US Explores Policy Responses to China's Rare Earths Dominance
Rare earth minerals, crucial for modern technologies like electric vehicles and wind turbines, have sparked trade tensions with China. Policymakers in the US are now exploring ways to tackle this challenge, with Congress and the Trump administration considering targeted policy responses.
The intermittent nature of wind and solar energy makes them less valuable than reliable sources, further straining the demand for rare earths. The 2022 Inflation Reduction Act, despite some cuts, boosted many subsidy programs for alternative energy, including wind and solar. However, these subsidies artificially inflate demand for rare earths, a concern that should be addressed.
Retaliatory trade measures like price controls are deemed unwise. Instead, ending federal subsidies for uneconomic technologies that rely heavily on rare earths is a free-market approach worth considering. Streamlining the permitting process for domestic rare earths mining projects is another positive step forward.
To mitigate dependence on foreign rare earth supplies, the US should target remaining subsidies that fuel demand, promote domestic mining, and foster a balanced energy mix that includes reliable sources. This multi-pronged approach can help ensure a stable and secure supply of these vital minerals.
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