In the race for green tech, the leading position of Europe and the United States is coming under new pressure.
During the summer break, China’s commerce ministry cut export quotas for so-called rare earth elements by 72 percent for the second half of this year.
This has serious implications. Rare earth elements are playing a rapidly growing role in our drive toward a high-tech, low-carbon economy, in everything from batteries for hybrid and plug-in cars to catalysts in energy-efficient light bulbs.
The rare-earth element terbium, for example, can cut the electricity demand of lights by up to 80 percent, while fractions of dysprosium can significantly reduce the weight of magnets in electric motors. Rare earth elements also have found military applications.
Chinaholds the largest reserves of rare earths and is responsible for over 95 percent of their current global production. Beijing is well aware of the importance of these strategic resources. In 1992, Deng Xiaoping noted that “the Middle East has its oil, China has rare earth.”
With China seeking to shift its industry to the manufacture of higher-value goods needed for a green industrial transformation, it will increasingly require the lion’s share of its own rare-earth production to satisfy domestic demand.
No wonder that Beijing is slowly pulling the plug on exports. A year ago, the Chinese Ministry of Industry and Information Technology suggested in a policy paper that the export of the most valuable rare earth elements be terminated.
The European Union and the United States need to develop an adequate plan to secure these critical raw materials. On a visit to Brussels, Congressman Bart Gordon of Tennessee, the out-going chairman of the committee on science and technology in the U.S. House of Representatives, met with the European Parliament’s industrial policy committee to promote trans-Atlantic collaboration on this issue, including joint hearings by the U.S. Congress and the European Parliament.
Trans-Atlantic cooperation should encompass several crucial dimensions.
First and foremost, there is a need for more reliable data on the distribution of global reserves and global production potential. Many experts currently speak of a supply crunch by 2012, while others consider the risk minimal as new mines become operational.
Several countries have considerable reserves of rare earths. Had it not been so easy in the past to import them from China, we would have focused more on these alternatives. A trans-Atlantic “early warning system,” armed with accurate facts and figures, could be established to identify future supply options.
Second, we need a strong and coordinated research and development effort on substituting rare earth metals with other materials; increasing the efficiency in using rare earths; and ensuring the recycling of rare earths. If this were done, China’s reduction of exports could come to be seen as a blessing in disguise.
Recycling in particular could lead to the creation of “trash-for-cash” schemes that would not only secure supplies, but also decrease greenhouse gas emissions and ultimately act as a buffer against rising prices. The European Commission, in its approaching Innovation Act, should spearhead these schemes through trans-Atlantic innovation and research and development.
China’s export restrictions have raised a red flag that demands our attention. Trans-Atlantic cooperation on this issue will not only reduce duplication, but — coupled with a strong focus on rare-earth recycling substitution and efficiency — could open up new markets and help in the development of high-tech, low-carbon economies.
Reinhard Bütikofer, a German member of the European Parliament, sits on its committee on industry, research and energy and its delegation for relations with the United States.