COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT 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, renewable energy, security of supply, surveillance concerning imports, sustainable development, value chain, waste recycling

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   EUROPEAN COMMISSION  Brussels, 16.3.2023  SWD(2023) 162 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  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) 160 final} - {SWD(2023) 161 final}  
 
 
Executive Summary Sheet 
Impact Assessment for the European Critical Raw Materials Act 
A. What is the problem and why is it a problem at EU level? 
Critical raw materials (CRMs) are indispensable inputs in our economy, particularly as they are 
used to manufacture technologies required for the deployment of green energy, for the digital 
transition or for strategic applications in health or defence. Given the growing needs generated 
by the twin transitions, the demand for those materials is forecasted to increase exponentially 
both at EU and global level, leading to supply-demand gaps. In addition, the EU supply of CRMs 
at both the extraction and processing stage is highly concentrated, sometimes in a single third 
country. In the event of the EU not being able to secure sufficient supplies of CRMs, the EU’s 
continued reliance might expose the EU to the following risks: geopolitical vulnerability; adverse 
environmental and social effects; disruptions to industrial supply chains; high and volatile prices 
delaying the green transition; dominant and critical raw materials suppliers leveraging market 
power in downstream industries.  
Against this background, the main problem identified is the EU’s lack of secure and sustainable 
access to CRMs, which is fostered by three sub-problems, namely the insufficient anticipation 
and mitigation of supply risks, the underdevelopment of the EU domestic CRM supply potential 
due to insufficient capacity at different value chain stages, and the insufficient sustainability and 
circularity in the EU sourcing of CRMs.  

What should be achieved? 
The general objective of the Critical Raw Materials Act is to address the main problem: the lack 
of secure and sustainable access to CRMs for the EU. To best address the problem, the following 
specific objectives directly address the problem drivers identified: 
SO1. Increase EU industry’s awareness and mitigation of CRM-related risks in the global supply 
chain 
SO2. Increase the EU CRM value chain’s capacity in the internal market     
SO3. Reduce the environmental footprint of the EU’s CRM consumption   
However,  the  regulatory  initiative  that  this  Impact  Assessment  underpins  cannot  meet  the 
objective  alone.  Strengthened  efforts  to  diversify  international  trade  and  investments  ensure 
undistorted international markets, and the promotion of high social and environmental standards 
in partnerships and cooperation with third countries. Increased research and innovation efforts to 
substitute critical raw materials and minimise the environmental impacts of resource extraction, 
and  work  on  skills  and  societal  acceptance  will  also  be  necessary.  These  aspects  are  further 
developed in the accompanying Communication that forms part of the European Critical Raw 
Materials Act. 
What is the value added of action at the EU level (subsidiarity)? 

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EU action is essential to generate economies of scale and of scope and to limit, if not to avoid, 
the fragmentation of efforts and associated inefficiencies. In line with this logic, the proposed 
actions focus on areas where there is a demonstrable value added in acting at Union level due to 
the  scale,  speed  and  scope  of  the  efforts  needed.  For  instance,  actions  aimed  at  mobilising 
investment  in  critical  raw  material  projects  along  the  value  chain  could  be  most  effectively 
designed and coordinated at Union level, given the scale of the investments needed and because 
the  resulting  capacities  should  serve  the  full  internal  market.  In  addition,  actions  aimed  at 
improving  monitoring  capacities  at  Union  level  will  achieve  greater  effectiveness  than  if  left 
uncoordinated. Together, Member States and Commission will be better able to anticipate supply 
disruptions than through a patchwork of national efforts. The framework proposed should allow 
for a more efficient division of tasks and for the sharing of relevant information to prevent the 
duplication of efforts. 

B. Solutions 
What are the various options to achieve the objectives? Is there a preferred option or not? 
If not, why? 
The options are organised in different pillars that propose different policy approaches to meet the 
specific objectives. The options combine different sets of policy approaches based on their level 
of ambition but also based on what is achievable with different governance structures, so that the 
tasks implied in each option are met with the appropriate level of resources. 
Policy  option  1  (PO1)  provides  for  a  mechanism  to  set  targets  for  strategic  raw  materials.  It 
comprises a governance structure under a dedicated EU CRM board supported by a network of 
national agencies and operational capacity within the Commission. Such entity would develop 
monitoring capacity, enable the coordination of EU strategic stocks and ensure that companies 
are better prepared ahead of supply disruptions. It contains elements to support the value chain, 
notably through exploration coordination, enhanced support for national CRM projects and easier 
access  to  finance.  In  terms  of  circularity,  it  provides  for  a  recommendation  targeting  small 
consumer electronics and the announcement of future actions. It provides for enhanced EU efforts 
in international standards-setting, as well as minimum requirements for certification schemes on 
CRM sustainability and information requirement on the environmental footprint of CRMs placed 
on EU market. 
Policy option 2 (PO2) shares with PO1 the same governance mechanism and tasks in terms of 
monitoring, strategic stocks and risk preparedness. It further reinforces the value chain in the EU 
with the development of stronger obligations on exploration and the implementation of Strategic 
Projects  along  the  value  chain  of  strategic  raw  materials.  These  projects  would  benefit  from 
streamlined permitting and easier access to finance. Measures around circularity include targeted 
amendments  of extractive waste directive. Measures on standards  contain the development  of 
additional  standardisation  deliverables  on  industrial  process  and  measures  on  environmental 
footprint contain the progressive development of threshold for CRM if a dedicated assessment 
provides that it would not affect supply security.  
Policy option 3 (PO3) develops an external capacity in terms of governance, which enables to 
propose ambitious measures on strategic stocks, monitoring and risks preparedness. It also builds 
on  the  notion  of  Strategic  Projects,  which  would  benefit  from  additional  permitting  support 
through dedicated resources from Member States and a dedicated European CRM Fund. It shares 
with PO2 the measures on circularity, standards and environmental footprint. 

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All policy options build on the notion of critical raw materials and of strategic raw materials, 
which are a subset focused on the materials needed for particularly strategic applications. 
The  impact  assessment  suggests  that  option  2  is  the  preferred  option,  notably  in  terms  of 
efficiency  and  stakeholders'  support.  It  is  to  be  noted  that  option  3  presents  a  higher  level  of 
ambition and would allow to meet the objectives more effectively.  
What are different stakeholders' views? Who supports which option? 
Due  to  the  variety  of  the  proposed  pillars,  it  is  not  straightforward  to  attribute  opinions  of 
stakeholders to the overall options. Instead, the impact assessment details the stakeholders’ views 
for each of the pillars. In total, it can be concluded that stakeholders from the industry are rather 
in  favour  of  the  strong  measures  that  would  be  proposed  in  option  3  notably  in  terms  of 
governance and of support to the value chain. Public authorities’ views are split, with a slight 
preference for a network-based approach on governance, alike in option 2. Civil society would 
support the most stringent measures in options 2 and 3 on circularity and environmental footprint. 

C. Impacts of the options 
What are the benefits of the options (if any, otherwise of main ones)? 
Option  1  is  expected  to  bring  economic  benefits  for  companies,  due  to  targets  guiding  the 
development of EU support. They would also benefit from increased EU monitoring capacity 
provided by the network, while their diversification and resilience building would be encouraged 
by  national  measures,  as  well  as  from  targeted  value  chain  support  in  terms  of  exploration, 
permitting  and  financing.  Measures  on  waste  legislation  could  incentivise  additional  waste 
recovery while environmental footprint declaration requirements and actions on standards would 
improve the quality of information on sustainability. 
Option  2  would  bring  stronger  benefits  than  option  1.  Though  actions  on  governance, 
monitoring, strategic stocks are the same as in option 1, actions related to the support of the value 
chain  provide  for  a  more  strategic  and  comprehensive  response  to  the  problem  drivers.  By 
proposing the development of Strategic Projects, supported by streamlined permitting and access 
to  finance, this  option would better  contribute to meeting  EU supply  targets  for strategic raw 
materials  across  the  value  chain,  also  increasing  the  competitiveness  of  downstream  users. 
Environmental  footprint  declarations  for  CRMs  would  better  inform  consumer.  Measures  on 
exploration or waste, notably on recycling targets, would also further enable the development of 
a strong market for secondary raw materials.  
Option  3  is  expected  to  bring  even  larger  economic  benefits  for  companies  and  the  wider 
economy,  notably  by  providing  enhanced  support  for  monitoring,  strategic  stocks  or  risk 
diversification, executed by an external operational capacity. The option's financing support to 
Strategic Projects would also benefit from a fund of wider reach, while Strategic Projects would 
also be signalled as of overriding public interest, with higher administrative capacity for Member 
States to support them. Thresholds for environmental footprints would increase the sustainability 
of CRMs on the market. Options on waste, environmental footprint and standards are the same 
as for option 2. 
What are the costs of the options (if any, otherwise of the main ones)? 
Option 1 entails minimum administrative costs for large companies operating in the CRM value 
chain which would have to report information for monitoring as well as for some downstream 

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manufacturers. There are also costs related to the environmental footprint that would apply to all 
companies selling CRMs for which calculation rules are available and to companies wishing to 
make general claims on environmental footprint. Costs to the Commission and Member States 
mainly  relate  to  the  enforcement  of  the  measures  proposed,  notably  to  set  up  a  governance 
structure that would then carry out tasks, and on reporting obligations for Member States (e.g. on 
exploration). 
Option  2  would  entail  similar  costs  for  companies,  to  which  would  be  added  new  costs  for 
extractive waste operators and EEE producers to provide information on CRMs contained in their 
products and waste streams, respectively. Costs to Member States would increase with additional 
requirements in terms of exploration, though those costs would be split based on the territorial 
size of a country. Costs to the Commission would mainly cover the setting up of an effective 
governance and monitoring system, and the implementation of other measures, e.g. on circularity, 
environmental footprint. 
Option 3 entails significant costs for the Commission and Member States related to the setting 
up of an external operational capacity. This would enable a wider scope of actions and thereby 
be more  efficient  to  meet  the specific objectives, but  it would require  considerable budgetary 
support. In addition to similar costs as in options 1 and 2, this option would increase costs on 
companies  which  would  have  to  abide  by  additional  requirements  on  preparedness,  strategic 
stocks or audits of their supply chains.  
What are the impacts on SMEs and competitiveness? 
The preferred measures would make SMEs, such as junior exploration companies, benefit from 
additional data and information provided by Member States. In addition, SMEs operating in the 
CRM value chain or downstream sectors would benefit from additional monitoring and other risk 
mitigation measures that they are less likely to pursue by themselves. Direct administrative costs 
like  reporting  obligations  are  not  imposed  on  them.  They  would  also  benefit  from  increased 
access to finance. 
Overall, the competitiveness of the EU industry would be supported by the same measures that 
benefit  SMEs.  The  development  of  Strategic  Projects  would  increase  the  EU’s  resilience  by 
strengthening the CRM value chain, particularly for strategic raw materials, which would enable 
downstream  sectors  to  benefit  from  a  more  secure  CRM  supply  and  hence  make  them  more 
competitive vis-a-vis competitors in other parts of the world. 
Will there be significant impacts on national budgets and administrations? 
Member States would incur costs related to the participation in the governance structure, to the 
sharing of information with the board and to the implementation of measures, e.g. on strategic 
stocks coordination, companies’ risk preparedness, permitting, waste and exploration. 
Will there be other significant impacts? 
There are no other significant impacts foreseen in this initiative. It is expected to do no significant 
harm to the environment, while conversely to foster measures promoting the circularity of CRMs 
and their enhanced sustainability through environmental footprint measures. 
Proportionality? 
The preferred option is more in line with the principle of proportionality as it does not create a 
specific external operational capacity to enforce tasks related to CRMs. This however implies 
lesser effectiveness in meeting the specific objectives.  
D. Follow up 

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The  Commission  will  carry  out  an  evaluation  of  the  effectiveness,  efficiency,  coherence, 
relevance  and  EU  added  value  of  this  legislative  initiative  and  present  a  report  on  the  main 
findings to the European Parliament, the Council, the European Economic and Social Committee, 
and the Committee of the Regions five years after the date of application of the legislative act. 
The  Commission  may  propose  based  on  the  evaluation  report  how  to  improve  the  European 
Critical Raw Materials Act, whose implementation should also measure the achievement of the 
targets  for  European  supply  capacity  presented  in  the  IA.  Indicators  to  monitor  progress  are 
included in the assessment. 

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