Europe’s critical raw materials moment: Closing the gap in Europe’s twin transition
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An internal EU report exposed serious gaps in Europe’s ability to secure critical raw materials for the green and digital transition.
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The European Commission has now launched a new platform to aggregate demand for raw materials and boost supply diversification across the Single Market.
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Digital SMEs are both key enablers of Europe’s circular transition and highly exposed to critical raw material dependencies, making the forthcoming Circular Economy Act a decisive test to strengthen the resilience of the EU industry.
Europe’s green and digital ambitions rest on a fragile foundation: secure access to critical raw materials. Lithium, rare earths, nickel, cobalt and copper are indispensable for batteries, renewable energy systems, semiconductors and advanced manufacturing. Yet Europe remains heavily dependent on external suppliers for most of them.
This vulnerability was recently laid bare by the European Court of Auditors, which published a special report on critical raw materials for the energy transition. The report delivered a clear warning: despite ambitious strategies and new legislation, the EU is not yet on track to secure reliable and resilient supplies of the materials it needs[1].
The auditors found that diversification efforts have so far produced limited results, domestic extraction and processing capacity remain underdeveloped, and recycling is not scaling fast enough to meet future demand. Permitting delays, financing gaps and fragmented implementation continue to undermine the EU’s climate and industrial targets.
In response to these challenges, the European Commission has taken a concrete step forward by launching a new platform to aggregate demand for critical raw materials and support diversification efforts across the Single Market. The initiative aims to improve coordination between industry actors, strengthen supply security, and create more predictable conditions for investment along the value chain[2].
Seen together, the audit and this new initiative highlight a growing recognition that securing raw materials is not only an industrial necessity, but a systemic priority for Europe’s economic resilience. The platform represents an attempt to address some of the structural weaknesses identified by the auditors, particularly the lack of coordination and scale in European demand.
However, this step alone will not be sufficient. As the auditors emphasized, Europe must also deliver at home: faster permitting procedures, clearer investment frameworks, stronger support for recycling, and better alignment between EU and national policies.
This means Europe has begun to treat critical raw materials as a strategic priority, but the real test now lies in turning policy initiatives into concrete, measurable results. The resilience of Europe’s green and digital transition will ultimately depend on whether the materials underpinning it can be secured through a combination of stronger internal capacity and smarter resource management.
In this context, strengthening the European circular economy becomes even more important. Boosting recycling markets, increasing the uptake of secondary raw materials, and supporting innovative SME-driven circular solutions will be essential to reducing Europe’s external dependencies and closing the implementation gap identified by the auditors.
Digital SMEs sit at the centre of this challenge from two directions. As producers and users of ICT products, they are directly affected by CRM supply risks: the semiconductors, batteries and electronic components they rely on all depend on materials whose supply chains remain concentrated and fragile. At the same time, they are solution providers, developing traceability platforms, lifecycle management tools, repair and refurbishment services, and data-driven compliance systems that a functioning circular economy depends on. Fragmented regulations, high compliance costs and limited access to recycled materials currently constrain their contribution, however, making the design of the Circular Economy Act critical for unlocking their potential.
The upcoming Circular Economy Act therefore represents a crucial opportunity. DIGITAL SME has already put forward a policy paper with concrete recommendations to enhance Europe’s resource resilience, empower SMEs as key drivers of circular innovation, and anchor circularity at the heart of the EU’s industrial and raw materials strategy. The paper sets out eight targeted proposals, covering investment in circular infrastructure, harmonised e-waste and EPR rules, open traceability standards, digital sovereignty in circular systems, a unified secondary raw materials market, and the use of public procurement to stimulate demand. We look forward to continuing to contribute to the discussion on this important initiative.
Are you a tech SME or organisation eager to contribute to the green and digital transition with your solutions or policy ideas? Contact us here.
