Following on my colleague Euan Sadden’s blog post about China’s dominance of the rare earth metals market, the U.S. Department of Energy (DOE) has just unveiled its new Strategy on Critical Materials. Last week, I caught David Sandalow, DOE’s Assistant Secretary for Policy and International Affairs, presenting the key findings. He spoke at a half-day seminar on rare earth elements held by the Center for Strategic and International Studies.
DOE’s Strategy on Critical Materials is the agency’s attempt to assess potential supply risks in key materials used in clean technologies. For this report, DOE focused on just four clean tech options: wind turbines, solar cells, electric vehicles, and energy efficient lighting. Specifically, DOE looked at four components in these technologies: magnets, batteries, PV thin films and phosphors, and at 14 rare earth elements or other key materials such as lithium used in them:
DOE developed four relatively simple demand scenarios for each element: low or high market penetration of the technology; and low or high material content levels. (The market penetration scenarios came from International Energy Agency (IEA) estimates.) These are plotted against 2010-2025 supply projections. While these are not meant to be definitive projections for future demand, the scenarios do suggest which materials might face the greatest supply risks. DOE also developed a “criticality” matrix, ranking the elements according to their importance and the potential for supply constraints.
There is much more detail in the report, which I haven’t had a chance to read through yet, but a few thoughts based on David Sandalow’s overview:
First, this is certainly timely. The possibility of resource constraints for new, clean technologies is attracting attention from government and industry in the U.S. It seems a cruel irony that we would wean ourselves from petroleum only to find ourselves overly dependent on other resources with limited availability and held by governments not entirely favorably inclined towards the U.S. and other western developed world countries.
Second, while lithium may attract more attention, this report suggests that the rare earth metals are a bigger supply concern. In the short term, the report does not find that lithium supply is likely to be an issue. After 2015, depending on the market penetration scenario for PHEVs and BEVs, demand does begin to outstrip potential supply.
Third, the document is quite limited in scope. I believe the work was produced with a very short turn-around time, which may partly explain limiting the analysis to four technologies, but it would be valuable to look at other options which could see significant uptake in the 2010-2025 timeframe – for example, looking at fuel cells and their impact on demand for platinum and other precious metals.
Finally, I think an undercurrent of this whole event was unease over the potential for China to use its dominance in rare earth metals as a foreign policy tool, a topic David Sandalow wisely sidestepped. This is likely to be an increasingly important subject for U.S. government and for industry, although not one for the DOE to tackle directly.
Lisa Jerram is a senior analyst contributing to Pike Research’s clean transportation and clean industry practices with a focus on fuel cells and emerging transportation technologies. Jerram has more than 15 years experience in the alternative energy market, including an extensive background analyzing policy and regulatory issues, demand drivers, and technology factors for industry and government clients.