JRC revised methodology: Economic Importance

In the revised methodology, under the Economic Importance (EI) dimension, two policy needs were prioritized:

1. a more detailed and precise allocation of raw materials uses to their corresponding NACE-2 (Statistical Classification of Economic Activities in the European Community) sectors,
2. use of a raw materials-specific substitution index in the calculation of EI to allow for a reduction in the potential consequences to the European economy due to inadequate raw materials supply.

The fact that the EC methodology is based on an economy-wide approach creates even higher methodological difficulties, as opposed to assessments where some selected technologies and the related raw materials are targeted. In fact, it is virtually impossible to measure the importance of all applications in which the vast majority of all possible raw materials are used. Moreover, the choice of measuring the EI downstream practically obliges to adopt substantial simplifications.

In summary, the two main alterations of the refined economic importance component include:

1. A more detailed and precise allocation of RM uses to their corresponding NACE sectors, and
2. introduction of a dedicated substitution index SIEI deemed to be a reduction factor for the EI.

The revised approach to calculate EI and material substitution results in the following calculation procedure:

Where: EI is economic importance; As is the share of end use of a raw material in a NACE Rev. 2 2-digit level sector; Qs is the NACE Rev. 2 2-digit level sector’s VA; SI_EI is the substitution index (SI) of a RM (to be used in economic importance); and s denotes sector.