You’ve probably heard plenty about rare earths in the past few weeks and months. How many other commodities have earned their own New York Times debate? China’s dominance in production and processing of rare earths, and the recent actions it has taken to lower the amount of these substances on the world market, have thrust this previously quiet corner of industry into the limelight.
Rare earths have a wide variety of applications, including in cell phones, computer hard drives, and military equipment such as precision munitions and avionics. Much of the current discussion also focuses on wind turbines and hybrid and electric cars, as these products are the source of much of the forecasted growth in rare earths usage. But the necessity of using rare earths in these clean energy applications is not a foregone conclusion.
Rare earths, specifically neodymium, terbium, and dysprosium, create the strongest known permanent magnets. Permanent magnets can be used in wind turbines and in hybrid and electric motors to create the magnetic fields needed for the conversion between mechanical and electrical energy. Because they are stronger than ferrite magnets, permanent magnets can make generators and motors both smaller and lighter—two important considerations for contained environments such as these. Using a permanent magnet generator as compared to an induction generator in a wind turbine also reduces the technical complexity by allowing for removal of the gearbox, which also leads to lower maintenance requirements.
Surprisingly, then, the current use of rare earths for clean energy applications is actually rather low. Permanent magnet generators (PMGs) are still used only in a small fraction of new wind capacity, and the hybrid and electric car market is small enough that it is not a major factor in the world neodymium market (currently at about 20,000 tons produced per year). But the advantages that rare earth PMGs offer and the projected continued growth in clean energy have led to a flurry of apocalyptic news articles throwing the future of clean energy into question.
We may well be in the beginning stages of a prolonged rare earths shortage. Since China announced cuts in its export quota for the second half of 2010 and beyond, prices have shot up. Two major mines outside China, in the United States and Australia, are scheduled to begin production by 2012, and exploration is under way worldwide. However, no one expects these or other mines to make up the supply shortfall quickly. Mining rare earths is expensive enough that even with growing demand, profitability is not guaranteed, and in most countries the permitting process is arduous.
All forecasters expect demand for neodymium-based magnets to grow rapidly, and these forecasts are likely based on business-as-usual energy scenarios that do not involve aggressive growth in neodymium use for wind turbines and vehicles. The rare earths market will therefore be difficult for clean energy companies to rely on for some time. Perhaps the best option for manufacturers of wind turbines and electric cars would be to avoid using rare earths altogether wherever possible.
Not everyone is convinced that doubly fed induction generators (DFIG), the existing alternative to permanent magnet generators, are necessarily outclassed. A study conducted by Indar Electric found that DFIG systems showed “superior total efficiency performance over the entire speed range.” Much of the concern with DFIG systems has to do with compliance with strict grid codes that may come as the share of renewable energy grows, but Indar claims that its DFIG system (the company also makes PMGs) can satisfy all requirements.
Moreover, in the long run the advantages of PMGs may be superseded by those of High Temperature Superconductor (HTS) generators. Due to their increased conductivity compared to copper wire (and therefore to the reduced weight of the equipment they are used in), HTS generators would allow for turbines of even greater generating capacity, up to more than 10 megawatts. American Superconductor Corporation (AMSC) and TECO-Westinghouse have been developing a design for a 10 MW turbine since 2007, and the National Renewable Energy Laboratory (NREL) recently began working with AMSC to examine the economics of such a design.
Although NREL engineers have said it could take 10–15 years for HTS-based turbines to become commercialized, the rare earths market may not reach stable equilibrium much before that, making long-term bets on PMG turbines even riskier. HTS motors do rely, however, on yttrium, another rare earth element, and so it is unclear whether even these would be free from concerns over rare earths, although yttrium does not currently face supply challenges.
There are ready alternatives to rare earths-dependent motors in the hybrid and electric vehicle sectors as well. Only days after China reportedly shut off rare earths exports to Japan, two different Japanese research groups announced that they had developed hybrid vehicle motors that use weaker ferrite magnets instead of rare earths, but that can achieve equal power output through altered magnet placement. Other rare earths-free motors are in the pipeline as well, with one commercially available as soon as 2011. The Nissan Leaf and Tesla Roadster vehicle models already contain no rare earths, though current alternative motors are heavier and larger.
Basic economic principles, as Tony Marcos laid out succinctly in Magnetics Business and Technology Magazine, mean that with viable alternatives the growth of PMG turbines will be self-limiting. Manufacturers will pursue multiple technologies, and if increased demand for PMG turbines causes the price of neodymium and dysprosium to rise too much, these manufacturers will switch to whichever design (perhaps with ferrite magnets) makes the most economic sense. PMG turbines are more efficient, but also far more expensive, than ferrite alternatives. Some individual companies may not be equipped to survive a shortage of rare earths, but the industry has the necessary resilience.
The situation in the electric car market is comparable. Car companies are well aware of the threat posed by rare earth shortage and are taking measures to limit their exposure. Toyota already has created joint ventures to import rare earths from Vietnam and may have looked into recycling as a way to create a closed-loop system for its rare earths.
The looming shortage of rare earths on the world market is an issue worth much—though perhaps not all—of the attention it is now getting from major media outlets and industry forums. For many applications, no currently viable alternatives exist, and countries and companies are rightly focusing on how to secure their own supply (though Europe and the United States have yet to take decisive action). The growing momentum behind wind power and electric vehicles, however, will likely not be significantly slowed by rare earths.