Four goals that Fit for 55 need to aim for

Four goals that Fit for 55 need to aim for

On Wednesday, the European Commission presented the gigantic climate package Fit for 55. A package that includes a dozen initiatives with changes to existing legislation and completely new legislation that will point the way for how the EU’s climate target of 55% reduction in emissions by 2030 compared to 1990 to be reached.

– The Swedish mining and mineral industry is at the forefront of the climate transition and is investing heavily in achieving the industry’s own goals of fossil-free mining operations by 2035 and climate-neutral processing processes by 2045. We are convinced that the industry has the ability to adapt while maintaining and even improving competitiveness. But it requires the right political conditions both in Sweden and at EU level, says Hanna Stenegren, Director Climate and Energy at Svemin.

– As usual, the devil is in the details, and how the various legislations in the climate package are designed and how they are connected to each other will have major effects on the industry’s adaptation work.

The climate package must be linked to the EU’s critical raw materials strategy

Metals and minerals play a central role in the climate transition. The International Energy Agency (IEA) states that in order to achieve the climate goals in the Paris Agreement, between four and six times more metals and minerals are required than today for climate technologies such as renewable energy and electric cars. The World Bank states that maximized recycling can only meet between 15 and just under 30 percent of demand by 2050. The rest needs to continue to come from mining.

Today, the EU is very much dependent on imports of these metals, often from countries with a lack of human rights, virtually non-existent environmental requirements and high production emissions. Sweden has the potential and opportunity to sustainably produce more than half of the metals and minerals identified by the Commission on the EU’s list of critical raw materials and for the base metals and minerals that are crucial for the climate transition. The climate package must be linked to the European Commission’s ambition for the EU to become more self-sufficient in these critical raw materials and for climate transition to be fundamentally sustainable – all the way from the mine to wind turbines, car batteries and solar panels.

It must pay to be a climate pioneer – international competitiveness must be safeguarded

The Swedish mining and mineral industry is investing SEK hundreds of billions in developing fossil-free machines and transport as well as new fossil-free production processes. For this to become a reality in time to meet the climate goals, companies must be able to maintain their competitiveness throughout the green transition in order to complete the necessary investments.

The mining and mineral industry competes on the world market with companies that have significantly lower environmental, climate and social requirements. Products with a low climate footprint must have fair conditions of competition both within and outside the EU, in order not to be knocked out by cheaper products with a higher climate footprint.

Increased costs for fossil-free electricity from interconnected European countries need to be taken into account

An important part of the mining and minerals industry’s transformation to reduce fossil emissions is electrification. The need for electricity will increase sharply as fossil energy is phased out and it will be a matter of course that new mines in Sweden in the future will have a high degree of electrification. The mining and mineral industry is estimated to be one of the largest electricity consumers in 2045.

Sweden already has largely fossil-free electricity, and ambitious goals for 100% fossil-free electricity production. But since the electricity grid is physically and market-wise connected with countries that have fossil electricity production, the marginal pricing means that the fossil electricity production in the system determines the price. This means that the price that industry has to pay for Swedish fossil-free electricity corresponds to the price for fossil electricity production. The industry’s climate transition presupposes access to fossil-free electricity at a competitive price, and this also affects Sweden’s attractiveness for investments in future mining operations. As the price of emission rights within the EU ETS is expected to continue to increase, the possibility of compensation for the carbon dioxide price’s indirect effect on the fossil-free electricity price becomes increasingly important.

The revenues must be used for climate transition goals – not to fill gaps in the countries’ and the EU’s budget

Climate transition requires extensive investment – both private and public. Therefore, revenues from the EU Emissions Trading Scheme (EU ETS) and the new CO2 Adjustment Mechanism (CBAM) should be used to support industry’s investments in the development of, for example, new climate technologies and processes and strategic infrastructure for renewable electricity.

After the summer, Svemin will study the proposals in detail.

MORE INFORMATION

> The EU Commission’s Climate Package – Fit for 55
> IEA’s report – The Role of Critical Minerals in Clean Energy Transitions
> World Bank report – The Mineral Intensity of the Clean Energy Transition
> EU Raw Material Strategy