As I’ve written elsewhere, “Anyone who thinks the United States is going to compete with China for windmill and solar cell manufacturing, given that nation’s lower labor rates and greater access to vital rare-earth elements, is living in a fantasy world.” Green job hucksters pooh-pooh such observations, trotting out the old “America can do anything we put our minds to” routine. And that may be true, but it is completely irrelevant to the situation. As Ronald Reagan observed, “Facts are stubborn things.” And so are economics and monopolist behavior.
A perfect demonstration of the economic reality of our non-competitive labor rates can be seen in the decision of BP to shut down a solar-panel manufacturing plant in Frederick, Maryland. The plant was expanded with great fanfare three and a half years ago, and green jobs were the order of the day. BP was to pour $70 million into the expansion, but instead, they’ll be moving their production to—surprise!—China and India. BP will be laying off about 300 people here, and, as they can’t find any buyers for their building, they’ll be tearing it down. The Washington Post (a frequent “green energy” booster) now points out that BP, which once (fatuously) declared its new mission as moving “Beyond Petroleum,” is still “committed” to solar power, just not here. “‘We remain absolutely committed to solar,’ BP chief executive Tony Hayward said in an interview Friday. But he said BP was ‘moving to where we can manufacture cheaply.’”
And for those who doubted the United States would be balked in leading the green-power revolution because of obscure rare earth elements that nobody can pronounce (Dysprosium, anyone? Neodymium? Yttrium?), the evidence is becoming overwhelming that we will indeed be stymied by our lack of supply. As Daniel McGroarty, a principal of the Carmot Strategic Group observes, China is involved in an intentional strategy to ensure that the Chinese, not the United States, will be the ones building the green devices of tomorrow. And it’s not only the obvious devices, like windmills and solar panels. China will be making your compact fluorescent bulbs, your power-saving computer monitor, cell-phone display, fiber-optic cables, automotive components, and much more.
As McGroarty points out,
The more rare earths the world has consumed, the fewer have been mined here in the United States. In 1985—before the emergence of the public Internet and in the infancy of the laptop revolution—the U.S. produced half of the world’s rare earths supply. By 2000, world production had more than doubled, while the U.S. share dropped below 10 percent. In 2002, U.S. rare earth production dropped to zero, with the shuttering of the lone rare earths mine in Mountain Pass, Calif. Today, 95 percent of all rare earths produced worldwide come from a single country: China.
And “It’s one thing” McGroarty adds,
when a monopolist uses its market advantage to extract a premium for its product. Consumers grumble, then pay up. But it’s a different story when the sole supplier won’t sell at any price, and that’s where China is heading. Each year for the past half decade, China has tightened its export restrictions on rare earths, reserving production to feed its own roaring economy. In addition, China has set its sights on green energy manufacturing, using its near-monopoly on rare earths to require foreign companies seeking access to the elements to locate their factories in China” (emphasis mine).
Many U.S. policy makers on both sides of the aisle have drunk the “green energy Kool-Aid,” and support the rapid expansion of wind and solar power as a means to “create jobs” and to stimulate what they claim is the next great opportunity for wealth creation in the United States. But the reality is, the more we invest in wind and solar power, the more we create jobs in China and India, which will increasingly sell us the devices that, in many cases, we designed, but cannot manufacture competitively due to high labor rates, and a complete lack of investment in securing the rare earth elements needed in manufacturing.