Europe s metals ecosystem e xposed to signifcant levels of international competition because metals are a globally traded commodity Europe s metals ecosystem facing specifc regulatory challenges from the transition of Europe s power sector Europe s metals ecosystem a sector whose 2050 future can be secured with a dedicated industrial strategy 3 4 5 The sector s strategic status and globallyset pricing mechanisms means it faces high international competition Europe is already highly dependent on imports of primary raw materials with other value chain stages under pressure China s share of nonferrous metals production has grown dramatically in the last 15 years largely based on coalpowered electricity This mak es the threat of EU production being replaced by more carbonintensive nonEU production very real The sector s high electrointensity means that while it has major potential for emissions reductions it is also particularly susceptible to the impacts of a decarbonising EU power system The industry s use of electricity is higher than any other energyintensive sector per tonne of product as a percentage of production costs Indirect carbon costs from the Emissions T rading S ystem already disadvantage the sector vs international competitors and require adequate compensation L ooking ahead the sector s k ey enabling factor for the transition will be the abundant availability of carbon neutral electricity at globally competitive prices Europe can enable the nonferrous metals sector s competitive transition to a climateneutral economy alongside its dependent value chains through a horizontal industrial strategy ensuring Competitivelypriced and abundant carbonfree electricity Innovation and investments support Enhanced value chains industrial symbiosis Assertive trade and competition policies Ambitious Circular Economy policy 25 8 times more carbonintensive Chinese production due to coalpowered electricity 9 5X more impacted by electricity costs vs overall manufacturing sector 12 60 import dependence for almost all metals 7 4154 MWh electricity used per tonne of product in primary production 10 3054 China s global mark et share for all base metals 8 2040 Electricity as a percentage of metals production costs 11 7 European Commission 2018 8 Quanxun 2017 Xiuxia 2017 T aube 2017 9 European Aluminium The Nick el Institute et al 2017 10 Eurostat EU EFT A 11 CEPS Ecofys Ecorys JRC 12 CEPS Ecofys Ecorys JRC Global competition Importance of electricity MET ALS IN A CLIMA TE NEUTRAL EUROPE A 2050 BL UEPRINT 9