'Energy Security' Mythbusters

Green energy increases reliance on foreign sources.

Remember how one advantage of green technology would be to make America less dependent on foreign sources of energy? Oops. A Department of Energy report released last month to little fanfare inadvertently blows this idea away.

The "Critical Materials Strategy 2010" represents DOE's effort to understand how green energy technologies depend on rare earths. Those are the minerals at the bottom of the periodic table whose unique properties make them indispensable in many high technologies, including wind turbines and solar panels.

As the world recently realized, more than 95% of these minerals are sourced from China. Because of the environmental problems associated with extracting them, most countries where deposits exist have discouraged mining. The two most promising non-Chinese sources are mines in Mountain Pass, California and Mount Weld, Australia, and it will take years to bring them fully online.

China has been taking advantage of its rare-earth monopoly. Late last month it announced a 35% cut in its export quota, and that follows a previous quota cut of 72% last year. Export taxes on some rare earths also rose on January 1, to 25% from between zero and 15% depending on the element.

The reasons for these actions aren't fully clear. Beijing may be cracking down on illegal mining that creates pollution problems. But politics might also be at play, as with the apparent suspension of shipments to Japan following a maritime territorial dispute last year.

Hence the DOE's concerns about rare earths and green tech. As the report notes, "[s]everal clean energy technologies—including wind turbines, electric vehicles, photovoltaic cells and fluorescent lighting—use materials at risk of supply disruptions in the short term." Those risks include "supply-demand imbalances that could lead to increased price volatility and supply chain disruption." Exacerbating the problem, rare earths are traded in relatively small, nontransparent transactions instead of on open exchanges, making it harder to discern supply, demand and price trends.

So much for DOE's claim, voiced on its website, that the "growth of clean and domestic renewable energy is an important part of . . . increasing our energy security." In reality, renewables appear to be substituting dependence on one set of foreign suppliers for dependence on another set of foreign suppliers.

Reliance on global markets for energy supplies has never been as terrible as energy independence believers argued—at least so long as the global market in question is as broad and deep as that for oil and other hydrocarbons. The U.S. also is capable of producing more of its energy if it could muster the political will to expand oil and natural gas drilling. So we suppose thanks are in order to DOE for reminding everyone that not even a windmill can free America from the need to trade with others for energy.