Last month the U.S. Department of Energy updated its list of “critical materials,” an initiative that reflects the Biden administration’s push toward a more active industrial policy in general and rapid deployment of renewable energy in particular. From the DOE’s perspective, critical materials are materials the agency considers essential for completing the transition to net zero carbon emissions and that may be vulnerable to supply-chain disruption — say, mining capacity shortages or geostrategic gamesmanship.

The mere fact that the list exists might not seem worthy of public notice. But, truth is, the United States has a very serious critical materials problem looking forward, and publicizing the list represents a significant step in meeting the government’s commitment to clean energy objectives. Enough of the world is switching to renewables over the next few decades that the demand for many material inputs can be expected to increase by several hundred percent. If the U.S. wants to remain a leader in energy and technology, it needs to become an active and flexible producer. This means it needs an industrial policy — a clear, consistent government strategy operating in tandem with the private sector, friendly foreign governments and states/localities to strengthen supply chains that to date have been left to the vicissitudes of markets.

When Markets Don’t Work

You might be thinking: Why not just get on with it, mining, processing, and stockpiling critical materials in cooperation with other major economies? Well, that’s a lot easier said than done. The U.S. used to be the largest producer of many critical materials such as lithium and the so-called “rare earth” elements used in myriad ways in high technology. But a combination of market forces, global economic integration, and plain old NIMBY has shifted most messy industrial processes away from the rich, industrialized nations toward middle-income producers (notably, China).

It’s very difficult to reverse this process — for example, to open new mines in the U.S. Indeed, some estimates say it takes 7-10 years just to get the necessary mining permits. That timeline plainly does not work for the U.S. when demand for many energy-related critical materials is expected to double or triple in the coming decade.

If history is any indicator, a critical materials policy requires more than clearing away the obstacles to production. Even if new mines do open in the U.S., they will have to operate in volatile, global markets — and, in particular, to compete with China’s control of existing supply chains. For example, the only rare earth mine in the United States has gone bankrupt numerous times, and its operators have spent much of their time digging up raw materials and sending the stuff to China for processing before China sells it back. Does that sound self-defeating? You bet.

Last year, Australian-based Jervois Global made headlines for opening the first and only cobalt mine in the United States in decades. It also closed the Idaho mine some eight months later due to low cobalt prices. This time the villain was most of the world since we often forget we willingly get most of our cobalt from Democratic Republic of Congo under labor conditions that are often compared to “modern-day slavery.”

This disconnect between the United States’ goals, timelines and capabilities is plainly frustrating. But it appears that the era of wheel-spinning is coming to a close. The DOE’s critical materials list will facilitate policy that can enable responsible supply chains in the U.S., and limit reliance on China and other problematic sources.

Back to the list again. What’s new in the DOE’s list, and what does it tell us?

Over the past several years, the U.S. has allocated more than $8.5 billion for critical materials activities through the DOE and the Department of the Interior, and now the DOE’s approach has clearer objectives. In particular, the Energy Act of 2020 expanded DOE authority, and in 2021 the agency outlined its critical materials strategy. We will likely see many large and influential projects taking shape, which will include everything from direct support to mining and recycling, to research into more sustainable alternative materials, to what DOE calls “advanced theoretical, computational and experimental tools.”

The new DOE list also made the news because it is different from Interior’s list of “critical minerals” and demonstrates the potential for different approaches between U.S. departments. Under the Department of the Interior, the United States Geological Survey has been updating a list of critical minerals (not critical materials) since 2017. The USGS has been using it for geologic mapping efforts, feasibility studies and other research that will also undoubtedly support the DOE’s objectives.

There is a lot of overlap between the two lists, but the USGS minerals list also includes materials related more narrowly to U.S. defense technologies and uses a different methodology for identifying what is “critical.” The DOE assessment, by contrast, has a global perspective, a focus on clean energy deployment, and is forward-looking to 2035. This is closely related to the Energy Department’s focus on renewable energy technologies, rather than the broader goal of defending the country or keeping the economy humming.

Still wondering why one list is about materials and the other minerals? Actually, this question doesn’t have a good answer. The USGS list of critical minerals, after all, includes more than minerals — stuff you might be tempted to call materials — and the geologists definitely know this.

The more interesting question about the lists, though, is what’s been included. The DOE’s identification of copper as a critical mineral for energy has raised eyebrows and exposed a conflict between agencies. Just months ago, the USGS publicly sent letters to Congress  explaining why copper, the third most commonly produced metal in the world, is not included in its list of critical minerals. The inclusion on the DOE’s list has been welcomed by the domestic copper industry because it means that copper projects are likely eligible for government support offered by the Inflation Reduction Act.

A Bit of Perspective

The Department of Energy’s take on critical materials aims to change a pattern of neglect justified by a deep, implicit belief that globalization and free markets would allow the private sector to solve public problems with minimal government engagement. The recognition that more is needed is surely a step in the right direction in the face of the problems that must be solved to contain climate change and sustain global prosperity. But it also opens the door for intervention that is either counterproductive or capturable by special interests. We know what doesn’t work, but we don’t really know what does.