  common 
framework at Union level that covers critical raw materials across the whole supply chain to achieve 
the objective set.  

Effective  action  against  supply  disruptions  requires  a  joint  approach  to  gather  expert-based, 
transparent  and  timely  data  to  inform  economic  operators  on  market  evolutions.  Today,  there  is  no 
Union-level mechanism in place that provides for monitoring and mitigation measures for critical raw 
materials, that supports the development of the critical raw materials value chain and the sustainability 
and  circularity  of  the  EU’s  critical  raw  materials  consumption.  In  the  absence  of  an  efficient 
coordination  and  cooperation  between  Member  States  and  the  Commission  to  increase  the  Union’s 
collective  knowledge  on  critical  raw  materials  trade  flows,  the  EU  will  not  be  able  to  effectively 
anticipate supply shocks, nor react accordingly. 

In addition, critical raw materials value chains are not only capital intensive but are subjected to the 
irregular  geographical  location  of  the  mineral  deposits.  Increasing  critical  raw  materials  capacities 
requires a common framework at the European level able to (i) support companies’ investments and 
competitiveness  and  (ii)  establish  harmonised  procedures  to  facilitate  value  chain  developments, 
particularly on permitting processes. Member States or regional or local authorities will also remain 
the competent authorities in terms of permitting and will retain the possibility to prevent the selection 
of a Strategic Project. 

2.3  Based  on  the  answers  to  the  questions  below,  can  the  objectives  of  the  proposed  action  be 

achieved sufficiently by the Member States acting alone (necessity for EU action)? 

No Member State alone is capable of effectively addressing the growing critical raw materials supply 
risks – not least due to the repartition of geological occurrences across Member States. The measures 
included in this initiative will not be as effective if implemented by Member States acting alone, as the 
problems they address concern the Single Market as a whole. The problems that this initiative tackle 
are not limited to single Member States or to a subset of Member States but to the EU industrial base 
and the EU-wide value chain of critical raw materials. In addition, approaches at Member States’ level 
are unlikely to be adequate to serve the needs of closely intertwined supply chains within the internal 
market, neither will satisfactorily reply to supply chains operators necessities and demands.  

(a)  Are  there  significant/appreciable  transnational/cross-border  aspects  to  the  problems  being 

tackled? Have these been quantified? 

The identified problems are transnational to the EU as they involve all the stages of the supply chains 
widespread across Europe, starting from fixed production sites based on the geographical availability 
of  mineral  resources.  Therefore,  all  the  industrial  value  chains  from  producers  to  downstream  and 
recycling industries are affected when a risk of supply disruptions arise as well as the final consumer.  
As a result, the problems directly involve the core provisions of the internal market such as the cross-
border movement of goods and workers but also the competitiveness of European business, the well-
functioning and stability of the internal market and in general, the stability of the EU economy.  

(b)  Would national action or the absence of the EU level  action conflict with core objectives of 

the Treaty4 or significantly damage the interests of other Member States? 

In  light  of  the  foreseen  needs  of  critical  raw  materials  for  strategic  sectors  and  the  potential 
disruptions,  Member  States  might  decide  to  implement  unilateral  decisions  to  secure  on  a  national 

4 https://europa.eu/european-union/about-eu/eu-in-brief_en  

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basis their own supply of critical raw materials. Member States might decide to implement decisions 
such  as  the  introduction  of  uncoordinated  risk  preparedness  mechanisms  or  incentives  to  support 
national sectors and businesses, which might end up distorting competition between Member States, 
creating intra-EU restrictions to the free movement of goods and triggering the fragmentation of the 
single market. 

(c)  To  what  extent  do  Member  States  have  the  ability  or  possibility  to  enact  appropriate 

measures? 

A  Regulation  is  of  general  application  and  is  binding  upon  and  directly  applicable  in  all  Member 
States.  Nevertheless,  the  proposal  ensures  that  Member  States  are  represented  in  the  Critical  Raw 
Materials  Board,  enabling  them  to  advise  the  Commission  on  all  the  actions  taken  to  improve  the 
security  of  supply  of  critical  raw  materials,  in  particular  the  selection  of  Strategic  Projects,  where 
approval  from  the  Member  State  where  the  project  is  to  be  developed  is  required,  and  for  the 
monitoring and risk preparedness actions carried out in the context of this Regulation, where Member 
States are expected to actively contribute with information and analysis, which the Commission will 
complement  and  coordinate.  As  mentioned  previously,  while  this  initiative  sets  out  measures  to 
incentivise  national  authorities  to  simplify  and  accelerate  administrative  procedures  for  Strategic 
Projects, Member States, regional or local authorities retain the possibility to prevent the selection of a 
Strategic Projects. Member States remain the solely competent authorities in terms of permitting and 
remain  responsible  for  their  staffing  decisions.  Finally,  this  Regulation  requires  Member  States  to 
perform geological exploration campaigns and to increase their efforts on waste collection, recovery of 
critical  raw  materials,  in  particular  from  extractive  waste,  and  the  use  of  secondary  raw  materials. 
These are obligations are designed so as to target those areas where Member States retain significant 
competence, and they define the areas where more actions is necessary to achieve the objectives of this 
Regulation, while leaving discretion to the Member States on how to fulfil and implement them.  

(d)  How  does  the  problem  and  its  causes  (e.g.  negative  externalities,  spill-over  effects)  vary 

across the national, regional and local levels of the EU? 

Supply  disruptions  jeopardize  EU  industries  and  businesses  and  compromise  EU  main  climate  and 
digital goals. EU industries import most of their critical raw materials.  Disruptions of supply would 
spill over across industrial sectors and stages of the value chain, eventually endangering citizens’ well-
being.  

(e)  Is the problem widespread across the EU or limited to a few Member States? 

Action at the national level cannot contribute by itself to increase raw materials capacities. Most risks 
of  supply  come  from  geopolitical  vulnerabilities  that  affect  non-energy  and  non-agricultural  raw 
materials of high economic importance, emphasized by the concentration of supply from a few third 
countries  and  an  increasingly  strong  competition  to  secure  critical  raw  materials  for  the  digital  and 
green transition. In the meantime, under the disjoined and mostly coordinative EU approach pursued 
so  far,  there  has  not  been  significant  progress  in  increasing  the  Union’s  critical  raw  materials 
autonomous  capacity.  Few  Member  States  have  updated  regulatory  frameworks  for  critical  raw 
materials,  which  slows  down  actions  to  improve  raw  materials  access.  Some  Member  States  have 
developed national agencies to monitor raw materials market trends and domestic supplies, but  their 
efforts cannot effectively mitigate the risk of disruption for the whole Union. Given that critical raw 
materials are essential for the Union economy and the adverse state of the raw materials market in the 
EU, the risks of supply disruptions are widespread across all the Member States. 

(f)  Are Member States overstretched in achieving the objectives of the planned measure? 

The proposal only sets up the minimum regulatory requirements needed at the Member States level for 
the objectives to be achieved.  

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The proposal sets general benchmarks to increase the capacities at the different EU value chain stages 
with the objective of guiding and accelerate actions towards the common goal of securing critical raw 
materials supply, as well as benchmarks for the diversification of supply chains 
When it comes to the value chain, faster permitting procedures are required only for Strategic Projects. 
In addition, the Member State on whose territory the project is located retains the right to oppose the 
decision. 
The  proposal  lays  out  provisions  for  Member  States  to  develop  exploration  programmes  in  their 
territory, which is a necessary pre-condition to build critical raw materials capacities.  
When it comes to monitoring and risk preparedness, this proposal aims at incentivising Member States 
to  improve  their  monitoring  and  strategic  stocks  activities  through  information  requirements. 
However,  this  proposal  only  covers  information  requirements  for  public  stocks  and  data-gathering 
from key market operators.  
Finally, regarding circularity provisions, the initiative does set rules for Member States to develop the 
circularity of the critical raw  materials markets as they retain important competences in  those areas, 
but Member States should devise their own measures to achieve general objectives.  

(g)  How do the views/preferred courses of action of national, regional and local authorities differ 

across the EU? 

Overall,  Member  States  are  favourable  to  the  proposal  and  acknowledge  the  need  for  a  coordinated 
action  at  the  European  level  to  secure  raw  materials  supply.  Member  States  that  shared  their  views 
with  the  European  Commission  agree  that  is  a  priority  for  Europe  to  strengthen  EU  critical  raw 
materials’ capacities and ensure that critical raw materials follow the highest environmental and social 
conditions.  Most  of  the  concerns  pertained  to  the  subject  of  the  type  of  governance  body  to  be 
established, the burden of public stockpiling and the diversification of supply from third countries.  

2.4  Based  on  the  answer  to  the  questions  below,  can  the  objectives  of  the  proposed  action  be 
better achieved at Union level by reason of scale or effects of that action (EU added value)? 

The  objectives  of  the  proposed  action  be  better  achieved  at  Union  level  by  reason  of  the  scale,  the 
urgency and the scope of the efforts needed. 

(a)  Are there clear benefits from EU level action?  

There is clear added value from acting at the EU level. A common framework at the European level 
will  guide  and  encourage  companies’  investments,  de-risking  strategic  projects  and  boosting 
competitiveness.  It  will  ensure  that  projects  are  developed  taking  into  account  the  overall  single 
market’s needs, without leaving out a particular material or a value chain stage. EU action would also 
establish harmonised procedures to facilitate value chain developments, bringing long-term benefits to 
Member States, economic operators, and European citizens.  

In  particular,  this  initiative  will  save  companies  significant  time  and  resources  by  coordinating 
monitoring  activities  at  the  EU  level  and  deploying  measures  that  mitigate  the  impact  in  case  of  a 
supply disruption. The regulation also conceives measures to accelerate joint efforts to achieve a more 
sustainable  supply  of  critical  raw  materials  for  EU  industry  by  setting  measures  to  improve  the 
circularity  and  sustainability  of  the raw  materials  that  are  consumed  in the  EU or  placed on the  EU 
markets, thereby incentivising the emergence of a more sustainable critical raw materials market and a 
greater  share  of  secondary  production,  which  creates  new  economic  opportunities  for  European 
companies and workers. 

(b)  Are there economies of scale? Can the objectives be met more efficiently at EU level (larger 

benefits per unit cost)? Will the functioning of the internal market be improved? 

As mentioned previously, security of supply of critical raw materials can only be efficiently achieved 

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at  the  EU  level.  By  defining  a  binding-list  of  critical  and  strategic  raw  materials  and  creating  a 
framework to secure their supply, this proposal sets a solid basis for European markets and national 
authorities, providing  certainty  for investors and delivering  a  strong  position  for  the  global  markets. 
The  benefits  of  supply  security  are  not  quantifiable  directly,  but  the  costs  caused  by  supply 
disruptions,  shortages  or  demand/supply  gaps  risks  being  substantial,  particularly  if  they  hinder  the 
EU’s ability to meet the green and digital transitions. 

In  addition,  by  setting  up  a  governance  body  comprised  of  Member  States  and  the  European 
Commission, Member States will save costs by preventing overlapping actions and market fallouts.  
The  cost  to  improve  the  coordination  and  information  exchange  with  regards  to  monitoring  and 
stockpiling  at  the  EU  level  is  overrun  by  the  cost  of  non-acting.  A  coordinated  approach  towards 
critical  raw  materials  monitoring  should  provide  Member  States  with  a  strategic  and  coherent 
framework to support the CRM value chain, with positive effects on their supply chain’s solidity and 
their industry’s resilience. 

As  mentioned  before,  Strategic  Projects  should  contribute  to  untap  the  potential  of  the  EU  strategic 
raw materials. The selection of Strategic Projects follows a comprehensive assessment that prioritises 
projects contributing the most to achieving EU capacity benchmarks while tackling the most pressing 
vulnerabilities across EU supply chains, therefore improving the resilience of the Single Market.  

Measures  to  foster  the  development  of  a  secondary  raw  materials  will  improve  circularity. 
Environmental  footprint  measures  are  efficient  as  they  reward  companies’  sustainable  choices, 
improve  transparency,  and  address  the  most  polluting  CRMs  placed  in  the  EU  market  without 
envisioning major costs.  

(c)  What  are  the  benefits  in  replacing  different  national  policies  and  rules  with  a  more 

homogenous policy approach? 

As stated in 2.2., if the EU wants to achieve the twin transition, it is efficient, effective or coherent to 
set  a  critical  raw  materials  framework  at  the  EU  level.  Individual  actions  by  Member  States  could 
conflict in many ways, for example by outbidding each other on international raw materials markets, 
by  imposing  diverging  regulation  for  market  operators  or  supporting  projects  where  financial 
resources  are  available  rather  than  where  the  geological  or  other  resources  are  the  most  favourable. 
Such an approach would also leave potential synergies untapped, such as on monitoring and strategic 
stocks, where resources can be shared, and lessons learned from each other. In fact, Member States are 
calling for a coordinated EU approach and waiting to adopt national strategies only after the European 
Critical Raw Materials Act is adopted. 

(d)  Do the benefits of EU-level action outweigh the loss of competence of the Member States and 
the local and regional authorities (beyond the costs and benefits of acting at national, regional 
and local levels)? 

There is no loss of competence for Member States and local or regional authorities as they remain the 
main authorities in terms of permitting or exploration for instance. This regulation provides for a joint 
framework for their actions. 

(e)  Will there be improved legal clarity for those having to implement the legislation? 

The Regulation sets up specific timelines to guide Member States actions when a specific requirement 
is established. 
Many  provisions  of  the  Regulation  will  be  specified  through  implementing  or  delegated  acts,  that 
should further harmonise the implementation of the obligations introduced under this Regulation, thus 
improving legal clarity. 

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3.  Proportionality: How the EU should act 

3.1   Does  the  explanatory  memorandum  (and  any  impact  assessment)  accompanying  the 
Commission’s  proposal  contain  an  adequate  justification  regarding  the  proportionality  of 
the proposal and a statement allowing appraisal of the compliance of the proposal with the 
principle of proportionality? 

The proposed measures do not exceed what is necessary to secure the supply of critical raw materials 
with  a  demonstrable  value  added  in  acting  at  the  Union  level  due  to  the  scale,  the  urgency  and  the 
scope of the efforts needed. 

The measures on Strategic Projects focus on strategic raw materials to ensure that the scope is of the 
Act captures the materials that are the most needed to achieve the Union’s objectives for the green and 
digital transitions as well as for resilience and security. 

The measures on exploration are proportional to the size of the Member States territory, and Member 
States  would  remain  able  to  build  on  existing  exploration  policies.  The  national  programmes  of 
exploration  are  however  necessary  to  foster  the  development  of  the  value  chain.  The  measures 
proposed include a review and engagement with Member States on a regular basis especially when it 
comes to monitoring and governance provisions.  

The measures on monitoring leave Member State responsible for the identification and monitoring of 
key  market  operators. The burden on companies for providing information is very limited as it only 
captures large companies active in extraction, refining or recycling of critical raw materials. 

 The  measures  tackling  companies  risk  preparedness  remain  conscribed  to  only  a  subset  of  large 
companies  manufacturing  strategic  technologies  with  strategic  raw  materials  and  limited  to  internal 
audits and stress testing of their supply chains.  

The  measures  on  sustainability  do  not  impose  requirements  that  go  beyond  what  is  necessary  to 
incentivise  the  development  of  the  market  for  secondary  raw  materials  or  to  ensure  the  increased 
sustainability of critical raw materials production, through a gradual and evidence-based approach. 

3.2  Based  on  the  answers  to  the  questions  below  and  information  available  from  any  impact 
assessment,  the  explanatory  memorandum  or  other  sources,  is  the  proposed  action  an 
appropriate way to achieve the intended objectives? 

The  impact  assessment  that  accompanies  the  regulation  analyses  the  impacts  of  the  policy  option 
through a quantitative and qualitative assessment that proves that the proposals are proportionate and 
do not exceed what is necessary to secure critical raw materials at the Union level.  

(a)  Is  the  initiative  limited  to those aspects  that  Member  States  cannot achieve  satisfactorily  on 

their own, and where the Union can do better? 

Yes, the initiative only covers those aspects where actions at the Union level represent a competitive 
advantage compared at the national level.  

(b)  Is  the  form  of  Union  action  (choice  of  instrument)  justified,  as  simple  as  possible,  and 
coherent  with  the  satisfactory  achievement  of,  and  ensuring  compliance  with  the  objectives 
pursued  (e.g.  choice  between  regulation,  (framework)  directive,  recommendation,  or 
alternative regulatory methods such as co-legislation, etc.)? 

The objectives of this proposal can be best pursued through a Regulation. Given the urgent and further 
increasing risk of supply disruption of critical raw materials, the need for transposition in the Member 
States and for regular reviews to ensure proper implementation required, a Directive would not be fit 

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for purpose. This applies even more so for a Recommendation or alternative regulatory methods. By 
contrast, a Regulation ensures immediate effect once it enters into force and greater legal certainty for 
operators and Member State authorities subjected to it.   

(c)  Does the Union action leave as much scope for national decision as possible while achieving 
satisfactorily the objectives set? (e.g. is it possible to limit the European action to minimum 
standards or use a less stringent policy instrument or approach?) 

Considering  the  objectives  that  this  Regulation  set,  this  initiative  leaves  as  much  scope  for 
national decision as possible (see reply above to question 2.3.f).  

(d)  Does the initiative create financial or administrative cost for the Union, national governments, 
regional  or  local  authorities,  economic  operators  or  citizens?  Are  these  costs  commensurate 
with the objective to be achieved? 

To implement the regulation and the related delegated acts, the European Commission estimates that 
31 full-time equivalents are needed over the period at full operational capacity of the EU Multiannual 
Financial Framework (MFF). New commitments would be needed on existing budget lines, amounting 
to EUR 14.969 million in Heading 7 (Administrative Expenditure) and EUR 18.169 million in total, 
with EUR 3.2 million in Heading 1. 

For  each Member State, the European Commission estimates  that around 7 full-time equivalents are 
needed  to  cover  administrative  and  coordination  costs  and  around  26  full-time  equivalents  to  cover 
exploration  programmes.  In  addition,  total  costs  for  covering  the  whole  EU  with  exploration 
programmes led by Member States amount to EUR 182,4 million.  

The  details  costs  assessment  per  measures  per  companies,  for  the  ones  falling  within  the  scope,  are 
detailed in the impact assessment. They can relate in total for the EU to: 

-  EUR 1 million per year in the EU for conducting risk assessment (stress test/audit) for large 

companies using strategic raw materials in the manufacturing of strategic technologies;  

-  EUR 700 000 of one off costs for existing mining sites of reporting available information on 

critical raw materials content of waste streams and composition of the waste  

-  EUR14.55 million of one off costs for studies underlying environmental footprint claims (total 

figures for all companies expected to make claims) 

-  EUR  49.000  of  total  yearly  administrative  cost  of  reporting  for  large  companies  operating 

along the strategic raw materials value chain 

-  EUR 38.000 of total administrative costs of reporting for large companies using Strategic raw 

materials 

(e)  While respecting  the  Union  law,  have  special  circumstances applying  in  individual Member 

States been taken into account. 

Evidently,  each  Member  State’s  economy  has  a  different  structure:  In  some  Member  States,  the 
services sector is more important, in others industry and manufacturing; some Member States have a 
strong  industry  producing  strategic  technologies  (electric  vehicles,  wind  turbines,  chips,  etc.)  that 
require critical raw  materials,  while  others  less.  Nevertheless, it  is clear that  all  Member  States  will 
benefit from greater and more secure availability of critical raw materials, given the interlinkages in 
the  single  market  and  the  shared  political  objectives,  such  as  the  European  Green  Deal.  Special 
circumstances in Member States have been taken into account by defining in many areas the objectives 
to  be  achieved  (e.g.  time  limits  for  permitting  of  Strategic  Projects,  or  greater  collection  of  waste 
products  and  components  rich  in  critical  raw  materials),  while  there  is  substantial  discretion  for 
Member States to take into account national specificities (such as federal structures in permitting) in 
the implementation. Also in the monitoring and strategic stocks framework, there is substantial scope 
for Member  State authorities  to focus  their  efforts  on  those  raw  materials and those  sectors  that  are 
most  important  to  them,  while  the  Commission  would  coordinate  these  efforts  and  ensure  that  also 

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those raw materials that are not selected by Member States are covered.  

8