As the global community intensifies efforts toward decarbonization to combat climate change, China’s significant role in rare earth elements (REEs) production and its expanding influence in the carbon credit market are coming under scrutiny. With China currently accounting for over 80% of global REEs supply, concerns over supply chain vulnerability and geopolitical implications have prompted calls for diversification and sustainability in the REEs market.
REEs, comprising 17 metallic elements crucial for various industries, including electric vehicles (EVs), renewable energy, and defense systems, are integral to the transition to green energy. China’s dominance in REEs production, particularly in key materials for EV batteries, underscores its strategic advantage in the global energy transition.
However, questions arise regarding the long-term sustainability of China’s REEs dominance, given environmental concerns and geopolitical tensions. The environmental impact of REEs extraction, including significant waste generation and radioactive residue, raises calls for sustainable mining practices.
To address environmental concerns and reduce dependence on China, alternative technologies and mining methods are being explored. These include electrokinetic methods, biomining, and agromining, aimed at improving sustainability and reducing environmental impact.
Moreover, Western nations are actively seeking to reduce reliance on China for REEs supply. Initiatives such as Tesla’s plans for rare earths-free magnets in next-generation motors and collaborations between the US, Europe, and Australia for rare earth processing and production facilities signify efforts to diversify supply chains.
Despite these efforts, China continues to defend its REEs monopoly through strategic investments and control over production quotas. Geopolitical tensions and trade disputes between China and Western nations further complicate efforts to diversify supply chains and ensure a smooth transition to green energy.
As the world grapples with supply constraints, geopolitical tensions, and underinvestment, the road to a sustainable low-carbon future may face obstacles if effective strategic planning and cooperation among leading economies are not prioritized.
