The gasoline shortages of the 1970s and 1980s were created by trade embargoes and political upheaval in the small handful of countries responsible for the vast majority of global oil production.
Since that time, the US. has fought several wars in the Middle East and provided tremendous sums of foreign aid in its perpetual struggle to ensure a reliable supply of oil for U.S. consumers.
Unfortunately, there’s the potential to re-create the energy security problems of yesteryear with materials relied upon for today’s technology.
Rare earth elements are vital components in computers, satellites, medical devices, cellphones, hybrid vehicles, batteries, lasers, steel production, clean energy and many other instruments used every day by Americans.
Without REEs, these devices do not work. They don’t send the information or power the machine. And China has become the largest producer of rare earth elements in the world.
China maintains a strong monopoly in the global marketplace.
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In 16 of the past 20 years, the U.S. has imported 100% of the REEs used in domestic manufacturing.
Increasing mining activity won’t help
China has accomplished this by being a more cost-effective location for the separation and refining processes needed to manufacture rare earth elements, processes that tend to involve environmentally toxic chemicals. Environmental regulations across most of the globe cause the REE separation process to be costlier than importing them from China, where regulations are more lax. Thus the U.S. cannot simply increase mining activity to solve this problem since all the mined material would have to be shipped to China for processing.
This dependence on foreign sources for such a critical resource presents an economic and national security risk to the U.S.
Chinese restrictions on exports to the U.S. could leave U.S. businesses at risk of manufacturing disruptions and sharp price spikes, which ultimately affect the availability of electronics and green energy technology.
Reliance on Chinese imports could also be used as a weapon with national security implications. For example, the Pentagon recently halted the delivery of F-35 fighter jets after it discovered they contained rare earth components sourced from China. Delivery was halted out of fear the components could store or transmit sensitive information or China could halt exports to the U.S. in an effort to cut off supplies of military aircraft.
Two strategies, with research at the University of Tennessee
The U.S. has, however, two strategies at its disposal that are the focus of research efforts at universities, including the University of Tennessee.
The first strategy would be to find viable alternatives to REEs that allow firms to pivot away from REEs when global supply is disrupted.
The second strategy is to diversify its supply of REEs and become less reliant on a single country. Here the U.S. has three promising options. First is to improve processes for recycling rare earth elements from electronic waste, such as discarded laptops and cellphones. Second is to develop separation and refining processes that are less dependent on toxic chemicals or using supercomputers to increase the efficiency of the separation process to reduce the environmental impact of these processes. Third is to leverage nontraditional reserves that contain REEs in higher concentrations than the underground reserves currently mined.
Successfully implementing any of these strategies will require altering the policy landscape to make new technologies more economically viable as well as federal investment in research and development. China’s dominance in the market prevents U.S. companies from gaining a foothold both economically and technologically. The U.S cannot simply rely on private markets to fulfill the growing demand and diversify its REE supplies.
Failure to understand the U.S.’s reliance on rare earth elements obtained from China and to make needed policy adjustments could land us with the same energy security challenges the U.S. experiences with oil dependence.
Charles Sims is the director of the Energy and Environment program at the Howard H. Baker Jr. Center for Public Policy. Deborah Penchoff is a Baker Center fellow and associate director of the Innovative Computing Laboratory at the University of Tennessee at Knoxville.