How Does Heterogeneous Technological Change Shape EU Dependence on Critical Raw Material Imports?

The European Union’s decarbonization policies depend heavily on critical raw materials (CRMs), which are mostly imported from external suppliers, with global supply being highly concentrated and subject to significant risks. This reliance creates tensions between EU growth strategies, strategic autonomy, and resource security policies, as exemplified by the recent Critical Raw Materials Act. This study examines the interplay between technological change and CRM dependency by combining trade and innovation (patent) data. It analyzes the effect of CRM-intensive technological change on imports of CRM-related goods and materials in European countries, differentiating between: (i) technologies that exploit CRM; (ii) environmental technologies that use CRM; and (iii) efficient technologies for recycling and recovery of CRM. Additionally, this study disaggregates global value chains for solar photovoltaics, wind turbines, Li-ion batteries, and fuel cells, revealing significant heterogeneity in the effects of technological change on trade flows. Our findings offer insights into whether technological change can reconcile EU policy objectives or, instead, exacerbate contradictions between competing policy goals.