Economic Challenges in the Clean Energy Supply Chain: The Market for Rare Earth Minerals and Other Critical Inputs

The past few years have witnessed an increased impetus toward renewable energy to replace fossil fuels that has been driven both by environmental and national security concerns. Recent political instability in North Africa and the Middle East has added to concerns about the security of petroleum supplies. Nevertheless, renewable energy technologies are also exposed to supply chain risks for key inputs, especially rare earths, for which China is the dominant supplier. Rising price pressures in the rare earth market, due to increased demand, as well as China's tightening of export quotas, have magnified concerns about the availability of rare earths. This has led countries to develop strategies to find other sources, to substitute other materials, and to recycle. Over the longer term, the viability of the market for rare earths is dependent on the growth in demand for products requiring rare earth, the ability to find alternative supply sources to China, and possibly increased government support.