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It’s been just over a week since one of the 350-foot-long blades of a wind turbine off the Massachusetts coast unexpectedly broke off, sending hunks of fiberglass and foam into the waters below. As of Wednesday morning, cleanup crews were still actively removing debris from the water and beaches and working to locate additional pieces of the blade.
The blade failure quickly became a crisis for residents of Nantucket, where debris soon began washing up on the island’s busy beaches. It is also a PR nightmare for the nascent U.S. offshore wind industry, which is already on the defensive against community opposition and rampant misinformation about its environmental risks and benefits.
The broken turbine is part of Vineyard Wind 1, which is being developed by Avangrid and Copenhagen Infrastructure Partners. The project was still under construction when the breakage occurred, but it was already the largest operating offshore wind farm in the US, with ten turbines sending power to the New England Grid as of June. The plan is to bring another 52 online, which will produce enough electricity to power more than 400,000 homes. Now both installation and power generation have been paused while federal investigators look into the incident.
There’s still a lot we don’t know about why this happened, what the health and safety risks are, and what it means for this promising clean energy solution going forward. But here’s everything we’ve learned so far.
Vineyard Wind
On the evening of Saturday, July 13, Vineyard Wind received an alert that there was a problem with one of its turbines. The equipment contains a “delicate sensoring system,” CEO Klaus Moeller told the Nantucket Select Board during a public meeting last week. Though he did not describe what the alert said, he added that “one of the blades was broken and folded over.” Later at the meeting, a spokesperson for GE Vernova, which manufactured and installed the turbines, said that “blade vibrations” had been detected. About a third of the blade, or roughly 120 feet, fell into the water.
Two days later, Vineyard Wind contacted the town manager in Nantucket to explain that modeling showed the potential for debris from the blade to travel toward the island. Sure enough, fiberglass shards and other scraps began washing up on shore the next day, and all beaches on the island’s south shore were quickly closed to the public.
On Thursday morning, another large portion of the damaged blade detached and fell into the ocean. Monitoring and recovery crews continued to find debris throughout the area over the weekend. The beaches have since reopened, but visitors have been advised to wear shoes and leave their pets at home as cleanup continues.
During GE’s second quarter earnings call on July 24, GE Vernova CEO Scott Strazik and Vice President of Investor Relations Michael Lapides said the company had identified a “material deviation” as the cause of the accident, and that the company is continuing to work on a "root cause analysis" to get to the bottom of how said deviation happened in the first place.
The turbine was one of GE’s Haliade-X 13-megawatt turbines, which are manufactured in Gaspé, Canada, and it was still undergoing post-installation testing by GE when the failure occurred — that is, it was not among those sending power to the New England grid. This was actually the second issue the company has had at this particular turbine site. One of the original blades destined for the site was damaged during the installation process, and the one that broke last week was a replacement, Craig Gilvard, Vineyard Wind’s communications director, told the New Bedford Light.
By Vineyard Wind’s account at the meeting last week, the accident triggered an automatic shut down of the system and activated the company’s emergency response plan, which included immediately notifying the U.S. Coast Guard, the federal Bureau of Safety and Environmental Enforcement, and regional emergency response committees.
Moeller, the CEO, said during the meeting that the company worked with the Coast Guard to immediately establish a 500 meter “safety zone” around the turbine and to send out notices to mariners. According to the Coast Guard’s notice log, however, the safety zone went into effect three days later. In response to my questions, the Coast Guard confirmed that the zone was established around 8pm that night and announced to mariners over radio broadcast.
Two days after the turbine broke, on Monday, Vineyard Wind contacted the National Oceanic and Atmospheric Administration for aid in modeling where the turbine debris would travel in the water. The agency estimated pieces would likely make landfall in Nantucket that day. Vineyard Wind put out a press release about the accident and subsequently contacted the Nantucket town manager. At the Nantucket Select Board meeting last week, Moeller said the company followed regulatory protocols but that there was “really no excuse” for how long it took to inform the public, and said, “we want to move much quicker and make sure that we learn from this.”
The Interior Department’s Bureau of Safety and Environmental Enforcement has ordered the company to cease all power production and installation activities until it can determine whether this was an isolated incident or affects other turbines.
By Tuesday, Vineyard Wind said it had deployed two small teams to Nantucket in addition to hiring a local contractor to remove debris on the island. The company later said it would “increase its local team to more than 50 employees and contractors dedicated to beach clean-up and debris recovery efforts.”
GE Vernova is responsible for recovering offshore debris and has not published any public statements about the effort. In response to a list of questions, a GE Vernova spokesperson said, “We continue to work around the clock to enhance mitigation efforts in collaboration with Vineyard Wind and all relevant state, local and federal authorities. We are working with urgency to complete our root cause analysis of this event.”
There have been no reported injuries as a result of the accident.
Vineyard Wind and GE Vernova have stressed that the debris are “not toxic.” At the Select Board meeting, GE’s executive fleet engineering director Renjith Viripullan said that the blade is made of fiberglass, foam, and balsa wood. It is bonded together using a “bond paste,” he said, and likened the blade construction to that of a boat. “That's the correlation we need to think about,” he said.
One of the board members asked if there was any risk of PFAS contamination as a result of the accident. Viripullan said he would need to “take that question back” and follow up with the answer later. (This was one of the questions I asked GE, but the company did not respond to it.)
That being said, the debris poses some dangers. Photos of cleanup crews posted to the Harbormaster’s Facebook page show workers wearing white hazmat suits. Vineyard Wind said “members of the public should avoid handling debris as the fiber-glass pieces can be sharp and lead to cuts if handled without proper gloves.”
Though members of the public raised concerns at the meeting and to the press that fiberglass fragments in the ocean threaten marine life and public health, it is not yet clear how serious the risks are, and several efforts are underway to further assess them. Vineyard Wind is developing a water quality testing plan for the island and setting up a process for people to file claims. GE hired a design and engineering firm to conduct an environmental assessment, which it will present at a Nantucket Select Board meeting later this week. The Massachusetts Department of Environmental Protection has requested information from the companies about the makeup of the debris to evaluate risks, and the Department of Fish and Game is monitoring for impacts to the local ecosystem.
As of last Wednesday morning, Vineyard Wind had collected “approximately 17 cubic yards of debris, enough to fill more than six truckloads, and several larger pieces that washed ashore.” It is not yet known what fraction of the turbine that fell off has been recovered. Vineyard Wind did not respond to a request for the latest numbers in time for publication, but I’ll update this piece if I get a response.
Yes. In May, a blade on the same model of turbine, the GE Haliade-X, sustained damage at a wind farm being installed off the coast of England called Dogger Bank. At the Nantucket Select Board meeting, a spokesperson for GE said the Dogger Bank incident was “an installation issue specific to the installation of that blade” and that “we don’t think there’s a connection between that installation issue and what we saw here.” Executives emphasized this point during the earnings call and chalked up the Dogger Bank incident to “an installation error out at sea.”
Several blades have also broken off another GE turbine model dubbed the Cypress at wind farms in Germany and Sweden. After the most recent incident in Germany last October, the company used similar language, telling reporters that it was working to “determine the root cause.”
A “company source with knowledge of the investigations” into the various incidents recently told CNN that “there were different root causes for the damage, including transportation, handling, and manufacturing deviations.”
GE Vernova’s stock price fell nearly 10% last Wednesday.
The backlash was swift. Nantucket residents immediately wrote to Nantucket’s Select Board to ask the town to stop the construction of any additional offshore wind turbines. “I know it's not oil, but it's sharp and maybe toxic in other ways,” Select Board member Dawn Holgate told company executives at the meeting last week. “We're also facing an exponential risk if this were to continue because many more windmills are planned to be built out there and there's been a lot of concern about that throughout the community.”
The Select Board plans to meet in private on Tuesday night to discuss “potential litigation by the town against Vineyard Wind relative to recovery costs.”
“We expect Vineyard Wind will be responsible for all costs and associated remediation efforts incurred by the town in response to the incident,” Elizabeth Gibson, the Nantucket town manager said during the meeting last week.
The Aquinnah Wampanoag tribe is also calling for a moratorium on offshore wind development and raised concerns about the presence of fiberglass fragments in the water.
On social media, anti-wind groups throughout the northeast took up the story as evidence that offshore wind is “not green, not clean.” Republican state representatives in Massachusetts cited the incident as a reason for opposing legislation to expedite clean energy permitting last week. Fox News sought comment from internet personality and founder of Barstool Sports David Portnoy, who owns a home on Nantucket and said the island had been “ruined by negligence.” The Texas Public Policy Foundation, a nonprofit funded by oil companies and which is backing a lawsuit against Vineyard Wind, cited the incident as evidence that the project is harming local fishermen. The First Circuit Court of Appeals is set to hear oral arguments on the case this Thursday.
Meanwhile, environmental groups supportive of offshore wind tried to do damage control for the industry. “Now we must all work to ensure that the failure of a single turbine blade does not adversely impact the emergence of offshore wind as a critical solution for reducing dependence on fossil fuels and addressing the climate crisis,” the Sierra Club’s senior advisor for offshore wind, Nancy Pyne, wrote in a statement. “Wind power is one of the safest forms of energy generation.”
This story was last updated July 24 at 3:15 p.m. The current version contains new information and corrects the location where the turbine blades are produced. With assistance from Jael Holzman.
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A new report from the American Council for an Energy-Efficient Economy has some exciting data for anyone attempting to retrofit a multifamily building.
By now there’s plenty of evidence showing why heat pumps are such a promising solution for getting buildings off fossil fuels. But most of that research has focused on single-family homes. Larger apartment buildings with steam or hot water heating systems — i.e. most of the apartment buildings in the Northeast — are more difficult and expensive to retrofit.
A new report from the nonprofit American Council for an Energy-Efficient Economy, however, assesses a handful of new technologies designed to make that transition easier and finds they have the potential to significantly lower the cost of decarbonizing large buildings.
“Several new options make decarbonizing existing commercial and multifamily buildings much more feasible than a few years ago,” Steven Nadel, ACEEE’s executive director and one of the authors, told me. “The best option may vary from building to building, but there are some exciting new options.”
To date, big, multifamily buildings have generally had two flavors of heat pumps to consider. They can install a large central heat pump system that delivers heating and cooling throughout the structure, or they can go with a series of “mini-split” systems designed to serve each apartment individually. (Yes, there are geothermal heat pumps, too, but those are often even more expensive and complicated to install, especially in urban areas.)
While these options have proven to work, they often require a fair amount of construction work, including upgrading electrical systems, mounting equipment on interior and exterior walls, and running new refrigerant lines throughout the building. That means they cost a lot more than a simple boiler replacement, and that the retrofit process can be disruptive to residents.
In 2022, the New York City Housing Authority launched a contest to try and solve these problems by challenging manufacturers to develop heat pumps that can sit in a window just like an air conditioner. New designs from the two winners, Gradient Comfort and Midea, are just starting to come to market. But another emerging solution, central air-to-water heat pumps, also presents an appealing alternative. These systems avoid major construction because they can integrate with existing radiators or baseboard heaters in buildings that currently use hot water boilers. Instead of burning natural gas or oil to produce hot water, the heat pump warms the water using electricity.
The ACEEE report takes the cost and performance data for these emerging solutions and compares it to results from mini-splits, central heat pumps, geothermal heat pumps, packaged terminal heat pumps — all-in-one devices that sit inside a sleeve in the wall, commonly used in hotels — and traditional boilers fed by biogas or biodiesel.
While data on the newer technologies is limited, so far the results are extremely promising. The report found that window heat pumps are the most cost-effective of the bunch to fully decarbonize large apartment buildings, with an average installation cost of $9,300 per apartment. That’s significantly higher than the estimated $1,200 per apartment cost of a new boiler, but much lower than the $14,000 to $20,000 per apartment price tag of the other heat pump variations, although air-to-water heat pumps came in second. The report also found that window heat pumps could turn out to be the cheapest to operate, with a life cycle cost of about $14,500, compared to $22,000 to $30,000 for boilers using biodiesel or biogas or other heat pump options.
As someone who has followed this industry for several years with a keen interest in new solutions for boiler-heated buildings in the Northeast — where I grew up and currently reside — I was especially wowed by how well the new window heat pumps have performed. New York City installed units from both Midea and Gradient in 24 public housing apartments, placing one in each bedroom and living room, and monitored the results for a full heating season.
Preliminary data shows the units performed swimmingly on every metric.
On ease of installation: It took a total of eight days for maintenance workers to install the units in all 24 apartments, compared to about 10 days per apartment when the Housing Authority put split heat pump systems in another building.
On performance: During the winter, while other apartments in the building were baking in 90-degree Fahrenheit heat from the steam system, the window unit-heated apartments maintained a comfortable 75 to 80 degree range, even as outdoor temperatures dropped to as low as 20 degrees.
On energy and cost: The window unit-heated apartments used a whopping 87% less energy than the rest of the building’s steam-heated apartments did, cutting energy costs per household in half.
On customer satisfaction: A survey of 72 residents returned overwhelmingly positive feedback, with 93% reporting that the temperature was “just right” and 100% reporting they were either “neutral” or “satisfied” with the new units.
The Housing Authority found that the units also lowered energy used for cooling in peak summer since they were more efficient than the older window ACs residents had been using. Next, the agency plans to expand the pilot to two full buildings before deploying the units across its portfolio. The pilot was so successful that utilities in Massachusetts, Vermont, and elsewhere are purchasing units to do their own testing.
The ACEEE report looked at a handful of air-to-water heat pump projects in New York and Massachusetts, as well, only two of which have been completed. The average installation cost per apartment was around $13,500, with each of the buildings retaining a natural gas boiler as a backup, but none had published performance data yet.
Air-to-water heat pumps have only recently come to market in the U.S. after having taken off in Europe, and they don’t yet fit seamlessly into the housing stock here. Existing technology can only heat water to 130 to 140 degrees, which is hot enough for the more efficient hot water radiators common in Europe but too cold for the U.S. market, where hot water systems are designed to carry 160- to 180-degree water, or even steam.
These heat pumps can still work in U.S. buildings, but they require either new radiators to be installed or supplemental heat from a conventional boiler or electric resistance unit. The other downside to an air-to-water system is that it can’t provide cooling unless the building is already equipped with compatible air conditioning units.
One strength of these systems over the window units, however, is that they don’t push costs onto tenants in buildings where the landlord has historically paid for heat. They also may be cheaper to operate than more traditional heat pump options, although data is still extremely limited and depends on the use of supplemental heat.
It’s probably too soon to draw any major conclusions about air-to-water systems, anyway, because new, potentially more effective options are on the way. In 2023, New York State launched a contest challenging manufacturers to develop new decarbonized heating solutions for large buildings. Among the finalists announced last year, six companies were developing heat pumps that could generate higher-temperature hot water and/or steam. One of them is now installing its first demonstration system in an apartment building in Harlem, and two others have similar demonstrations in the works.
The ACEEE report also mentions a few other promising new heat pump formats, such as an all-in-one wall-mounted heat pump from Italian company Ephoca. It’s similar to the window heat pump in that it’s contained in a single device rather than split into an indoor and outdoor unit, so it doesn’t require mounting anything to the outside of the building or worrying about refrigerant lines, although it does require drilling two six-inch holes in the wall for vents. These may be a good option for those whose windows won’t accommodate a window heat pump or who don’t like the aesthetics. New York State is also funding product development for better packaged terminal heat pumps that could slot into wall cavities occupied by less-efficient packaged terminal air conditioners and heat pumps today.
Gradient and Midea are not yet selling their cold-climate window heat pumps to the general public. Gradient brought a version of its technology for more moderate climates to market in 2023, which was only suitable for heating at outdoor temperatures of 40 degrees and higher. But the company has discontinued that model and is focusing on an “all-weather” version designed for cold climates, which is the one that has been installed in the New York City apartments. Neither company responded to my inquiry about when their heat pumps would be available to consumers.
One big takeaway is that even the new school heat pumps designed to be easier and cheaper to install have higher capital costs than buying a boiler and air conditioners — a stubborn facet of many climate solutions, even when they save money in the long run. Canary Media previously reported that the Gradient product would start at $3,800 per unit and the Midea at $3,000. Experts expect the cost to come down as adoption and demand pick up, but the ACEEE report recommends that states develop incentives and financing to help with up-front costs.
“These are not just going to happen on their own. We do need some policy support for them,” Nadel said. In addition to incentives and building decarbonization standards, Nadel raised the idea of discounted electric rates for heat pump users, an idea that has started to gain traction among climate advocates that a few utilities have piloted.
“To oversimplify,” Nadel said, “in many jurisdictions, heat pumps subsidize other customers, and that probably needs to change if this is going to be viable.”
Current conditions: Two people are missing after torrential rains in Catalonia • The daily high will be over 115 degrees Fahrenheit every day this week in Baghdad, Iraq • The search for victims of the Texas floods is paused due to a new round of rains and flooding in the Hill Country.
Homeland Security Secretary Kristi Noem defended the Federal Emergency Management Agency after The New York Times reported it failed to answer nearly two-thirds of the calls placed to its disaster assistance line by victims of the Central Texas floods. Speaking on NBC’s Meet the Press on Sunday, Noem repudiated reports by the Times and Reuters that her requirement that she personally approve expenses over $100,000, as well as the deployment of other critical resources, created bottlenecks during the crucial hours after the floodwaters receded. “Those claims are absolutely false,” she said.
Noem additionally denied reports that FEMA’s failure to renew the contracts of call-center contractors created a slowdown at the agency. Per the Times’ reporting, FEMA allowed its call center contract extension to expire on the night of July 5, in the midst of the unfolding disaster. During the day on July 5, FEMA answered the calls of 99.7% of survivors seeking one-time assistance for their immediate needs, the Times’ reporting shows; after FEMA failed to renew the contracts and hundreds of contractors were fired, the answer rate dropped to just 35.8% on July 6, and 15.9% on July 7. “Those contracts were in place, no employees were off of work,” Noem told Meet the Press. (Reuters reports that an internal FEMA document shows Noem approved the call center contracts as of July 10.)
At least 120 people died in the flash floods in Texas’ Hill Country over the Fourth of July weekend, with more than 160 people still missing. FEMA has fired or bought out at least 2,000 full-time employees since the start of the year, though since the floods, the Trump administration has reframed its push to “abolish” FEMA as “rebranding” FEMA, instead.
The Trump administration last week fired the final handful of employees who worked at the Office of Global Change, the division of the State Department that focused on global climate negotiations. Per The Washington Post, the employees were the final group at the department working on issues of international climate policy, and were part of bigger cuts to the agency that will see nearly 3,000 staffers out of work. “The Department is undertaking a significant and historic reorganization to better align our workforce activities and programs with the America First foreign policy priorities,” the State Department told the Post in a statement about the shuttering of the office.
Grand Canyon Lodge employees pictured on July 20, 1930. NPS/George Grant
The historic Grand Canyon Lodge burned down in the nearly 6,000-acre Dragon Bravo Fire in Arizona over the weekend. The rustic lodge, located on the Canyon’s remote North Rim, had stood since 1937, when it was rebuilt after a kitchen fire, and was the only hotel located inside the boundaries of the national park.
Arizona Governor Katie Hobbs called for an investigation into the National Park Service’s handling of the fire, which destroyed an additional 50 to 80 structures on the park’s North Rim. “An incident of this magnitude demands intense oversight and scrutiny into the federal government’s emergency response,” she said, adding that “Arizonans deserve answers for how this fire was allowed to decimate the Grand Canyon National Park.” The Dragon Bravo Fire is one of two wildfires burning on the park’s north side and began after a lightning strike on July 4. The famous Phantom Ranch, located inside the canyon, and popular Bright Angel Trail and Havasupai Gardens, were also closed to hikers as of Sunday due to the fires.
Late last week, the local government of Nantucket reached a settlement with GE Vernova for $10.5 million to compensate for the tourism and business losses that resulted from the July 2024 turbine failure at Vineyard Wind 1. The town will use the money to establish a Community Claims Fund to provide compensation to affected parties.
The incident involved a 350-foot blade from a GE Vernova turbine that split off and fell into the water during construction of Vineyard Wind. Debris washed up onshore, temporarily closing some of the Massachusetts island’s iconic beaches during the height of tourist season. “The backlash was swift,” my colleague Emily Pontecorvo reported at the time. “Nantucket residents immediately wrote to Nantucket’s Select Board to ask the town to stop the construction of any additional offshore wind turbines.” Though significant errors like blade failures are incredibly rare, as my colleague Jael Holzman has also reported, the disaster could not have come at a worse time for Vineyard Wind, which subsequently saw its expansion efforts stymied by the Trump administration.
A group of young people filed a complaint last week against the federal government, claiming that the Trump administration has violated their right to good health and a stable environment, Inside Climate News reports. Our Children’s Trust represents the plaintiffs — the same Oregon group that brought Held v. Montana, which successfully argued that the state violated young people’s constitutional right to a clean and healthful environment, as well as the groundbreaking climate case Juliana v. United States, which the Supreme Court declined to hear this spring.
The new lawsuit hinges on the claim that several of Trump’s executive orders, including his declaration of a National Energy Emergency and his reinvigoration of the coal industry, knowingly increase fossil-fuel pollution that will have poor health impacts on current and future generations. The plaintiffs range in age from 7 to 25 and come from all over the country.
More than half of all the soybean oil produced in the United States next year will be used to make biofuel, according to a new outlook by the U.S. Department of Agriculture.
The multi-faceted investment is defense-oriented, but could also support domestic clean energy.
MP Materials is the national champion of American rare earths, and now the federal government is taking a stake.
The complex deal, announced Thursday, involves the federal government acting as a guaranteed purchaser of MP Materials’ output, a lender, and also an investor in the company. In addition, the Department of Defense agreed to a price floor for neodymium-praseodymium products of $110 per kilogram, about $50 above its current spot price.
MP Materials owns a rare earths mine and processing facility near the California-Nevada border on the edges of the Mojave National Preserve. It claims to be “the largest producer of rare earth materials in the Western Hemisphere,” with “the only rare earth mining and processing site of scale in North America.”
As part of the deal, the company will build a “10X Facility” to produce magnets, which the DOD has guaranteed will be able to sell 100% of its output to some combination of the Pentagon and commercial customers. The DOD is also kicking in $150 million worth of financing for MP Materials’ existing processing efforts in California, alongside $1 billion from Wall Street — specifically JPMorgan Chase and Goldman Sachs — for the new magnet facility. The company described the deal in total as “a multi-billion-dollar commitment to accelerate American rare earth supply chain independence.”
Finally, the DOD will buy $400 million worth of newly issued stock in MP Materials, giving it a stake in the future production that it’s also underwriting.
Between the equity investment, the lending, and the guaranteed purchasing, the Pentagon, and by extension the federal government, has taken on considerable financial risk in casting its lot with a company whose primary asset’s previous owner went bankrupt a decade ago. But at least so far, Wall Street is happy with the deal: MP Materials’ market capitalization soared to over $7 billion on Thursday after its share price jumped over 40%, from a market capitalization of around $5 billion on Wednesday and the company is valued at around $7.5 billion as of Friday afternoon.
Despite the risk, former Biden administration officials told me they would have loved to make a deal like this.
When I asked Alex Jacquez, who worked on industrial policy for the National Economic Council in the Biden White House, whether he wished he could’ve overseen something like the DOD deal with MP Materials, he replied, “100%.” I put the same question to Ashley Zumwalt-Forbes, a former Department of Energy official who is now an investor; she said, “Absolutely.”
Rare earths and critical minerals were of intense interest to the Biden administration because of their use in renewable energy and energy storage. Magnets made with neodymium-praseodymium oxide are used in the electric motors found in EVs and wind turbines, as well as for various applications in the defense industry.
MP Materials will likely have to continue to rely on both sets of customers. Building up a real domestic market for the China-dominated industry will likely require both sets of buyers. According to a Commerce Department report issued in 2022, “despite their importance to national security, defense demand for … magnets is only a small portion of overall demand and insufficient to support an economically viable domestic industry.”
The Biden administration previously awarded MP Materials $58.5 million in 2024 through the Inflation Reduction Act’s 48C Advanced Energy Project tax credit to support the construction of a magnet facility in Fort Worth. While the deal did not come with the price guarantees and advanced commitment to purchase the facility’s output of the new agreement, GM agreed to come on as an initial buyer.
Matt Sloustcher, an MP Materials spokesperson, confirmed to me that the Texas magnet facility is on track to be fully up and running by the end of this year, and that other electric vehicle manufacturers could be customers of the new facility announced on Thursday.
At the time MP Materials received that tax credit award, the federal government was putting immense resources behind electric vehicles, which bolstered the overall supply supply chain and specifically demand for components like magnets. That support is now being slashed, however, thanks to the One Big Beautiful Bill Act, which will cancel consumer-side subsidies for electric vehicle purchases.
While the Biden tax credit deal and the DOD investment have different emphases, they both follow on years of bipartisan support for MP Materials. In 2020, the DOD used its authority under the Defense Production Act to award almost $10 million to MP Materials to support its investments in mineral refining. At the time, the company had been ailing in part due to retaliatory tariffs from China, cutting off the main market for its rare earths. The company was shipping its mined product to China to be refined, processed, and then used as a component in manufacturing.
“Currently, the Company sells the vast majority of its rare earth concentrate to Shenghe Resources,” MP Materials the company said in its 2024 annual report, referring to a Chinese rare earths company.
The Biden administration continued and deepened the federal government’s relationship with MP Materials, this time complementing the defense investments with climate-related projects. In 2022, the DOD awarded a contract worth $35 million to MP Materials for its processing project in order to “enable integration of [heavy rare earth elements] products into DoD and civilian applications, ensuring downstream [heavy rare earth elements] industries have access to a reliable feedstock supplier.”
While the DOD deal does not mean MP Materials is abandoning its energy customers or focus, the company does appear to be to the new political environment. In its February earnings release, the company mentioned “automaker” or “automotive-grade magnets” four times; in its May earnings release, that fell to zero times.
Former Biden administration officials who worked on critical minerals and energy policy are still impressed.
The deal is “a big win for the U.S. rare earths supply chain and an extremely sophisticated public-private structure giving not just capital, but strategic certainty. All the right levers are here: equity, debt, price floor, and offtake. A full-stack solution to scale a startup facility against a monopoly,” Zumwalt-Forbes, the former Department of Energy official, wrote on LinkedIn.
While the U.S. has plentiful access to rare earths in the ground, Zumwalt-Forbes told me, it has “a very underdeveloped ability to take that concentrate away from mine sites and make useful materials out of them. What this deal does is it effectively bridges that gap.”
The issue with developing that “midstream” industry, Jacquez told me, is that China’s world-leading mining, processing, and refining capacity allows it to essentially crash the price of rare earths to see off foreign competitors and make future investment in non-Chinese mining or processing unprofitable. While rare earths are valuable strategically, China’s whip hand over the market makes them less financially valuable and deters investment.
“When they see a threat — and MP is a good example — they start ramping up production,” he said. Jacquez pointed to neodymium prices spiking in early 2022, right around when the Pentagon threw itself behind MP Materials’ processing efforts. At almost exactly the same time, several state-owned Chinese rare earth companies merged. Neodymium-praseodymium oxide prices fell throughout 2022 thanks to higher Chinese production quotas — and continued to fall for several years.
While the U.S. has plentiful access to rare earths in the ground, Zumwalt-Forbes told me, it has “a very underdeveloped ability to take that concentrate out away from mine sites and make useful materials out of them. What this deal does is it effectively bridges that gap.”
The combination of whipsawing prices and monopolistic Chinese capacity to process and refine rare earths makes the U.S.’s existing large rare earth reserves less commercially viable.
“In order to compete against that monopoly, the government needed to be fairly heavy handed in structuring a deal that would both get a magnet facility up and running and ensure that that magnet facility stays in operation and weathers the storm of Chinese price manipulation,” Zumwalt-Forbes said.
Beyond simply throwing money around, the federal government can also make long-term commitments that private companies and investors may not be willing or able to make.
“What this Department of Defense deal did is, yes, it provided much-needed cash. But it also gave them strategic certainty around getting that facility off the ground, which is almost more important,” Zumwalt-Forbes said.
“I think this won’t be the last creative critical mineral deal that we see coming out of the Department of Defense,” Zumwalt-Forbes added. They certainly are in pole position here, as opposed to the other agencies and prior administrations.”