DOE Report: Wind Turbine Makers to See Critical Rare Earth Metal Supply Disruptions

A report released on Thursday by the Department of Energy (DOE) examining the role that rare earth metals play in the manufacture of wind turbines, electric vehicles, and photovoltaic (PV) thin-film solar cells finds that these clean energy technologies may see supply disruptions for five rare earth metals (dysprosium, neodymium, terbium, europium, and yttrium) in the short term, though risks will generally decrease in the medium and long term.

The report was compiled to help the U.S. transition to a clean energy future by identifying strategies for responding to potential shortages of critical materials in the years ahead. “It will help us seize opportunities, using American innovation to find substitutes, promote recycling and help secure supplies of rare earth elements and other materials used in energy technologies,” Energy Secretary Steven Chu said in a statement.

The DOE’s focus on rare earth materials began earlier this year, when it developed its first critical materials research and development plan and received new funding for priority research. The fiscal year 2012 spending bill also includes $20 million to fund an energy innovation hub focused on critical materials that will help to further advance the three pillars of the DOE strategy: diversifying supply, developing substitutes, and improving recycling, reuse, and more efficient use, the agency said.

In the report, “2011 Critical Materials Strategy”—the DOE’s second published analysis of the topic—the agency finds that five rare earth elements (REEs)—dysprosium, terbium, europium, neodymium, and yttrium—were found to be critical in the short term (present to 2015). These five REEs are used in magnets for wind turbines and electric vehicles or phosphors in energy-efficient lighting. Other elements—cerium, indium, lanthanum, and tellurium—were found to be near-critical. Between the short term and the medium term (2015–2025), the importance to clean energy and supply risk will shift for some materials, it finds.

Shortages will particularly be felt by makers of wind turbines and electric vehicle technologies because they require permanent magnets (PMs) containing neodymium and dysprosium—REEs with highly valued magnetic and thermal properties. But manufacturers of both technologies are “currently making decisions on future system design, trading off the performance benefits of neodymium and dysprosium against vulnerability to potential supply shortages,” the DOE finds. “For example, wind turbine manufacturers are deciding among gear-driven, hybrid and direct-drive systems, with varying levels of rare earth content. Some EV manufacturers are pursuing rare-earth-free induction motors or switched reluctance motors as alternatives to PM motors.”

One reason for disruptions in supply is that in recent years, demand for almost all of the materials examined has grown more rapidly than demand for commodity metals such as steel. The growing demand for the materials studied comes from clean energy technologies as well as consumer products such as cell phones, computers, and flat panel televisions.

However, the global material supply has been slow to respond to the rise in demand, mostly due to a lack of capital, long lead times, trade policies, and other factors. Market response has also been complicated by complexities of coproduction and byproduction. “In addition, for some key materials, the market’s lack of transparency and small size can affect its ability to function efficiently,” the report says.

Governments and industry are beginning to recognize the importance of raw materials to the economic competitiveness of clean energy technology, and many are taking an active role in mitigating supply risks. In the U.S., though work has been scaled up to address supply disruptions, “much more work is required in the years ahead,” the report concludes.

The DOE’s strategy for addressing these challenges as outlined in the report consists of three steps. First, it plans to manage supply risk by diversifying sources of required materials. This will require taking steps to “facilitate extraction, processing and manufacturing here in the United States, as well as encouraging other nations to expedite alternative supplies.” The second step involves developing substitutes. According to the DOE, “research leading to material and technology substitutes will improve flexibility and help meet the material needs of the clean energy economy.” The third step relates to recycling and reusing rare earth metals. “Research into recycling processes coupled with well-designed policies will help make recycling economically viable over time,” it says.

Sources: POWERnews, DOE