Rare-earth element supply and demand and circular economy
The growing dependence of society on rare-earth elements (also known as REEs) poses a challenge to achieving a just low-carbon transition globally. While circular economy strategies have gained attention, their specific impacts remain unmeasured.
This article was written by Peng Wang, Yu-Yao Yang, Oliver Heidrich, Li-Yang Chen, Li-Hua Chen, Tomer Fishman & Wei-Qiang Chen, and it presents an integrated model that considers both in-ground and in-use stocks across ten regions from 2021 to 2050. It quantifies how circular economy strategies can reshape global supply chains of the critical rare-earth elements.
There is a considerable mismatch between in-ground stocks, supply and demand at specific region and element levels, with the mismatch for heavy rare-earth elements as a key obstacle for achieving net-zero emissions targets. The suggestion is that, as in-ground stocks decline among mineral suppliers, the accumulation of in-use stocks in consuming regions can foster a more balanced and less polarized geopolitical landscape for rare-earth elements. Circular economy strategies can lead to an increase of 701 kt secondary supply and a decrease of 2,306 kt demand within the next three decades. Implementing these circular economy strategies will require international cooperation in the governance of rare-earth elements amid sustainable transition.
Which is the situation on rare-earth elements?
Climate change is a common challenge for the entire world, which requires efforts from nearly all nations for a just low-carbon transition. However, the supply of rare-earth elements, especially neodymium (Nd), praseodymium (Pr), dysprosium (Dy) and terbium (Tb), as critical raw materials of clean technologies, is highly concentrated in a few countries. This has sparked concerns about supply security and trade friction, because of the uneven distribution of rare-earth elements.
Unlike fossil fuels, which are ‘burnt out’ and permanently lost once consumed, rare-earth elements are accumulated as in-use stocks that can be ‘recovered’ as alternative supply. Given that massive rare-earth elements transfer from in-ground stocks (deposits) to in-use stocks (products), there is growing interest in extracting the in-use stocks as secondary supplies. Circular economy strategies, which have been proposed to reduce supply issues across various critical materials such as cobalt and lithium, can also be applied to the case of rare-earth elements. However, despite recent attention, the potential of rare-earth circularity in promoting just low-carbon transition remains uncertain due to limited integrated quantitative analysis.
In this Article, the authors presented a Dynamic Integrated Model of Rare-Earth Circularity and Climate Target (DIRECCT). It is a model to explore the linkage among climate targets, energy transition pathways and circular flows of rare-earth elements in ten global regions. The DIRECCT model considers three widely adopted climate target scenarios:
• the stated policies scenario (STEPS);
• the sustainable development scenario (SDS);
• the net-zero emissions by 2050 scenario (NZE).
In each climate target scenario, the roles of different circular economy strategies in reshaping global rare-earth elements supply for a just and safe low-carbon transition are explored and discussed.
Rare-earth elements and climate change
Rare-earth elements play an important role in fulfilling the global common objective of climate change mitigation. The authors’ investigation reconfirms that the availability of rare-earth elements will become an important constraint of global low-carbon transitions. Especially the heavy rare-earth elements, which could limit the global greenhouse gas reduction to only 13% of its target. Therefore, the development of technologies without heavy rare-earth elements is a critical and urgent necessity for related industries such as electric vehicles and wind power.
There is growing attention from international bodies to strengthening the governance of critical minerals for global just transition. This is particularly relevant for rare-earth elements since their in-ground stocks are considered to be accompanied by high geopolitical, economic, environmental and social risks. The authors’ research shows that ongoing consumption of rare-earth elements can substantially reallocate rare-earth element stocks from their origins to regions with ambitious climate goals. For example, China, the European Union and the United States together accumulate 71% of the world’s in-use stocks by 2050. Through circular economy strategies, the newly formed rare-earth element stocks can change the geopolitical landscape behind rare-earth elements supply chain towards a more balanced and less polarized one.
Compared with in-ground stocks, the supply from in-use stocks has many exceptional attributes for a just transition. For example, high demand (price) can incentivize rare-element mining in more environmentally and socially sensitive areas, accompanied by artisanal activities. Despite demand reduction (halved by circular economy), the growing supply from in-use stock holders with a more balanced structure can help to stabilize rare-earth elements prices. Meanwhile, secondary production in general has a much smaller environmental footprint than primary supply. Notably, the quality of rare-earth minerals is inevitably decreasing with the depletion of high-grade ore deposits, which further highlights the mentioned advantages of in-use stocks.
Rare-earth elements and circular economy
However, without circular economy, the in-use stocks of rare-earth elements could not be effectively mobilized. Circular economy is already recognized as the ‘third pillar’ of deep decarbonization. A circular economy can not only bring about more complete use of end-of-life rare-earth elements, but also reduce the demand for rare-earth elements through both supply-side and demand-side strategies. For example, circular economy can substantially reduce primary mining by 60%. This can prevent the ‘rare-earth element balance problem’ by reducing the surplus and corresponding cost of other rare-earth elements such as cerium and lanthanum.
Moreover, circular economy can help some major regions such as the United States, the European Union, India and Japan reduce their dependency on foreign rare-earth elements supplies by up to 100%, 93%, 91% and 88% by 2050, respectively. Thus, international cooperation on circular economy, such as the European Union’s initiative of the Global Alliance on Circular Economy and Resource Efficiency, is welcomed.
The benefits of circular economy require mobilization of technologies, policies and infrastructures towards full use of secondary rare-earth elements sources. There is currently a ‘window of opportunity’ when demands and potential tensions are still relatively lower than the anticipated challenges in upcoming decades. In particular, the circular economy strategies for rare-earth elements are associated with some uncertainties. Thus, cooperation on establishing standards between upstream and downstream industries is needed. Notably, the industrialization of circular economy strategies is also driven by market forces. Within this context, enterprises may not attach enough importance to circular economy in the current window of opportunity. Therefore, it is necessary to closely monitor the development of circular economy strategies and introduce government regulations and economic incentives to encourage technological innovation and business investment.
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