Climate agenda makes West increasingly reliant on China

Arab News

a day ago

https://arab.news/cbhw5
China and the US last week reached an agreement to alleviate some restrictions on rare earth element exports. Under the plan, China will issue six-month export licenses for key rare earth minerals and magnets, which had been heavily restricted since April. This ban, during a period of trade turbulence, caused global shortages and disrupted many sectors, particularly renewable energy, including electric vehicles, as well as defense at a time of resurging geopolitical and military threats. This agreement will help stabilize supply chains, but it is not a 'happily ever after' ending.
The trade tensions are still present. To regain access to rare earth elements, the US agreed to ease certain tech-related export controls and visa restrictions on Chinese researchers.
It comes as no surprise that, during the last round of trade tensions, semiconductors and rare earth elements were at the core, as they are both — in different ways — essential to the development of the economy of the future. For now, this deal excludes military-grade materials, which shows China's leverage capacity. China accounts for 70 percent of the world's rare-earth mining and more than 90 percent of the processing, so despite efforts to replace it or find alternative sources, this pressure will continue to weigh on Western economies.
The situation regarding rare earth elements could be blamed on tariff tensions, yet — just like semiconductors — they are becoming a key asset that any country would look to secure for itself. These tensions have highlighted the vital role rare earth elements play in the renewable sector, raising questions about the sustainability of supply in a time of intensifying geopolitical competition.
In short, if Western economies fully transition to a climate-friendly structure, they will become dependent on China. Any supply disruption could severely damage these economies or even halt key sectors — especially in areas like EVs.
Despite efforts to replace China or find alternative sources, this pressure will continue to weigh on Western economies
Khaled Abou Zahr
There are plans to replace China's supply with sources from allied countries such as Australia. But these still need to be executed, which will take at least a decade, according to several experts in media reports. One might also want to add another decade to account for the likely real-world and geopolitical delays. Moreover, it is not just about mining, as processing facilities must also be built. It is now clear that constructing alternative infrastructure will require even more time, investment and, as with anything in the Western hemisphere, environmental approvals.
Basically, rare earth element processing has significant environmental impacts, including toxic and radioactive waste, water and air pollution, high energy use and land degradation. And so, to power the climate-friendly economy, more pollution seems to be the path forward.
Innovation offers another potential route to building an independent supply chain, but it is still in its early stages. The same applies to recycling. We can already imagine the debates around this endeavor and, realistically, it may not be achieved by 2040, perhaps not even by 2050.
This state of affairs brings to mind a statement made in 2023 by Greg Hayes, then-CEO of Raytheon, who said the company had 'several thousand suppliers in China and decoupling … is impossible.' This comment, coming from a leader in the defense industry, reveals the depth of Western dependency on China and should be taken seriously. It has also been stated that the entire renewable energy sector is completely dependent on China. Thus, between the climate economy and defense, China has effectively cornered the whole Western hemisphere.
Logically, China has argued that export controls on rare earth elements are necessary to prevent Chinese-made goods from being used for military purposes that threaten its interests. And evidently, Beijing would prefer these elements to be used in the climate economy rather than in weapons systems. Yet, setting aside rising geopolitical threats, how can Europe and the US fully transition to a climate-friendly economy if that means total dependence? What if China's growing economy pushes Beijing to decide it needs to reserve this supply for its own growth? What would Europe and the US do then?
The unique properties of the rare earth elements make them indispensable for scaling up the clean energy transition
Khaled Abou Zahr
In this potential scenario, how would the West ensure high-efficiency performance in wind turbines, EVs, solar panels and energy storage systems without China? A quick search reveals that elements like neodymium, praseodymium and dysprosium are essential for powerful magnets used in EV motors and wind turbines, while lanthanum and cerium support battery and fuel cell technologies. It does not stop there but rather extends to the entire climate-friendly infrastructure. Indeed, rare earth elements also improve energy-efficient lighting, smart grid electronics and hydrogen systems. Their unique properties make them indispensable for scaling up the clean energy transition.
To be corny, there is a silver lining to this entanglement. It is that, in all logic, each party should seek continued collaboration and avoid escalating tensions. For now, there is no doubt that, in these segments, China has the upper hand, but the West has other sectors it can use as a bargaining chip. Nevertheless, while the West rebalances its supply chain — or at least begins to debate it — it may feel reverse pressure that forces diplomatic concessions in unrelated areas.
It is interesting that, in pursuit of climate ideology, the West has tied its future to China, while in pursuit of financial performance, the defense industry has done the same. Without much questioning, the West has allowed China to become the kingmaker in both sectors, perhaps forgetting their true original missions.