Green Energy Actually Increases U.S. Dependence on Imports - Global Trade Magazine
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  April 14th, 2016 | Written by

Green Energy Actually Increases U.S. Dependence on Imports

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  • China produces most of the world’s rare earth minerals and supplies the U.S. with 71 percent of its rare earth imports.
  • Despite agreeing to abide a WTO ruling, China remains with an 85-percent worldwide market share for rare earth minerals.
  • Several pounds of rare earth compounds are used in batteries that power electric vehicles.

One of the common rationales for promoting wind and solar energy technologies is to reduce dependence on foreign sources of energy.

But a report from the Institute for Energy Research says green energy may actually increase United States imports.

Green energy technologies are dependent on rare earth minerals and lithium for batteries, the report noted, both of which are primarily imported into the United States. China produces most of the world’s rare earth minerals and that country supplies the U.S. with 71 percent of its rare earth imports. The U.S. produces 24 percent of the rare earth minerals that it needs, according to the report.

In 2013, the United States imported 54 percent of the lithium it used, with Chile and Argentina supplying 96 percent of those imports. By contrast, the U.S. now imports 27 percent of the oil it uses domestically.

China began producing rare earth minerals in the early 1980s and became the world’s leading producer in the early 1990s. China sold its rare earth minerals at very low prices and U.S. producers stopped operations. China controlled 95 percent of the world’s rare earth production in 2010 and began restricting exports, causing prices to rise over 500 percent for certain materials.

As other countries such as the U.S., Canada, and Australia began entering the market, China announced last year that it would adhere to a World Trade Organization ruling by removing its export quotas and other restrictions on rare earth minerals. Despite this move, China remains the dominant producer of rare earth minerals, with an 85-percent market share worldwide.

Several pounds of rare earth compounds are used in batteries that power electric vehicles and hybrid-electric vehicles.

Over 50 percent of lithium used in the United States is produced abroad. The U.S. produces only 28 percent of the lithium used domestically. Chile is the major source of lithium to the United States, followed by Argentina.

“Some see lithium as the new oil with 90 percent of the market controlled by three companies,” the report concluded. “Tesla… will need to obtain lithium fairly soon since its gigafactory may start producing batteries this year and plans to be at full production by 2020.”


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