Increasingly, China has come to dominate the rare earth element market, virtually monopolizing all aspects of the supply chain. With demand for REE expected to rise, the United States government and several private companies have begun taking steps to globalize the REE supply chain to supply the burgeoning greentech industry. However, high up-front costs and long lag times to refine and alloy metals threaten to delay the reestablishment of an REE supply chain for several years. This week’s GR Insight looks at the ways in which private companies and the US government are addressing the supply problem to ensure future access to REE.

Rare earth elements (REE) are an essential component to a variety of green technology, military equipment, and high-tech products, however China has developed a virtual monopoly on REE production, with great geo-strategic implications. Over the past twenty years, prices have been so low that China has effectively captured the market. Now, many of the technologies that businesses and policymakers are counting on to drive the world toward energy efficiency and greater consumption of renewable energy require REE in one form or another, but supply chains have not been developed and few countries outside China are producing them. In this Garten Rothkopf Energy and Climate Brief, the supply problem and the policy response are discussed in detail, to assess what the future of REE could mean for the new energy economy.

What are Rare Earth Elements, Why are They Critical To GreenTech

The term "rare earth elements" refers to a class of seventeen metals, including scandium, yttrium, and the fifteen lanthanides, which tend to be found together.  Despite their name, rare earth elements are more common than many other critical industrial materials, including gold, cadmium, and rhenium.  The difficulty lies in extracting and refining them in economically viable quantities. There have been three drivers for increased demand for of REEs – miniaturization, efficiencies and push for clean technologies – affecting both the power and transport sectors, as well as a range of critical modern technologies, including hard drives, cell phones, energy efficient light bulbs, auto pollution control devices and catalysts, as well as critical military applications such as guidance and control systems, smart bombs, and patriot missiles.  They are also essential to hybrid batteries and the magnets used in wind turbines.

REEs are critical to next generation technology improvements.  While the specific supply requirements of these technologies have not been projected, REEs will be necessary for superconducting materials, advances in materials science (lanthanide series of REMs are the only known bridge to next level of improved performance in materials properties for metallurgical alloys and electrical conductivity), and the next generation of solar cells using Indium and gallium.  The overriding need for lighter, more efficient motors and turbines from renewable technologies will become a priority in short order.  In certain applications, two tons of rare earth magnets are required in the permanent generator that goes on top of a turbine. Hybrid electric vehicles such as the Toyota Prius, for example, use batteries that need 12 kg of lanthanum per unit at current ranges.  


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