NCPA - National Center for Policy Analysis

Rare Earth Dependence

August 22, 2011

Increasing the United States' reliance on a "clean" energy, as touted by President Obama, is a risky policy that leaves Americans dependent on China for supplies of critical energy resources, says H. Sterling Burnett a senior fellow with the National Center for Policy Analysis.

Key components of every green energy technology -- from wind turbines to high-tech batteries -- are made from of a small class of minerals known as the rare earth elements, and other rare minerals.  These elements are abundant, but, for the near future, they are found in economically exploitable concentrations only in the People's Republic of China.  With 97 percent of the global market, China has a de facto monopoly on the trade in these rare elements.  And China has already shown itself willing to use its virtual monopoly on rare earths to extract favorable political outcomes from foreign nations.

The production of solar cells relies on the rare element tellurium.  However, the only tellurium mine on Earth is in China.  As a result, China is increasingly dominating the market for solar manufacturing.

  • In 2003, China produced only 1 percent of the world's solar panels but by 2009 its share rose to 43 percent.
  • By contrast, since 2003, U.S. production of solar panels fell from 14 percent to just four percent of the world's total.

China is increasingly choosing to sell finished green products to the world, rather than exporting its rare earths in raw form.

  • It has eliminated export tax rebates for rare earth elements while increasing the export taxes to as much as 25 percent.
  • Further, China decreased its export quota by 40 percent between 2009 and 2010.

The push to adopt rare earth-powered energy technologies involves swapping one form of dependence for a much more restrictive one, says Burnett.

Source: H. Sterling Burnett, "Rare Earth Dependence," Public Broadcasting, August 19, 2011.

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