ICYMI

MIT Turns Soda Cans and Sea Water Into Green Hydrogen

By Alex Kimani - Jun 10, 2025

• MIT scientists have developed a process to produce hydrogen from recycled aluminum cans and seawater.
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• The technology emits just 1.45 kg of CO? per kg of hydrogen.
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• The method is cost-competitive at $9/kg, and offers on-demand hydrogen via aluminum-seawater reactions.
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Scientists at the Massachusetts Institute of Technology have unveiled a process that generates hydrogen fuel using recycled soda cans and seawater, with overall carbon emissions on par with green hydrogen technologies. This approach relies on a chemical reaction between aluminum in the soda cans and water, which produces hydrogen. 

In its natural state, aluminum rapidly forms a thin oxide layer when exposed to air, which prevents any further reaction. To get around this problem, the MIT team used a rare gallium-indium alloy to remove the oxide layer, allowing the metal to react with seawater and release pure hydrogen. From an environmental viewpoint, the results were encouraging: the MIT method generates just 1.45 kilograms of carbon dioxide for every kilogram of hydrogen produced, comparable to other green hydrogen technologies and much lower than 11 kilograms of CO2 emitted by fossil fuel-based hydrogen production.

The MIT team estimates that its novel method costs $9 per kilogram of hydrogen, roughly on par with other green hydrogen technologies and a potentially attractive solution for large-scale hydrogen production. The MIT team has proposed a system whereby pre-treated aluminum pellets are transported to fuel stations, which can then be mixed with seawater to generate hydrogen on demand. This minimizes transportation costs as well as the risks associated with transporting volatile gases. The scientists estimate that a single kilogram of hydrogen could power a vehicle for 60 to 100 kilometers. As an added bonus, the MIT process also generates boehmite, a mineral used in the manufacture of electronic components and semiconductors. This could help offset some of the production costs.

“One of the main benefits of using aluminum is the energy density per unit volume,” says Aly Kombargi, an MIT PhD graduate in mechanical engineering. “With a very small amount of aluminum fuel, you can conceivably supply much of the power for a hydrogen-fueled vehicle.”

Currently, the lion’s share of global hydrogen output is ‘gray’, meaning it’s produced from natural gas through various thermal processes, most notably steam methane reforming (SMR). SMR involves reacting methane, the primary component of natural gas, with steam at high temperatures in the presence of a catalyst. 

Other methods, like partial oxidation and autothermal reforming, can also be used, but SMR is the most widely used and efficient. Unfortunately, producing hydrogen from fossil fuels is a ‘dirty’ process: global hydrogen production generates 900 million tonnes (Mt) of CO2 emissions in a typical year, more than the global aviation industry at ~800Mt. Blue hydrogen is also produced from fossil fuels, but the CO2 emitted is captured and stored underground. Nearly three-quarters of all globally captured carbon is used in ‘enhanced oil recovery’ (EOR). CO2 injection has been used successfully in the Permian Basin.

Source: Corporate Europe Observatory

Hard Sell

Governments and companies across the globe have announced plans to build nearly 1,600 hydrogen plants. Unfortunately, the hydrogen economy is struggling to take off, with Bloomberg New Energy Finance (BNEF) estimating that just 12% of hydrogen plants have customers with offtake agreements. 

Cost is a big factor here: green hydrogen produced using renewable energy costs nearly four times as much as gray hydrogen created from natural gas, making it hard for developers to build hydrogen infrastructure whose demand might not materialize for years.

“No sane project developer is going to start producing hydrogen without having a buyer for it, and no sane banker is going to lend money to a project developer without reasonable confidence that someone’s going to buy the hydrogen,” BNEF analyst Martin Tengler notes.

“It’s no different than any other energy development at scale. Natural gas pipelines didn’t get built without customers,” says Laura Luce, chief executive officer of Hy Stor Energy.

Meanwhile, Trump’s “Big, Beautiful Bill” could have dire consequences for the hydrogen sector if it becomes law. The sweeping policy bill will do away with billions in tax credits provided by Biden’s Inflation Reduction Act (IRA), with Section 45V tax credit considered a major boon for low-carbon hydrogen and ammonia projects across the country. Losing 45V tax credits may seriously erode the economic viability of dozens of companies including Plug Power (NASDAQ:PLUG), Air Products & Chemicals (NYSE:APD), CF Industries (NYSE:CF), Bia Energy, Clean Hydrogen Works and Monarch Energy.

On a brighter note, Trump’s bill has left carbon capture credits intact. Big Oil has invested billions of dollars in carbon capture projects, including Exxon Mobil’s (NYSE:XOM) latest CCS project targeting power-hungry U.S. data centers. 

Exxon’s CCUS project will provide low-carbon power to the U.S. data centers powering the AI  boom. Meanwhile, last month, Shell (NYSE:SHEL), TotalEnergies (NYSE:TTE) and Equinor (NYSE:EQNR) expanded their Northern Lights CCS project with additional investments, bringing total investments to $714 million.

By Alex Kimani for Oilprice.com

Cenovus CEO Says U.S. Still Relies Heavily on Canadian Oil

By Editorial Dept - Jun 10, 2025,  Oilprice.com

Despite political tensions and tariff threats, the United States remains heavily dependent on Canadian oil, Cenovus Energy CEO Jon McKenzie said Tuesday at an energy conference in Calgary.

Nearly 4 million barrels per day of Canadian crude are exported to the U.S., making Canada its largest foreign oil supplier. McKenzie emphasized that the energy systems of the two countries are deeply interconnected, regardless of President Trump’s claims that the U.S. doesn’t need Canadian oil.

“What hasn’t changed is energy economics and energy physics,” said McKenzie. “The reality is we are hardwired into the U.S. system.” Many U.S. Midwest refineries are specifically configured to handle Canadian grades of oil.

The current trade tensions have reinforced the urgency for Canada to diversify its energy export markets, McKenzie noted, but he cautioned against rash policy responses. Instead, he urged Prime Minister Mark Carney’s new government to pursue long-term strategies that strengthen North American energy ties

“We need to make sure we don’t act viscerally when we’re threatened and that we act intelligently in our long-term interest,” McKenzie said.

Carney, who came to power in April on a wave of anti-Trump sentiment, has pledged to fast-track national interest projects to transform Canada into a conventional and clean energy superpower. However, McKenzie warned against the federal government picking winners and losers in the energy sector, advocating instead for broad regulatory reform to attract investment.

On the operational front, the company also confirmed that it is ramping up production at its 238,000 bpd Christina Lake oil sands site after temporarily shutting it down due to wildfire threats in early June.

 

Activists Zero In on Gas in Supermajor Court Attack

By Irina Slav - Jun 11, 2025

• Environmental activists are suing TotalEnergies for greenwashing.
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• The activists accuse the company of misleading consumers by portraying natural gas as a clean energy solution during its 2021 rebranding campaign.
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• Even if activists win the lawsuit, the impact would likely be symbolic, as global demand for gas remains strong due to its affordability, reliability, and cleaner profile compared to other fossil fuels.
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Activists are suing TotalEnergies for greenwashing. The supermajor’s alleged crime: saying that natural gas is better for the environment than coal and oil. Normally, activists focus on oil when they attack the energy industry, but lately, they have shifted their attention to gas. The TotalEnergies case may be only the beginning of a new offensive.

Less than a decade ago, natural gas was broadly accepted as what many called “a bridge fuel” from the hydrocarbon era to the post-hydrocarbon era of low-emission energy. Gas was going to be around longer than coal and oil as it came to replace them to drive CO2 emissions down. Yet some activists spotted an inconsistency with that strategy. While it emits much less carbon dioxide, natural gas is mostly methane—and methane is a greenhouse gas in its own right. Also, it’s more greenhouse-y than CO2, which activists like to point out, although it gets degraded in the atmosphere much more quickly than CO2.

Perhaps the most notorious attack on natural gas was one study claiming that liquefied natural gas specifically was actually more harmful to the planet than coal. The study—although promptly debunked—led to the Biden administration imposing what it called a pause on new LNG export facility permits. President Trump removed the pause, but elsewhere, the offensive against natural gas continues.

“Total has deployed communication campaign on gas aimed at associating it with renewable energies, in an attempt to make it seem positive, clean, desirable energy and even a ‘fantastic resource for decarbonisation’. This impression is, once again, seriously erroneous,” said Clementine Baldon, one of the attorneys representing a group of environmentalist outlets, including Greenpeace and Friends of the Earth, as quoted by the Financial Times this week.

Baldon’s clients accuse TotalEnergies of misleading consumers with an information campaign during its rebranding from Total to TotalEnergies in 2021. The misleading consisted of TotalEnergies saying that it planned to achieve “carbon neutrality with society”, which was inconsistent, per the environmentalists, with its core business, which involved an expansion in oil and gas production—especially gas.

The allegations rest on a collection of 44 pieces of corporate communication, including things like social media posts, corporate statements on TotalEnergies’ websites, and advertising materials. TotalEnergies has countered the allegations frankly rather toothlessly, saying that “It is false and artificial to accuse TotalEnergies of greenwashing . . . TotalEnergies has never said that [fossil fuels] are good for the climate.” The company also said a lot of the information referenced by the plaintiffs was not produced for the mass consumer, so consumer laws should not apply.

In the past couple of years, supermajors began to strike back against the activists. Even TotalEnergies itself filed a lawsuit against Greenpeace for misleading information contained in a report claiming that TotalEnergies deliberately underestimated its carbon footprint. The court dismissed the case, prompting celebrations at Greenpeace, but TotalEnergies’ move to sue signaled a change in the industry with regard to activists and their attacks on it.

What this latest lawsuit shows is that these attacks are nowhere near done, which was only to be expected. Climate activists want all hydrocarbons to stay in the ground regardless of emission footprint. But because oil has been overused as a scarecrow, it is now the turn of natural gas, which is objectively cleaner, in terms of CO2 emissions and particulate material emissions, than coal and oil.

Demand for natural gas is rising globally, many countries are trying to switch from coal to gas precisely because it is cleaner in terms of actual physical pollution. From the activists’ perspective, this cannot be allowed to happen because gas is as much a hydrocarbon as is oil and as is coal. Cue the lawfare.

In truth, if the activists win this case, the victory will be mostly symbolic. They could probably get the court to order TotalEnergies to add a tobacco-style warning to its promotional materials but they could not force it to stop its LNG developments around the world—because this world needs gas and the ones supplying this gas are the energy companies like TotalEnergies.

In further truth, there is already a shift underway to reduce methane leaks along the natural gas supply chain. There are even certification providers that guarantee certain gas cargos are low-emission ones, and buyers are willing to pay a premium for them. Reducing methane leaks is more gas for sale, after all.

The activists probably do not delude themselves into thinking a court order that can stop TotalEnergies advertising can also stop it from producing natural gas. They may think such an order would sap consumers’ appetite for gas, but that would be asking for too much because there is a pretty simple reason why gas is and will continue to be in strong demand for decades to come. It is reliable, it is cheap, and it is abundant enough to remain both reliable and cheap for quite a long while. No amount of “misleading commercial practices” lawsuits can change that.

By Irina Slav for Oilprice.com

The Computing Industry is Running Out of Energy

By Haley Zaremba - Jun 10, 2025

• The growth of energy efficiency in traditional computer chips is slowing due to physical limitations, coinciding with a rapid increase in energy demands from the tech sector, especially artificial intelligence.
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• Reversible computing, a method that saves energy by undoing computation rather than erasing it, is gaining traction as a potential solution to overcome these energy challenges.
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• Alongside reversible computing, other technologies like quantum computing and alternative algorithms are being explored to address the growing energy needs of the digital industry.

The computing industry is running out of energy. Though the technology in computer chips has been growing smaller and more energy efficient at a rapid clip for decades, advancements are set to slow down rapidly due to fundamental physical limitations. This is unfortunate timing, as the tech sector’s energy demands (and chip demands) are set to skyrocket as the growth of artificial intelligence’s already prodigious energy footprint outpaces the growth of new energy production capacity. 

“The semiconductor industry will soon abandon its pursuit of Moore's law,” Nature reported back in 2016. “Now things could get a lot more interesting.” Moore’s law refers to the principle that the quantity of transistors that fit on a microprocessor chip will double approximately every two years. While that law has largely held true, it’s no longer realistically viable. “The doubling has already started to falter, thanks to the heat that is unavoidably generated when more and more silicon circuitry is jammed into the same small area,” the Nature article continued.

According to a roadmap report from the Institute of Electrical and Electronics Engineers (IEEE), the energy efficiency of digital logic will plateau before the end of the decade. Traditional computer chips have pretty much gotten as small as they possibly can, barring a major overhaul in the most fundamental ways that computer chips work.

And some scientists argue that this is exactly what’s in order – a complete overhaul. One such alternative approach is through reversible computing. In reversible computing, no information is ever deleted – a total reorientation of how information is processed and stored. Erasing information requires computational energy, which is lost as heat. Undoing computation – rather than erasing the steps – can actually save energy in the long run. 

“We keep getting closer and closer to the end of scaling energy efficiency in conventional chips,” says Michael Frank, a pioneer and decades-long advocate of the still-nascent technology. says. According to Frank, the coming stall-out of semiconducting advancement is “going to require more unconventional approaches like what we’re pursuing.”

While this kind of computation has languished in academia and thought experiments for decades, it might finally have its day in the sun. “There aren’t that many other ways to improve power,” Christof Teuscher, a researcher specializing in unconventional approaches to computing at Portland State University, recently told Quanta Magazine. “Reversible computing is this really beneficial, really exciting way of saving potentially orders of magnitude.” As such, the relatively obscure model is gaining traction in tech circles.

This burgeoning tech theory is not new, but is more relevant – and therefore closer to becoming a practical reality – than ever before. In fact, a reversible computing chip startup called Vaire Computing is already hard at work developing a commercial model. They’ve already announced the tape-out stage of the chip design, which the company claims is capable of recovering half of the energy used in the chip’s resonator circuit.

This rapid advancement in reversible computing research and development is driven by its unique relevance and utility in the context of artificial intelligence. “Computations in AI are often run in parallel, meaning different processors each run one part of a computation. This creates an opportunity for reversible computing to shine,” stated a recent report from IEEE Insider. “If you run reversible chips more slowly, but use more of them to compensate, you end up saving energy: The advantage of running each chip more slowly wins out against the disadvantage of running more chips,” the report went on to say.

Reversible computing isn’t the only innovative response to runaway digital energy demand out there, but it may soon become one of the forerunners. It’s competing against other equally futuristic-sounding technological alternatives such as quantum computing, as well as (relatively) simpler solutions like algorithms based in integer addition instead of the more traditional floating-point multiplication (FPM). It’s still unclear which of these approaches will become the new normal, but it’s clear that as Moore’s law loses steam, disruption is impending. 

By Haley Zaremba for Oilprice.com

 

Corporate World Goes Quiet on Climate Pledges

By Irina Slav - Jun 09, 2025

• Major companies are quietly scaling back climate language in reports, with firms like American Airlines, GM, and Coca-Cola reducing or removing net-zero and emissions-related content.
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• Profitability and political headwinds are driving the retreat.
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• Corporate climate messaging is becoming more cautious, with 80% of executives adjusting their transition narratives and half avoiding net-zero talk entirely.
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Companies in various industries are removing climate change and net zero language from their reports, the Wall Street Journal reported this month, lamenting the fact that corporates were “watering down” their commitments in the area. It may be temporary—or it may be the natural thing.

Analysis of the proxy statements of a number of large businesses conducted by the WSJ showed that many of them were, it seems, less willing to discuss climate change and their response to it in as much detail as they were a few years ago. The WSJ suggested it was an about-turn prompted by the energy policies of the Trump administration and the axing of the Inflation Reduction Act.

Companies “implicated” in watering down their climate change language included American Airlines, Kroger, American Eagle Outfitters, and e.l.f. Beauty. Their crime was either reducing the amount of text dedicated to climate change and the respective company’s efforts to counter it or entirely removing such text.

The above are not the only ones that have gone rather general on climate change. Coca-Cola only mentions climate and emissions in general terms and briefly in its latest proxy statement. GM also does not go into a lot of detail on its net-zero efforts, and neither does United Airlines. Yet there are perfectly respectable reasons for this, even from a climate activist perspective.

Most of these companies produce separate reports regarding climate change and emission reduction because it is the done thing these days. Indeed, one of them told the WSJ as much. “We periodically adjust the copy used in the company’s external messaging and communications,” a spokesperson for American Eagle Outfitters told the publication. “AEO’s commitment to reducing greenhouse-gas emissions remains unchanged.”

Other comments from the mentioned companies follow the same lines: these businesses have already internalized emission-cutting language and action, and no longer feel the need to talk loudly about it. And, of course, there’s the Trump factor at work.

The current administration axed billions on subsidies for transition-related businesses. As a result, these businesses are suffering a fate even worse than theirs already was because of raw material inflation, higher borrowing costs that had nothing to do with the Trump admin, and, notably, a pullback from investors that realized they had grossly overestimated the speed, at which their investment in net zero would be returned.

Trump’s policies certainly hurt the coolness aspect of net-zero pledges and pronouncements but it was the lack of promised profits that likely played a bigger part and led to companies toning down these pledges and pronouncements.

“The whole sector — solar, wind, hydrogen, fuel cells — anything clean is dead for now,” one energy transition-focused hedge fund manager told Bloomberg earlier this year. “The fundamentals are very poor,” Gupta, who manages some $100 million, told Bloomberg, adding, “I’m not talking about long term. I’m talking about where I see weakness right now.” Apparently, the long-term outlook for net zero remains bright, but the short term is more problematic.

Yet considerable problems abound not just in the industries directly related to the energy transition, such as it is. Even companies in other industries, such as air travel and cosmetics, are finding it difficult to stick to their pledges—at least without losing a lot of money. Tracking and reporting Scope 3 emissions, for instance, requires substantial resources and carries equally substantial costs. After all, it involves tracking the emissions of an entire supply chain from suppliers to consumers. Many corporations are realizing investing the money, time, and effort in this endeavor may not be worth it, especially with a federal government that does not care about any sort of energy transition at all.

Another thing they are realizing is that, put crudely, emission tracking does not pay—not without a solid subsidy back that is at present absent. It was the Wall Street Journal again that reported how transition-focused startups were folding as Trump axed those subsidies. EV batteries, direct air capture, and even solar power, which was supposed to have become well established, are now suffering the consequences of overhyping. With the benefits that were promised to come from net zero never materializing, unlike costs related to the transition push, could anyone really blame corporate leaderships for removing net-zero language from their reports?

Indeed, a recent survey from the Conference Board that the WSJ cited in its report found that as much as 80% of corporate executives said their companies were “adjusting” their transition narrative—for fear of backlash that has prompted 50% of the respondents to entirely stop talking about net zero. That backlash can hardly be blamed on Trump. It is a natural consequence of the overhyping that never delivered on the promises made. What is happening, then, is a natural process that, one might argue, was even late in coming.

By Irina Slav for Oilprice.com

 China's Petrochemical Reliance on U.S. Outweighs Rare Earth Trade

By ZeroHedge - Jun 10, 2025

• China imports substantial volumes of petrochemical feedstocks from the US, far exceeding the value of rare earth metals the US imports from China, indicating a mutual dependence between the two nations.
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• Tariffs and export restrictions imposed during the trade war, particularly on feedstocks like propane and ethane, threaten to disrupt these established trade flows and impact industries on both sides.
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• China's petrochemical plants, especially those reliant on US propane and ethane, face potential shutdowns or increased costs due to difficulties in finding alternative supplies, highlighting the vulnerability of global supply chains to trade disputes.
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US petrochemical producers may have found themselves on the front line of global trade wars, BNEF reports, with China’s dependence on the US for feedstocks (see "Chinese Plastics Factories Face Mass Closure As US Ethane Supply Evaporates") blunting the impact of its dominations of exports of rare earth metals.

China imported more than 565,000 barrels per day of petrochemical feedstocks from the US in 2024 according to the Energy Information Administration, with a value of over $4.7 billion. That dwarfed the $170 million of rare earths the US imported last year, about 70% of which came from China, according to the US Geological Survey.

The figures show the dependence the US and China have developed on each other by ever tightening trade links over the past few decades. While China has a tight grip on refining many metals crucial for industry, it also takes in niche chemicals from the US that are difficult to buy elsewhere.

China leans on naphtha to produce most base chemicals, which are processed further to end up in everyday items like electronics and clothing. However, some plants can switch to cheaper propane when the economics make sense, which they do regularly. Propane dehydrogenation plants however can’t process alternatives like naphtha. The US accounted for over half of all China’s propane imports in 2024. 

US producers have looked to China to buy their ballooning volumes of feedstock, the market value of which has almost quadrupled since 2020. China accounts for almost half of all new mixed-feed ethylene and propylene production capacity set to come online globally over the next four years, based on data compiled by BloombergNEF.

A forced divorce

The honeymoon period may be about to end. Following the implementation of tariffs by President Donald Trump’s administration in April, China retaliated with its own on US imports — including a 125% tariff on feedstocks like propane and ethane. The duty effectively killed the economics of importing US feedstocks. 

Alternative sources of propane may be hard or expensive to come by, with producers in the Middle East sending most of their supplies to India, South Korea and Japan. While some rerouting could take place, Middle Eastern players could use the lack of alternatives for China’s propane dehydrogenation plants to charge a premium. China’s propane dehydrogenation operators, like Hengli Petrochemical, have already suffered from weak margins over the past years. Many may opt to shut their operations temporarily.

A messy settlement

China moved quickly to remove tariffs on US ethane as trade talks commenced. However, while China seems willing to buy US ethane, the US administration may no longer allow it. Enterprise Products Partners — the largest US-based exporter of petrochemical feedstocks — received a notice on Wednesday from the Bureau of Industry and Security at the US Department of Commerce, denying licenses to export ethane to China on the basis that such flows “pose an unacceptable risk of use in or diversion to a ‘military end use’ in China.” Energy Transfer received a similar communication.

China’s ethane cracking capacity is dwarfed by its capacity to process naphtha and propane, but almost all of its ethane imports come from the US. The restrictions will have a significant impact on the Lianyungang and Tianjin plants, owned by Satellite Chemical, Sinopec and INEOS. SP Chemicals, a Singapore-based producer, sources most of its feedstock from Enterprise Products Partners.

As the trade war continues, it appears commodities may lead the confrontation, with players on both sides set to feel the pain.

By Zerohedge.com

China’s Rare Earths Weapon Could Kill Europe’s Auto Industry

By Irina Slav - Jun 08, 2025

• China’s new rare earth export restrictions are throttling global supply chains, posing a direct threat to Europe’s auto industry and its mandated EV rollout.
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• Automakers warn of looming shutdowns due to complex and slow licensing requirements for rare earth magnets.
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• The crisis exposes dangerous overdependence on China, sparking renewed calls in the EU and U.S. to build independent rare earth supply chains.
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China earlier this year introduced restrictions on its exports of rare earths. The move marked a new stage in the US- China trade spat, when the two sides no longer tried to out-tariff each other but took to more concrete steps. The problem is, the restrictions don’t just apply to U.S. companies. And they may well deliver the fatal blow to Europe’s struggling auto industry.

China controls 90% of the world’s rare earths processing capacity. It is the indisputable, if not exactly celebrated in the West, master of the rare earths industry. And now, it is using this position to make a point to trade partners that have gone above and beyond to restrict Chinese exports to their own countries and regions—essentially the same thing that Washington does when it uses the dominance of the dollar to sanction governments it doesn’t see eye to eye with.

Rare earths are used in a perhaps surprisingly wide variety of products. More specifically, it’s rare-earth magnets that are troubling carmakers on both sides of the ocean. “Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components, including automatic transmissions, throttle bodies, alternators, various motors, sensors, seat belts, speakers, lights, motors, power steering, and cameras,” the Alliance for Automotive Innovation, an industry body, wrote in a letter addressed to the Trump administration in early May.

The letter, cited by Reuters in a recent report on the rare earths restrictions, is one of what looks like a cry for help that is only going to get louder. It was signed by auto industry leaders including Toyota, Volkswagen, and General Motors, which thanked the administration for trying to resolve the issue. If they didn’t, the carmakers said, it would be only a matter of time before car factories started shutting down.

The same is happening in Europe, and it’s worse—because with Trump, U.S. carmakers no longer have to worry about EVs. With the current European parliament and the Commission, local carmakers do have to worry about EVs, a lot. Because EVs feature greater amounts of those rare earths than internal combustion engine cars. And European carmakers have been mandated with the production and sale of certain minimum numbers of these EVs over the next three years.

“I informed my Chinese counterpart about the alarming situation in the EU car industry — the rare earth and permanent magnets are essential for industrial production… this is extremely disruptive for industry,” the European Union’s trade commissioner, Maros Sefcovic, said this week, as quoted by the Financial Times. He added that the “Carmakers are warning of huge production difficulties in a short period of time.”

The clock, in other words, is ticking and China does not really seem in a hurry to stop it. The restrictions that Beijing implemented in mid-April are not literal—or direct. They are in the form of a new licensing regime for anyone who wants to buy rare earth magnets from Chinese producers. To do that, the prospective buyer needs to apply for a license, provide a substantial amount of information, and wait. As a Bosch spokesperson described it, the application process was “complex and time-consuming, partly due to the need to collect and provide a lot of information.”

Because of this complexity, only a few car parts suppliers have been granted such licenses, making the car companies’ freak-out only a matter of time, really. But this is coming at a really bad time for European carmakers, despite the substantial rise in EV sales. They are still to turn in a solid profit on their electric cars and they are supposed to be making ever more of these—which means a lot more rare earths.

Things are not that swell in the United States, either, after President Donald Trump accused the Chinese of violating a deal the two earlier agreed, on the temporary relaxation of trade warfare, including tariffs and other trade restrictions—only to be slapped back with the accusation that he did that first, by restricting semiconductor exports.

Things are not looking good for the car industry right now but there is, as always, a silver lining. It consists in the fact that the world is entirely dependent on a single source of rare earths and this is not a sustainable or secure state of affairs. There has been a lot of talk in both Europe and the United States about building their own supply chains in such critical materials but action has not really been forthcoming. Even if it was, building a supply chain from scratch takes many years—just ask China. Yet the rare earths drama may boost Europe’s resolve to actually start working on that supply chain, however long it takes to build it. Import dependence can be fatal.

By Irina Slav for Oilprice.com