The Electric-Vehicle Push Empowers China

Source: By Robert Bryce, Wall Street Journal • Posted: Tuesday, January 4, 2022

Instead of using its own energy reserves, the U.S. is betting on its rival’s rare earths.

Vice President Kamala Harris charges an electric vehicle during a tour of the Brandywine Maintenance Facility in Prince George’s County, Md., Dec. 13. Photo: Manuel Balce Ceneta/Associated Press

The Biden administration wants to spend billions on electric-vehicle subsidies and charging stations because, as Vice President Kamala Harris put it in a Dec. 13 speech, “climate change has become a climate crisis and it demands urgent action.” But rushing to replace gasoline-powered cars with electric vehicles would hand the keys to the American transportation sector to China, given Beijing’s near-monopoly on rare-earth elements like neodymium and dysprosium, which are used in the high-output motors of most electric vehicles.

The Journal reported Dec. 3 that the Chinese government is consolidating assets from state firms to create a new global champion called the China Rare Earth Group. The state-run Global Times quoted a manager at a state-owned rare-earth enterprise based in Ganzhou: “The new company will enforce stricter rules on the production quantity as well as the export volume of rare earths, which may also drive up prices.”

The White House’s Dec. 13 press release on charging stations, which includes a section on electric-vehicle batteries, mentions the need to increase domestic production of lithium to bolster the “battery supply chain,” but it mentions neither rare earths nor China.

In May, the International Energy Agency reported that an electric-vehicle motor requires “upwards of 1 kilogram,” or more than 2 pounds, of rare-earth elements. The same report found that China controls about 85% of the global supply of those elements and that the “geographical concentration of production” of critical minerals—including rare earths, lithium, copper and cobalt—“is unlikely to change in the near term.”

Even if the U.S. could increase quickly the mining of rare earths—an unlikely prospect given the difficulty of gaining permits for new mining operations—the IEA explains that processing rare earths “often generates toxic and radioactive materials” that can leak into groundwater, and that “this has been a serious issue in China.”

Some auto makers, including Nissan and BMW, have developed electric-vehicle drive trains that reduce or eliminate the need for rare earths. But even if the auto industry doesn’t need them, the wind-energy industry does. According to the IEA, offshore wind turbines require as much as 500 pounds of rare earths per megawatt of installed capacity, including some 400 pounds of neodymium. Those are big numbers considering that the Biden administration wants to deploy 30,000 megawatts of offshore wind by 2030. The IEA predicts that the global wind-energy industry’s need for rare earths “is set to more than triple by 2040.”

The punch line here is obvious: Since the 1973 oil embargo, U.S. policy makers have decried America’s dependence on foreign oil to fuel our transportation sector. But now, in the name of climate change and the much-hyped “energy transition,” the U.S. is positioning itself to be dependent largely on China for rare earths, and it will do so at the same time that the U.S. and China are increasingly at odds over the origins of Covid-19, Taiwan sovereignty, control of the South China Sea, and genocide and crimes against humanity against predominantly Muslim Uyghurs in Xinjiang, including forced labor to produce polysilicon for solar panels.

By forcing electric vehicles into the market, the U.S. will trade reliance on domestically produced gasoline and diesel fuel for reliance on Chinese neodymium, terbium and dysprosium. What a lousy trade.

Mr. Bryce is host of the “Power Hungry Podcast” and author of “A Question of Power: Electricity and the Wealth of Nations.”