EGEC views on the EU Critical Raw Materials Act

EGEC views on the EU Critical Raw Materials Act

EGEC, the voice of the European geothermal industry, is a not-for-profit association representing the entire value-chain of the industry across 28 countries. It is included on the European Transparency Register number: 11458103335-07. Further information can be found at www.egec.org.

We welcome the opportunity to respond to the consultation on the EU Critical Raw Materials Act consultation. Our observations and recommendations are:

•Reward the contribution of geothermal energy as an EU strategic interest : Geothermal uses the heat stored below ground to provide permanent supplies of baseload renewable heating, cooling and electricity, which is essential for the energy transition and meeting the European Climate Law. Geothermal lithium is a by-product of geothermal energy activities. It is extracted from brines that carry heat and minerals. This is a marked difference from current methods to extract and process lithium, which centre on hard rock mining and evaporation. These approaches are significantly more harmful to the environment and CO2 intensive than geothermal lithium.

•Domestic resource to increase critical raw materials supply : We welcome the emphasis on the untapping into the potential of EU internal supply of critical raw materials. Recognition of strategic resources, such as supplies of domestically produced lithium from geothermal energy capacity. This will ensure the EU meets its core goals of energy and material independence whilst simultaneously strengthening actions to deliver emission reductions outlined in the European Climate Law (EU2021/1119) as well as the energy transition.

•European leadership : The geothermal sector was instrumental in designing and piloting methods to extract lithium from geothermal systems without hampering their energy generation activities. Many projects and exploration activities are already in process in Germany, France and Italy. Furthermore, the European geothermal industry has already invested more than €50 million into this sector. However, we now need targeted support from public funds to ensure European sovereignty of supplies and maximise the potential of geothermal lithium across Europe as well as exporting EU technologies and expertise.

•But the rest of the world is catching up fast : Other countries have also placed strategic value on lithium and are using public finance to stimulate domestic extraction and production. For example, the US government launched a $7 billion package of measures to establish a domestic battery value chain in February 2022. Australia and Canada have also launched multi-billion-dollar funding programmes for domestic lithium production and processing. This not only distorts competition, but also shifts the focus of potential investors away from the EU, making it more difficult to raise the necessary capital for scaling domestic production.

•Reducing bottlenecks : The major bottlenecks and solutions for investment in geothermal and associated lithium capacity are:

• • Capacity in permitting agencies to fast-track applications : We are concerned about by-passing environmental laws such as Environmental Impact Assessments (EIAs), the Habitats Directive or Areas Assessments (AAs) and recommend increasing the capacity of permitting agencies to undertake applications for geothermal sites with lithium capacity. A single permitting application must be able to cater for the requirements for a geothermal site and sustainable lithium extraction. We also suggest that the Life Cycle Assessment tool, developed by EGEC through the Horizon 2020 funded project GeoENVI, is incorporated into the permitting application process.
  • Resource mapping : We recommend use of the European Sovereignty Fund, outlined in President von der Leyen’s State of the Union 2022 speech, to finance exploration to assess the lithium reserves and their proximity to current or future geothermal energy capacity. This would address the dual goal of greater material independence and energy independence in the context of the ‘renewable go-to areas’ outlined in COM(2022) final. We recommend a resource assessment campaign to identify geothermal lithium resources and projects.
  • Financial de-risking of geothermal lithium : Better geological data helps to reduce the risk for a geothermal lithium project. However, an additional financial risk mechanism is required to manage the project development risks associated with developing geothermal installations. The European Sovereignty Fund must be the source for such a sustainable pan-European financial de-risking scheme, which could take the form of a public-private partnership.
  • Support research and innovation: The EU has significant potential for lithium extracted from geothermal waters but needs investment and support to develop these resources and the extraction technologies. The global race to bring to market geothermal lithium requires an immediate European financial public support, to bring a technology to market readiness level. Therefore, we recommend future calls of the EU’s Horizon, Life and other research budgets are dedicated towards geothermal lithium maximisation.

We look forward to supporting the development of an effective Critical Raw Materials Act and the twin goals of increased material and energy independence.

Sanjeev Kumar
EGEC, Head of Policy
s.kumar@egec.org
+32 499 53 97 31

EGEC Official Response (document)