This is the second instalment of our series “Resilience by Design” where we unpack how a systems transformation approach to policymaking can strengthen European resilience in a complex and volatile environment.
“The energy transition did not happen because someone had all the answers. It happened because enough people understood what was at stake and decided to act. That moment has arrived again, not just for energy, but for every system Europe depends on. The question is not whether transformation is possible. We know it is. The question is whether Europe will choose to design it or wait to be forced into it.” we argued in our first instalment.
For this second instalment, we unpack a further building block of Europe’s economy: Materials. If we are serious in designing our future, what is the material choice we have?
Access to, and use of natural resources, has always been assumed to be closely related to the level of development achieved by nations throughout human history. We also see this is troubling global geostrategic policy developments. This is nothing new, only more transparent this time. The resource agenda is driving the geopolitical efforts of net-consumer nations to politically control resource-rich countries, leading to instability, weakened democratic systems, and conflict. The whole history of colonialisation of nature, was, and still is, central to questions of fairness and equity.
The link between the expansion of natural resource use and improving wellbeing seems broken, at least in high income countries. Global material use has more than tripled in the last 50 years, according to the UN International Resource Panel (IRP), with four human needs - energy, housing, mobility and food - representing 90% of total global material demand. However, while global progress on human development indicators is stalling according to the UNDP, growth in materials extraction and processing is continuing unabated and driving the triple planetary crisis. 60% of climate change, 40% of pollution-related health impacts and more than 90% of land-related biodiversity loss and water stress can be attributed by this according to the IRP. The same data also shows that the wealthiest 10%, who benefit most, are also the most responsible for these environmental impacts, whereas the 50% poorest are responsible for 10% of total lifestyle consumption. In short, our economic model is wasteful and unjust.
The most important question is therefore how to decouple the meeting of human needs from expanding resource and energy consumption, and as such, how to enhance rather than destruct the resilience of our economic system. The most promising concept to achieve this is a circular and regenerative economy, providing an integrated business model that reduces material needs and energy use, providing the goods and services that underpin modern economies, and rewards resilience over fragility.
Europe, lacking energy reserves, critical minerals and dominant technology platforms, finds itself structurally exposed in the new geopolitical landscape. Its economic model is broken. Where it specialised in regulation, market access and coordination, it outsourced its security, imported its energy and resources and externalised its industrial production. That model depended on abundant global growth, stable geopolitical guarantees, and a broadly cooperative international order, as excellently argued by Hans Stegeman, Chief Economist of Triodos Bank. None of those conditions hold today. Democratic erosion, geopolitical vulnerability and ecological constraints are converging and limiting the political room for manoeuvre.
While the war on Iran directly shows Europe’s remaining exposure to fossil fuels, vulnerabilities as a result of its material dependence remains its Achilles heel. Supply of critical raw materials is concentrated in a small number of countries, some of them geopolitically problematic, and in certain respects the dependencies are more acute than they were with fossil fuels. The policy response is familiar - more markets, more growth, and more competition are expected to compensate for the EU economy’s vulnerabilities, rather than vulnerabilities being addressed as such. Simplification is presented as pragmatism, deregulation as necessity, and removal of democratic safeguards as an unfortunate but temporary cost.
In that sense, materials are where fossil fuels were two decades ago: a geopolitical vulnerability, associated with large environmental damages, and no commercially viable alternative in sight.
What makes materials different from energy, however, are its system dynamics. Where fossil fuels, and electricity to an extent are defined by flows, which can only be consumed once, material welfare is dependent on stocks as well. The total amount of materials that are utilised at any time in an economy are more important to a nation’s ability to deliver prosperity, than the supply of materials consumed.
A transition to a less vulnerable system is therefore easier than it may appear. Europe is already sitting on a substantial stock of materials embedded in its economy. This is why the concept of a circular and regenerative economy is so attractive. However, despite enthusiastic policy announcements, circular economy indicators show no meaningful progress over the past decade, according to the recent Europe’s Environment 2025 by the European Environment Agency. Therefore, if Europe is serious about achieving strategic autonomy in the area of minerals and materials, far more is needed. In curbing overall consumption as well as in structural and infrastructural investment to enhance reuse, recycling and recovery throughout value chains and for urban mining.
And this is the second difference from fossil fuels – we know what works to achieve a systems transformation in the area of materials. The current focus to diversify the supply of critical raw materials is not enough, clear demand signals are needed. Just as the EU has introduced climate targets and emission trading schemes that provided the long-term economic incentives for clean businesses to innovate and grow, a similar visionary approach is needed for materials.
What is needed is not incremental adjustment but a systemic shift, and the proposed Circular Economy Act is an opportunity to begin delivering one. Inspired by the lessons from the energy transition, the Co-chairs of the International Resource Panel released its call to action with four essential policy missions for the Circular economy act. This is based on the Global Resource Outlook 2024 and endorsed by more than 100 expert organisations and include:
Two elements are critical for the Circular Economy Act, in addition to its sectoral proposals specifically. First, in the absence of appropriate market signals, and in the absence of the realistic hope that they will be fixed soon, introducing science-based material use targets would be a valuable first step for policy guidance. Second, the Act must address the global governance gap in materials management directly, though, for example, proposing the establishment of an International Materials Agency.
A genuine circular economy would deliver more than efficient production methods. It represents a structurally different economic model, one that is resilient to supply shocks and external coercion, and that enables equitable partnerships with resource-rich countries based on value creation rather than extraction.
While energy and energy security are essential for modern economies, an energy transition by itself will not result in a more resilient, less wasteful and more just and regenerative system. The desired shift from a fossil fuels-based economy to one built around electrification that depends on more metals and minerals provides a unique opportunity to design resilience into the system. The real lesson from the war on Iran is how to make all economic systems delivering human needs more sustainable and resilient to multiple threats from climate change and conflict.
If Europe is serious about its political priorities of security, resilience and prosperity in the current geopolitical context, it needs a compass. Instead of being driven by fear in this storm of power, and waiting for global alignment on trade, industrial and environmental policy, Europe needs to retake control of its own destiny.
The current material and energy scarcity forces Europe to consider a new strategic direction and prioritisation based on a compass of values, rule of law and science-based policymaking. In such a context, sufficiency -reducing material demand rather than merely greening supply - stops being a moral preference and becomes a strategic consideration. It is a test of political adulthood, as pointed out by Hans Stegeman. Europe’s leverage lies in showing that a high-income, democratic region can function under material constraints. That reduced dependence can increase resilience and could provide a clear orientation and opportunities for businesses and citizens to thrive together.
We must move from discussing how to deregulate Europe, to how to continue building it, strengthen in it both regionally and internationally. From constant adaptation to an active creation. Showing that Europe can function under resource constraints, implementing the circular economy concept in a holistic way, is our chance to lead … not just to follow.