Collective Benefits, Local Costs: Governing Critical Raw Materials in the European Union
- Economics & Finance, Energy & Climate, EU Institutions & Governance, Industrial & Competition Policy
- July 27, 2026
In 2024, the European Union adopted the Critical Raw Materials Act (CRMA), which both responds to and reinforces a broader global shift in policy agendas around critical raw materials. The contemporary industrial policy revival, combined with growing resource nationalism and strategic decoupling, has led major economies to adopt extensive legislation aimed at securing minerals essential for key and emerging technologies such as electrolysers, wind turbines, lithium‑ion batteries, heat pumps, and solar photovoltaics (European Court of Auditors 2026, 14).
China’s export control laws and expanded licensing regimes for minerals, the use of the Defense Production Act in the United States to influence mineral markets, and new preferential arrangements such as the Forum on Resource Geostrategic Engagement all reflect the same underlying vision of critical raw materials as strategic assets (European Parliamentary Research Service 2025). The EU’s answer is the evolving CRMA.
The Act identifies key strategic resources required for the Union’s green transition and for its collective security in a shifting world order. It lists 34 critical raw materials (CRMs) and, within this group, 17 strategic raw materials (SRMs) (CRMA 2024). The broader set covers economically important materials facing supply risk, while the strategic subset includes those essential to current green and digital technologies and to defence and aerospace sectors (CRMA 2024). The legislation also sets non‑binding but specific benchmarks for 2030: the EU should mine 10 per cent of its annual needs, process 40 per cent, and cover 25 per cent through recycling. For each SRM, it should not depend on any single third country for more than 65 per cent of its supply (CRMA 2024).
The CRMA covers a wide range of issues, from risk monitoring to sustainability and procurement. It includes measures on domestic production, such as the designation of “strategic projects”, streamlined permits for extraction and exploration, and support for offtake agreements. However, as the Commission’s 2025 RESourceEU Action Plan and the 2026 Special Report of the European Court of Auditors (ECA) show, significant bottlenecks still hinder the effective implementation of the Act and the achievement of domestic production and processing goals (European Commission 2025; ECA 2026).
The ECA identifies four key impediments: insufficient exploration, lack of technologies and facilities, lack of financing, and lengthy permitting procedures (ECA 2026, 30). It also highlights institutional and political constraints, including fragmented EU‑level funding, local political resistance near existing and potential extraction sites, and slow environmental clearance processes (ECA 2026, 33‑35).
This paper argues for a policy framework that recognises the mismatch between the collective benefits of meeting CRMA goals and the highly localised financial, environmental, and political costs of exploration, extraction, and refinement. It focuses on two sets of bottlenecks: financing and local political feasibility. It then proposes ways to mitigate these through risk pooling and incentive mechanisms built on existing EU instruments.
Financing and risk
Exploration, extraction, and refinement of most CRMs are highly capital‑intensive activities, especially when opening new extraction sites (International Energy Agency 2025, 91). Building mining infrastructure around previously unused deposits can entail upfront costs in the order of billions of euros. The Sakatti project in Finland, for example, has an estimated initial cost of 900 million to 1.2 billion euros (Anglo American 2026). As a designated strategic project expected to start production in the early 2030s, it faces a decade of capital outflow before any returns (Anglo American 2026).
Beyond high upfront costs, multiple reports highlight financing bottlenecks due to factors such as the heterogeneity of CRMs, environmental and social concerns, energy prices, price volatility, and long project timelines (ECA 2026, 33). This creates an environment in which potential investors face high initial costs, high risks, and very long time horizons, with returns measured in decades if projects succeed.
The EU has taken steps to address these issues. The CRMA requires member states to establish national exploration programmes, targeting one of the riskiest phases of the value chain, where only one in roughly one thousand exploration ventures becomes an operational mine (ECA 2026, 32). Financing has also expanded, but the available volume remains far below what would be needed to meet CRMA targets on time. Direct EU funding for CRMs between 2014 and 2027 amounts to around 1.8 billion euros, which would cover only one and a half ‘Sakatti-scale’ mining operations, without additional external financing (ECA 2026). Even if volumes increase, funding is currently fragmented across numerous EU and national instruments, which complicates access.
This leaves the Union with a familiar problem. Overreliance on a small number of external suppliers creates collective security risks for key sectors, including transport, defence, and energy. Yet the financial risks and costs of mitigating these vulnerabilities are largely borne by individual firms and host regions. Closing this gap requires an incentive system at EU level that reflects the collective nature of the benefits.
By 2026, the EU already has many of the necessary mechanisms. Instruments such as InvestEU, the Innovation Fund, and NextGenerationEU demonstrate that the Union can mobilise large‑scale guarantees, equity, and joint borrowing for projects deemed strategically important. Extending this logic more explicitly to CRM exploration, extraction, and refinement would both increase liquidity for EU actors in the value chain and pool the financial risks associated with long, uncertain projects.
Local opposition, administrative capacity, and permits
Beyond financing, new exploration, extraction, and refinement projects face political and institutional obstacles at the local level. These include administrative bottlenecks around permits and environmental assessments, as well as quality‑of‑life and environmental concerns among local communities (ECA 2026; EC 2025; EPRS 2024).
The CRMA addresses social and environmental sustainability at project sites and refers to the Commission’s 2021 “EU principles for sustainable raw materials” as guidance (CRMA 2024). However, these provisions focus on minimising adverse impacts and ensuring consultation. Compensation is framed as a response to harm, not as a proactive incentive. As a result, the political burden of hosting extraction remains local, while the security stakes are European, as the CRMA itself acknowledges in its recitals (CRMA 2024, recitals 1‑4).
This paper proposes an EU‑level framework that builds on existing mechanisms, such as the Just Transition Fund, but shifts the role of social and environmental measures from damage mitigation to positive incentives. Hosting CRM projects should become attractive for local populations, not merely tolerable. This would transform the electoral risks for local and regional leaders into potential gains.
The Barroso lithium project in Portugal illustrates how the absence of structured incentives can render a strategically important CRM project politically infeasible even in a low‑density, economically peripheral region. The extraction site in Boticas faced intense local resistance because communities perceived a one‑way transfer of environmental and social costs to the region, while economic benefits would accrue elsewhere (Bayley 2023). Local authorities that initially supported the project encountered electoral backlash, with anti‑mine sentiment shaping municipal politics and forcing leaders to withdraw support (Eco News 2021). In the absence of EU‑level benefit‑sharing mechanisms, neither national nor regional authorities could sustain the consistent backing for the project despite its contribution to European strategic autonomy. The Barroso case shows that mitigation and consultation alone can lead to prolonged deadlock. Without tangible incentives, local communities have little reason to accept extraction, and political leaders have strong reasons to avoid it.
A second dimension of local incentivisation concerns administrative capacity, which the ECA identifies as a major bottleneck for CRM projects (ECA 2026, 13‑16). Many municipalities lack the staff, technical expertise, and legal resources needed to process complex mining permits or manage public consultations. This turns administrative burden into political risk. Providing EU‑level technical and administrative support would function as a political incentive by lowering the cost of participation for local authorities and increasing the credibility of project timelines.
The Cáceres lithium project in Extremadura is a clear example. The regional administration lacked sufficient technical staff to evaluate complex environmental impact assessments, which led to repeated delays and procedural inconsistencies (Osusky 2021). Reporting indicates that these administrative gaps fuelled public distrust and amplified local mobilisation, turning the 2019 and 2023 municipal elections into de facto referendums on the mine. Local leaders, facing electoral pressure and without EU‑level support to justify hosting extraction, withdrew political backing (Associação Unidos em Defesa de Covas do Barroso 2024, 6). The project stalled not because of geology or economics, but because administrative burden and political risk were concentrated locally while benefits were perceived as external. This illustrates how administrative capacity support can operate as a political incentive, reducing local risk and increasing the feasibility of CRM projects.
Conclusion
This paper has highlighted two limitations in the current approach to financing and implementing the goals of the Critical Raw Materials Act. First, the volume and structure of available funding remain insufficient and fragmented, which hinders the development of new CRM projects. Addressing this requires both an increase in EU‑level resources dedicated to exploration, extraction, and refinement, and a streamlining of access through a more coherent financing hub, in line with the recommendations of the European Court of Auditors and proposals such as the Draghi report (ECA 2026; EC 2024b).
Second, the EU’s sustainability and consultation framework, while important, remains largely reactive. It focuses on mitigating harm rather than creating positive incentives for host regions. Shifting towards a model that treats hosting CRM projects as an opportunity for local communities, supported by targeted compensation and administrative capacity‑building, would help align local interests with the Union’s collective security needs.
Bridging the gap between localised costs and EU‑level benefits is essential if the Union is to meet its CRMA targets. Without mechanisms for financial risk pooling and political burden sharing, domestic production will continue to lag behind strategic ambition. Recognising and governing the spatial politics of extraction is therefore not a secondary concern, but a precondition for achieving European strategic autonomy in critical raw materials.
Sources
Anglo American (2024) Sakatti: A mineral discovery for a greener future. Available at: https://www.angloamerican.com/our-portfolio/our-projects/sakatti (Accessed: 30 April 2026).
Bayley, C. (2023) ‘Portugal’s Barroso lithium mine project faces villagers’ ire’, BBC News, 18 October. Available at: https://www.bbc.com/news/world-europe-67135047 BBC (Accessed: 30 April 2026)
ECO News (2021) Barroso lithium mine environmental impact study “inaccurate”, says Mayor. Available at: econews.pt (Accessed: 30 April 2026).
European Commission (2024a) Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a framework for ensuring a secure and sustainable supply of critical raw materials.
European Commission. (2024b). The Future of European Competitiveness: A Competitiveness Strategy for Europe (Draghi Report). Available at: https://commission.europa.eu/document/download/97e481fd-2dc3-412d-be4c-f152a8232961_en (Accessed: 30 April 2026).
European Commission (2025) RESourceEU Action Plan: Accelerating our critical raw materials strategy to adapt to a new reality. COM(2025) 945 final. Brussels: European Commission.
International Energy Agency (2025) Global Critical Minerals Outlook 2025. Paris: IEA. Available at: windows.net (Accessed: 30 April 2026).
Osusky, J. (2021) ‘White gold: The battle for lithium in Cáceres’, Lithium Worlds. Available at: lithiumworlds.com (Accessed: 30 April 2026).
Ragonnaud, G. (2024). Implementing the EU’s Critical Raw Materials Act. PE 766.253. Brussels: European Parliamentary Research Service (EPRS).
Szczepański, M. (2025) China’s rare-earth export restrictions. PE 779.220. Brussels: European Parliamentary Research Service (EPRS).
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Benedek Várszegi
Independent Researcher