The United States is too reliant on China for minerals crucial to new clean energy technologies, making the American economy vulnerable to shortages of materials needed for a range of green products — from compact fluorescent light bulbs to electric cars to giant wind turbines.
So warns a detailed report to be released on Wednesday morning by the United States Energy Department. The report, which predicts that it could take 15 years to break American dependence on Chinese supplies, calls for the nation to increase research and expand diplomatic contacts to find alternative sources, and to develop ways to recycle the minerals or replace them with other materials.
We also use this stuff in guided missile technology, an important fact this story doesn't mention. 96% of the "most crucial types" of rare earth materials are produced in China, and guess what folks - surprise, surprise, the price is going up again!
And on Tuesday, China’s finance ministry announced on its Web site, and the official Xinhua news agency later reported as well, that China plans to increase its export taxes on some rare earths next year. The ministry did not say how much the taxes would increase. Although World Trade Organization rules ban export taxes, China has imposed them on rare earths for the last four years.
Rare earths that sell for "several dollars" a pound in China shoot up to over $40 a pound overseas when the export taxes are added. When you add it all up...
That is among the reasons, along with cheap labor and extensive Chinese government subsidies, that many clean energy manufacturers have found it cheaper to shift production to China.
And that means we are falling behind.
Mr. Sandalow said that wind turbine manufacturers were capable of building very large turbines without rare earths. But using rare earths could reduce the per megawatt cost of wind energy and improve its competitiveness through savings on other materials, like steel and copper.
He cautioned that the United States had been putting far fewer resources than China into exploring ways to use the powerful magnetic and other properties of rare earths.
“There are thousands of rare earth researchers in China and dozens in the United States, and that underscores both the challenge and the opportunity,” he said. “Their expertise in this area is significant.”
While the Chinese government keeps shifting rationale for its rare earth export policies, the rest of the world is starting to look to alternative sources. Molycorp, an American company that closed operations in 2002, is set to reopen a mine in California in 2012. Another mine in Australia plans to do the same. Other smaller mining companies are looking to operate in the US - but those will take financing and permits to get rolling, and that takes years.
Don't want to advocate that we continue to destroy the environment in pursuit of these materials - but until synthetic substitutes or alternative production methods are found, we are in a jam here. Chinese turbine manufacturers are planning a major push into the US wind energy market, and putting a cost squeeze on these materials will leave our manufacturers at a disadvantage - and then we can wave bye-bye to the jobs. And profits. Something tells me that is exactly what they have in mind.
So the question remains: Do we want millions of clean energy jobs in this country, or not? If so, we are going to need a federal energy and industrial policy that addresses this and other issues, and we are going to have to start playing hardball with countries that manipulate trade laws to create unfair advantages for their own manufacturers. Good luck with that last one, but it's in our power to do something about the first.
My hope is that President Obama is serious about creating a clean energy economy, whether or not he can twist Republican arms in the House to make it happen is another story altogether. Something tells me a trade for nuclear and/or more domestic drilling will be the hostage if and when he does. Whatever happens though, we cannot afford to keep falling behind the curve. Other countries are rapidly moving forward with energy policy - 73 countries already have renewable energy targets in place. Our individual state targets do help, but industry experts are increasingly calling for a national policy to signal to the world we mean business.
Bottom line: The United States needs to seriously get in the game - before we get left behind.