A show of hands – who loved their high school chemistry class? Do you still remember the elements in the periodic table? Quick – what’s the symbol for Iron? How about Hydrogen?
OK. Those are easy: Fe and H.
What about Prometheum? or Ytterbium?
While the actual symbols may not be important (they’re Pm and Yb in case you’re interested), perhaps the better question is – why should you care?
The two elements listed above comprise two of 17 Rare Earth Elements (REEs).
And these unique elements are creating major waves in the energy industry.
REEs are essential to the make-up and operation of a many familiar products, from flat-panel TVs to medical devices. REEs also are key components to batteries used in hybrid and electric vehicles, catalytic converters, wind turbines and processes like petroleum refining.
Oh. They also happen to comprise about 85% of the phosphors needed for fluorescent lamps.
Unfortunately, REEs are only found in a few places on earth, and a growing imbalance in REE supply and demand is resulting in significant price hikes. For some rare earth oxides – prices have been increased to the tune of 4,500%.
While you may not have noticed such drastic price increases on the shelf of your local retailer, costs for products like CFLs and other fluorescent lamps are showing up in lamp manufacturers’ pricing.
Why the sudden change?
While the U.S. was a major source of REEs in the 60s, 70s and 80s, China has since become the primary source of supply – with an estimated 85% of the world’s stockpile of REEs. However, over the past several years, China has limited exports and throttled back production.
How much have they throttled back? Just last year, China set its export quota of REEs at 30,000 tons – less than 20% of the total estimated demand.
That’s when the ruckus really began to ramp up.
So what does all of this mean?
In the short-term, prices for nearly everything using REEs – particularly CFLs and fluorescent lamps – will rise. By how much is yet to be determined. Many industry experts agree the increase in price for products containing REEs is all but a certainty. But just how much and for how long is unknown – at least until a more long-term agreement or alternative solution is found.
Unfortunately, no sustainable long-term solution has been identified, and REEs will remain critical components to many of the products for which we rely day-to-day.
The good news is that several manufacturers have already begun development of products to address the problem, and negotiations with China continue.
We’ll continue to monitor the situation, and provide input when we can – particularly if any changes affect our rebate programs.
While CFLs (and other efficient alternatives) still provide a significant increase in efficiency and cost-effectiveness compared to incandescent lighting, perhaps this can serve as a reminder for why it’s more important than ever to look for new and innovative ways to save energy in your home and business. It also might be a great time to stock up!