“Ree”-Examining Rare Earth Elements

Here in Boston for the National Conference of State Legislatures’ 2017 Legislative Summit, I’ve enjoyed attending several informational sessions on current topics in energy and environmental policy. It’s been an honor to meet and talk with dozens of state legislators from all over the country.

Rightly so, the legislators, their staff and energy leaders are asking future-focused questions and trying to imagine together what the utility of the future will look like. Many of the panels and forums touched on exciting developments in battery storage and renewable energy technologies.

State legislators could also benefit from tactical discussions about how to reach the utility of the future, while stimulating U.S. innovation and economic growth. A timely topic came to mind this week: How is the U.S. planning for manufacturing clean energy technologies without over-relying on supply chains that include potentially hostile foreign governments, or scarce resources such as rare earth elements (REEs) and other now-precious metals such as lithium?

REEs tend to have unpronounceable names, and prove hard to extract and process, yet are increasingly needed for new technologies, from iPhones to electric car batteries and LEDs. Theses minerals and other metals and compounds are increasingly foundational components for the utility and grid of the future. Lithium-ion batteries are perhaps the most commonly used example, but many other technologies in energy and daily life rely on REEs.

For those new to the issue, the U.S Geological Survey offers a helpful 4-page document listing REEs by name, describing some common uses and flagging issues in recovery and processing of REEs. Despite many known REE deposits, the global supply of REEs is limited by the cost and complexity of exploring REE deposits and developing REE mines, including REE extraction and separation facilities.

In 2011, PACE reported on rising prices and foreign monopoly control of rare earth element supply and pricing problem. We shared the example of neodymium, an element needed in surprising amounts in high-capacity wind turbines. A core concern then – China’s dominance of the global REE supply – remains today and may be exacerbated by the coming demand boom for electric vehicles with batteries, large-scale wind projects, LED-lighting, and more.

Over the past decade, alarmed by China’s aggression on rare earth supplies, many voices have raised REE concerns, including the Congressional Research Service, the Department of Defense, and the Department of Energy. Others say that “rare” is a misnomer, pointing out that REEs are present in many places around the globe. Those who wish to minimize REE concerns tout that technology advances aimed at developing batteries that use wholly different materials, along with recycling programs, can reduce U.S. dependence on other nations’ output and willingness to trade fairly in REEs. The financial markets seem to be paying closer attention to metals prices and geopolitical nuances, especially after leading automakers’ announcements of plans to produce only electric vehicles in just a few short years.

While the debate continues, the U.S. government is taking concrete steps to increase useful research and development into REEs and other alloys needed to bring about the energy technology revolution.

The Ames Laboratory, part of the Department of Energy’s national labs system, now operates the Critical Materials Institute. CMI partners with industry and academia to study REE issues, explaining its mission as follows:

“Actual or threatened shortages of essential raw materials create risks for U.S. manufacturing and energy security. Nascent industries, including the clean energy sector, are particularly vulnerable. Rare earth elements, with essential roles in high-efficiency motors and advanced lighting, are the most prominent of the critical materials today. Rare earth metals and alloys are not produced in the United States, despite the availability of geologic resources, because the processes required to separate individual rare earths from one another and then convert them to metals and alloys are inefficient, costly, polluting, and potentially damaging to worker health and safety. The solution is innovation throughout the rare earth supply chain.”

In a great example of stimulating innovation through the supply chain, earlier this summer, the Department of Energy’s Office of Fossil Energy announced a $6.9 million investment in research aimed at producing salable rare earth elements (REEs) from domestic coal and coal by-products. These projects expand upon a body of REE research ongoing at the National Energy Technology Laboratory.

There’s a lot more to the clean energy materials and supply chain debate than PACE can answer or even flag in one weekly blog, but it seems increasingly important to re-examine the issues and advocate for more attention to the topic. Kudos to the Department of Energy for directing its own scarce money and personnel resources to our collective store of knowledge. If you’d like to contribute to the debate, or highlight research that can alleviate rare earth and other metals concerns, let us know by emailing so we can ree-examine the topic.


A Lease on Life for U.S. Offshore Resources

Over the years, PACE has consistently spoken out in favor of increasing our nation’s supply of energy, across all sources. That’s why earlier this week, we filed a formal comment letter with the Department of Interior’s Bureau of Ocean Energy Management (BOEM) advocating for development of a new and expanded offshore oil and natural gas leasing program. If you or your organization would like to join the comment effort, let us know by emailing and we can guide you through the process.

At this point, BOEM is undertaking an initial scoping process for its five-year (2019-2024) leasing program. The agency is asking for public comments, due by August 17, on what areas should be considered for leasing as it assembles its Draft Proposed Program (DPP). In the months to come, the agency will continue with inquiries covering specific areas and environmental impacts.

Even the federal government estimates that U.S. federal waters contain abundant amounts of oil and natural gas, perhaps enough to supply the nation for over a decade. However, many of these resources are located in areas that are either completely or largely cut off from consideration for development. By some estimates, 94% of federal offshore areas are off-limits to development.

You might ask why offshore oil and gas development is still so important, when headlines trumpet that the U.S. is now a leading energy producer, prices at the pump are reminiscent of the late 1990s, and the economy seems less energy-intensive. Two over-arching concerns led PACE to file these comments and focus on it in this week’s second newsletter post: the economy and national security.

Studies have found that developing these resources in places like the Gulf of Mexico, the Atlantic and the Alaskan Arctic could fuel over a half-million jobs and lead to over $300 billion in government revenue. Healthcare, infrastructure, tax reform – all these federal efforts could benefit from the cash influx. States, too, need the additional income and more chances to develop high-quality jobs for their citizens. That’s hitting home with me right now after spending several days in coastal Mississippi, where the landscape and the economy still are healing from the after-effects of Hurricane Katrina, now nearly 12 years in the rearview mirror.

Considering the national security angle, you may be surprised to learn that imports continue to make up over 50 percent of the nation’s crude oil and petroleum product supplies. While the U.S. enjoys energy trading relationships with many stable and reliable governments, that’s not always the case. Given our increasingly unpredictable relations with unstable countries who are also energy exporters, it just makes sense to continue to use all the reasonable tools we have to strengthen our energy independence. I like the idea of letting hostile governments know we can take care of ourselves for a decade or more.

Admittedly, expanded offshore leasing would be accompanied by increased environmental impacts. That’s why, as BOEM continues through a planning and comment process that can take up to three years, the agency will include deliberate, thoughtful creation of an Environmental Impact Statement. The agency will also have to consider requirements under several other long-standing, well-established environmental statutes such as the National Environmental Policy Act, the Clean Water Act and the Endangered Species Act. It’s worth noting, too, that as we continue to import energy products from overseas, there’s a significant chance those resources were developed in lands or waters where the concept of environmental regulation is an endangered (or extinct) species. As well, the Obama Administration’s Interior Department concluded last year that a failure to hold offshore lease sales could result in significant environmental and social costs because of the resulting need to develop still other sources.

The BOEM planning process isn’t glamorous, and the career civil servants running it have a lot of tedious work ahead of them, but what they are undertaking is really important, and PACE will draw attention to it again. Decades of prohibitions against offshore leasing and inconsistent policies have stunted the amount of scientific and technical research into what these areas can contribute, and how technology and ingenuity can most efficiently and carefully harness the energy under the seas. In August 2018, I hope we can report back that a thoughtful BOEM public comment process, with contributions from all sides, has helped create a new lease on life for offshore energy.


Choice, Consequences, and Consumers

PACE was on the road in July, covering national meetings of state legislators such as the American Legislative Exchange Council, the Southern States Energy Board, and the Council of State Governments’ Southern Legislative Conference. It was a privilege to hear hours of thoughtful discussions and be reminded how hard our elected officials work to get energy policy right for consumers. We were also able to share some thoughts about net metering and the importance of policies that avoid cost-shifting to customers who don’t (or can’t afford to) choose solar.

The energy policy workload isn’t going to lighten up anytime soon. If summer discussions are a good predictor, state legislatures nationwide will be considering issues including: support for baseload power, electric vehicle subsidies, storage programs, cybersecurity, wind tax credits, and energy efficiency incentives.

Just as in the past several years, state policy discussions will be influenced by reports and rhetoric surrounding changes in the energy industry. In the late summer or fall, national policy directions from the Trump Administration, such as the Department of Energy’s grid study and the White House task force on regulatory reform, may emerge and further shape the state-level policy debate.

Taking a look at the landscape and reflecting on talk of change in the air, PACE anticipates that advocates for energy deregulation, labeling themselves as “customer choice” voices, will re-emerge on the state and national scene. They’ll seize upon the mantra that “changes in technology demand changes in fundamental market structures and rules.” New market research will appear saying that an overwhelming majority of consumers favor choice. Attractive advertisements will show images of electric cars, smart thermostats, and fresh-faced millennials managing their energy consumption from their fitness band-watches. This is, of course, a rosy picture that belies a much more complicated reality.

For that reason, it seems timely in August, as states look ahead to 2018 legislative sessions, to share some lessons learned from our country’s 20-plus year experiment with competitive retail electricity markets.

In a nutshell, deregulation hasn’t worked for consumers. In state after state with deregulated electricity markets, prices are higher than in state with traditional markets. Consumers and businesses grapple with price volatility under deregulation. Reliability emergencies can be directly tied to supply constraints caused by deregulation. In some states, regulators and courts are investigating energy marketers for misleading claims and ordering refunds to low-income consumers. Furthermore, regulators seem to be spending just as much time watching over and fine-tuning the deregulated markets as was required previously for traditional regulatory structures. The bottom line? Deregulation is fraught with consequences that advocates aren’t likely to advertise, but that policy makers need to hear.

This Fall, PACE will devote more blog space to this important topic, highlighting specific case studies and consumer experiences.  As we develop this conversation, we’d love to hear from consumers, legislators, regulators, and staff about deregulation and how it has manifested in your states.