Energy & Environmental Policy

Rare Earth Elements: A Critical Component of a Clean Energy Future

As our nation moves towards an increased use of renewable energy technologies, we should plan for the increased demand this will place on rare earth elements. In an effort to prevent the substitution of a dependence on foreign oil for a dependence on foreign REEs, the United States should implement a proactive strategy to diversify our supply of these elements.

REEs include elements such as neodymium, lanthanum, lutetium, scandium and yttrium. These elements are critical components of many of the technologies we use today, including superconductors, hybrid and electric vehicles, catalytic converters, compact fluorescent light bulbs, lasers, cell phones and even advanced weapons systems. The elements are not actually rare but are difficult to find in concentrations that are economically extractable.

Currently, 97 percent of the rare earth elements produced each year come from China. There are deposits in various parts of the world, but China’s production techniques and costs are among the cheapest, making it economically challenging for other countries to aggressively participate in the market. Furthermore, mining of REEs is a chemical-intensive process and precautions must be taken to prevent environmental contamination. Relative to the United States, regulation in China is more lax, further lowering production costs. China is also home to much of the world’s alternative energy technology production and consumes two-thirds of the REEs it produces for manufacturing.

The United States produced REEs domestically until the 1990s, when the largest domestic mine, Mountain Pass in California, closed due to fierce Chinese competition.  Today, the United States is dependent on foreign countries for our supply of REEs, mainly China. According to the U.S. Geological Survey there are other deposits of REEs in Australia, Canada and Greenland. Production, however, has been slow because of the Chinese market presence.

Further complicating our foreign dependence on REEs, are recent actions by the Chinese government to restrict trade of REEs. China recently resumed exports of REEs to Japan after a two month hiatus, and even temporarily froze shipments to the U.S. and Europe.  China has been slowly tightening its restrictions on the REE trade and recently lowered its export quotas by 40 percent, causing concern among trading partners who depend on the minerals for high-tech manufacturing.

Recent developments in REE trade highlight the United States’ dependence and vulnerability.  It is in the United States’ best interest to develop domestic REE resources, and to conduct R&D into new mining techniques and more efficient utilization of the elements to ensure our energy security. The scientific community is currently researching new technologies for mining REEs, recycling consumer goods that contain REEs, and more efficient uses for the minerals. In 2007, Congress created the Advanced Research Projects Agency – Energy program at the Department of Energy (DOE) to look into major energy challenges. Like DARPA does for military technology, ARPA-E is intended to fund high-risk, high-reward research that might not otherwise be pursued by the business community. The initial budget of $400 million was a part of the economic stimulus bill of February 2009.

Two awards already announced through ARPA-E include research to develop bulk quantities of nanocomposite magnets in a bid to cut by 80 percent the REEs used in magnets for power turbines. There is also research into the creation of a nanostructured version of the neodymium iron boron magnet that eliminates the need for as much neodymium. Researchers are also looking for REE substitutes.

In order to better position the United States, a multi-pronged REE strategy should be implemented that includes:

  1. promotion of expanded domestic exploration  and production through a government incentive program,
  2. encouragement of expanded exploration in countries where we have strong bilateral relationships such as Canada and Australia through the establishment of tech-transfer MOUs,
  3. continued and expanded funding for REE R&D through ARPA-E and
  4. establishment of a national recycling program.

Rare earth elements are an important component in new energy technologies. Current dependence on China for the production of REEs, however, puts the United States at a disadvantage. In order to protect future energy needs of the United States, it is critical that we have a strategic plan in place to address the acquisition and efficient use of REEs. By implementing a plan that includes the promotion of increased domestic and international production, research into new production techniques and a national recycling program could help diversify our supply and better prepare us for a clean energy future.



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