Europe transition to renewable energy

Rare earth and other elements are required for not only wind turbines, solar panels, electric vehicles and even the magnets used in AI hardware and key defence technologies. Today, Europe imports around 70% of its rare-earth minerals, 98% of which are refined in China, which dominates the global market.

Mining these minerals carries environmental and social risks, while importing them limits Europe’s ability to enforce higher standards. Onshoring mining will not be enough: even if every announced European mining project is built, output would rise only modestly by 2030, far below what is needed to support Europe’s renewable electricity ambitions.

This is where the distinction with fossil fuels matters. Fossil fuels are imported, combusted and replaced. Minerals, by contrast, remain embedded in turbines, panels, batteries and motors throughout their lifetime. At end of life, they can be recovered. Yet today, recovery rates for strategic metals from end-of-life products are below 1%².

Investing in circularity is therefore not a side issue, but a competitiveness strategy. By designing products for disassembly, reuse and recycling, Europe can reduce dependency on newly mined imports while building industries that generate jobs, innovation and intellectual property at home. The transition to a low-carbon, circular, and resource-efficient economy could generate 1.2 million new jobs in the EU by 2030³.

Policy is starting to recognise this. The EU’s Critical Raw Materials Act (CRMA) sets a binding target that domestic recycling provides at least one quarter of the block’s annual consumption of strategic raw materials. Recycling and recovery plants can qualify as strategic projects, benefitting from streamlined permitting and access to finance. National funds and the ResourceEU action plan aim to address remaining bottlenecks⁴.

But this will not be enough in the absence of a European savings and investment union, another strategic priority that would allow for more effective investor participation in the circularity theme. While public finance is relatively scarce, it can absorb more risk where projects are strategically important. Private capital is more risk-constrained and profit-seeking, but abundant.

Financing partnerships that play to these respective strengths is part of the solution, as is unlocking the EUR 10 trillion in household savings currently sitting in low-yielding deposits⁵. Investments in circularity to date are lacking in part due to the fact secondary materials are more expensive than state-subsidised primary supplies. In practice, recycling economics are often weaker than primary imports without policy support or long-term contracts. European buyers have reported paying up to six times the Chinese domestic price for rare earth oxides. These investments are also capital intensive, requiring patient capital.

Blended finance, which allows public capital to be used to de-risk projects and crowd in private investment at scale, is one under-utilised solution. Examples already exist. HyProMag, a rare earth magnet recycling company with operations in the UK, Germany and the US, was heavily backed by public grants before it was scaled by joint ventures and private capital.

In the short and medium term, the role of stewardship cannot be underestimated: engaging with listed companies that are central users of critical minerals to prioritise circularity and resilient supply chains.Investing in circularity is therefore both an environmental imperative and a strategic lever for European sovereignty. Critical to success will be breaking down silos: those between public and private finance and strategic policies like the CMRA and intra-European trade and financing barriers.

By backing companies across the maturity spectrum that integrate reuse, recovery and recycling into product design, investors can help reduce exposure to volatile fossil fuel and mineral imports, support resilient European value chains and capture long-term returns. In doing so, investors help build a more competitive, sovereign and future-fit Europe and Switzerland.