Branstad today announced the facility, which will produce amino acids through fermentation technologies. It will be located next to the Cargill facility, and Branstad said he believes other companies will also locate in the area.

“The location will be right next to Cargill and it will be the beginning of a whole bio-refinery complex,” he said. “I think Cargill envisions this to a be bioscience complex similar to what they already have in Eddyville, Iowa and in Blair, Neb.”

The Iowa Economic Development Authority Board approved $1.8 million in direct assistance and tax incentives for the project, and additional incentives are expected from Webster County and an Iowa DOT RISE (Revitalize Iowa’s Sound Economy) grant.

State Sen. Rob Hogg (Photo: Iowa Senate Democrats)

State Sen. Rob Hogg (D-Cedar Rapids) said the new jobs are great news but the governor is still nowhere close to meeting his campaign promise and is actually going in the wrong direction.

“I think he came in promising that he’d be able to do things with job creation and I think the promise was unrealistic,” Hogg said. “I think it was a campaign gimmick to put some number out there and raise people’s hopes to win an election.”

Branstad and Debi Durham, head of the Iowa Partnership for Economic Progress, met with CJ Cheiljedang representatives in January. Lt. Gov. Kim Reynolds then met with them on a trade trip in June, and Branstad visited with them again on his September trade mission to Asia.

“It’s a major investment and it is a result of the direct and hands-on effort that we’ve made at economic development,” he said.

But Hogg said at nine months into Branstad’s administration the state should have 30,000 new jobs. His tally puts the state 15,000 jobs fewer than when he took office in January, and Hogg said cuts to education and economic development will hinder that into the future.

“There’s been this series of things where he’s kind of come in with this new sheriff approach,” Hogg said. “He wants to run everything his own way and the problem with that is we need a bipartisan economic development strategy. My recollection was with the former governor we were having announcements like that every month at least. I haven’t heard that from Governor Branstad because I think we’ve been under-investing in our economic development strategy as a state.”

Branstad also announced today an executive order to create the Iowa Partnership for Economic Progress board, a 15-member body including the chair of the economic authority board; head of the Iowa Innovation Corporation; director of Economic Development Authority Board; and the governor or his designee.

Branstad said the 11 other members of the board — which he will appoint without Senate confirmation — will be individuals who are actively engaged in the private, for-profit sector of the economy or have similar experience. The board’s goal is to develop a strategic vision for economic development and private sector job creation.

The Mountain Pass Mine in California, which closed in 2002, is considered the country's best hope to combat China's trade dominance in rare earth elements. (WikiCommons)

In 1949, two geologists found what they suspected to be a massive uranium deposit in the desert of southeastern California, about an hour’s drive from Las Vegas. A cache of uranium would have been an incredibly lucrative find, but the geologists were disappointed when further testing revealed the area to be full of deposits of rare earth elements.

[Environment1] Rare earth elements, also called rare earth minerals, were thought to be virtually worthless. For the most part, the REEs, obscure elements with names like Promethium and Europium, had no practical use.

But the geologists saw potential in REEs and convinced the Molybdenum Corporation of America to buy the mining rights to the 222 acres of land that would later become known as the Mountain Pass Mine. The decision to mine that land, once considered a gamble, is now paying off in a big, big way.

During the last 60 years, the company, which became known as Molycorp, developed thousands of uses for REEs, jump-starting a worldwide race to mine the minerals and landing the company squarely in the middle of a trade face-off between the United States and China.

Amid new fears about the United States’ dependence on China for its REEs, politicians are calling for the U.S. to develop its own REE resources. Attention has shifted back to Molycorp and its Mountain Pass Mine, considered by many experts to be the country’s best hope to compete with China. But the Mountain Pass Mine closed down in 2002 amid a series of waste water spills that dumped radioactive materials all over Mountain Pass. Now, the company, which is planning to reopen the mine amid big claims about its potential to meet the country’s REE demand, must prove that it can clean up its act.

Through the early 1970s, Mountain Pass was the world’s largest REE supplier. “They were unchallenged in the world as suppliers of this material until the Chinese discovered that they had a large amount of this stuff as a byproduct of iron deposits,” said Bill Bird, president of Medallion Resources, an REE exploration company.

But China soon began to realize its REE potential. In the 1980s and 1990s, China doubled down on a strategic effort to become the world’s REE superpower. In 1992, Deng Xiaoping, head of the country’s Communist Party, famously said, “The Middle East has oil, China has rare earths.”

The effort paid off. China now corners the market on REEs, controlling an estimated 97 percent of the world’s production. And the market is huge — and growing. REEs are used in everyday consumer goods like DVD players, cell phones and televisions; they are found in satellite communication devices and the military’s smart bombs; and they are key components of clean energy technology like wind turbines and electric vehicles.

Trade experts have long raised concerns about China’s control over the world’s REE supply. Those concerns reached a fever pitch last week when The New York Times reported that China was blocking shipments of REEs to the United States. The report came just days after the Obama administration announced it would investigate the country’s green tech trade practices.

By the mid-1990s, the Mountain Pass Mine was feeling the weight of China’s REE exploits. China had developed its own resources and was exporting REEs at prices that the company couldn’t match. “The Chinese started producing rare earth elements, and China being what it is, they were able to produce them very cheaply,” Bird said.

On top of that, the Mountain Pass Mine came under fire from state and federal regulators for a series of mine waste spills. Over the course of ten years, thousands of gallons of waste from the Mountain Pass Mine spilled from holding ponds and waste pipelines, according to reports. The waste included thorium, a radioactive byproduct of REE mining.

Mining at Mountain Pass stopped soon after the spills came to light. Industry sources say Union Oil of California, which bought Molycorp in 1977, couldn’t afford to comply with environmental rules and felt that it couldn’t compete with China. In 2002, the company did not renew a permit to store tailing, the uranium and thorium waste that is a byproduct of REE mining, and the Mountain Pass Mine shut down.

“The economics wasn’t there because China had ramped up its production and was aggressively mining,” said Molycorp spokesman Jim Sims.

One industry veteran said the spill will cost oil giant Chevron — which bought Molycorp from Union Oil of California in 2005 — an estimated $185 million to clean up. The official called the mine’s poor environmental record “legendary.”

Confronted with China’s REE dominance and questions about its environmental record, Molycorp worked during the next several years to reopen the mine and develop a cheaper and more efficient way to remove and isolate REEs. The chemical separation process, which extracts the valuable REEs, is the most expensive and environmentally risky part of REE mining.

With a new and cheaper separation process, Molycorp, which became the sole owner of the mine in 2008, is hoping to break ground on the new REE separation facility in January. The “near-zero emissions” facility will recycle the waste water produced from the process, as well as many of the chemicals necessary to separate out the REEs, Sims said.

“The new facility incorporating these new environmental technologies will produce rare earths at a cost-per-pound that is one half of the Chinese,” Sims said, adding that the company hopes to begin mining again at Mountain Pass in 2012. Sims says the mine will produce 20,000 tons of REE-equivalent each year, more than the current U.S. demand of between 15,000 and 18,000 tons per year.

“We’ll be in a position of virtual independence,” Sims said, though he noted that the company will also sell REEs overseas.

But the industry veteran, who requested anonymity, raised questions about whether Molycorp could meet its timeline for beginning operations. “They’ve been saying it’s six months off since 2007,” the industry veteran says.

Given the recent reports about China, there is more pressure than ever on the United States to develop home-grown REE resources. Experts say U.S. rare earth demand is certain to balloon in the coming years, as plug-in hybrid electric vehicles become cheaper and wind turbines begin to pop up all over the country. One turbine can require as much as a ton of REEs.

“We’re becoming dependent on these things for the economy to keep going,” said Jim Hedrick, an REE consultant. “As people are learning more about the rare earths, more and more chemists and biologists are finding new uses for them.”

Hedrick believes the U.S. is too reliant on rare earths to not develop a domestic REE industry. “If you pull rare earths out of the equation, then you’ll cause a lot of disruption,” he said.

Despite Molycorp’s goals, experts suggest that it will take many years to develop a U.S. REE industry. Yaron Vorona, executive director of the Institute for the Analysis of Global Security’s Technology and Rare Earth Metals Center, cited an April 2010 Government Accountability Office report that says it could take 15 years to develop a U.S. rare earth industry.

Vorona says the U.S. has a lack of scientific knowledge about REEs because most scientists went to China to continue their work on the minerals decades ago. “If the mines that are being planned were all to come online tomorrow that would be fantastic, but there would be nobody to run them,” Vorona said, noting that China has 100,000 rare earth scientists.

He also said that chemical separation of REEs is often very difficult to perfect. “It’s a very long and involved process,” he says. “That’s one of the biggest risks. It can take dozens, hundreds of steps to separate the rare earths.”

U.S. Trade Representative Ron Kirk said today that he would investigate the claims made in the petition during the next 90 days.

In a statement, Kirk said:

We take the USW’s claims very seriously, and we are vigorously investigating them. In light of the large number of allegations and the extensive documentation accompanying them, I have asked my staff to utilize the 90-day period allowed by statute to thoroughly examine and verify the USW’s claims. For those allegations that are supported by sufficient evidence and that can effectively be addressed through WTO dispute settlement, we will vigorously pursue the enforcement of our rights through WTO litigation.

In the 5,000-page-plus petition, the United Steelworkers allege that China is breaking World Trade Organization rules by offering manufacturers in the country unfair advantages.

Kirk’s statement summarizes the steelworkers’ petition this way:

According to the petition, these policies include export restraints, prohibited subsidies, discrimination against foreign companies and imported goods, technology transfer requirements, and domestic subsidies causing serious prejudice to U.S. interests. The petition further alleges that China’s policies have caused the annual U.S. trade deficit in green-technology goods with China to increase substantially since China joined the WTO, making China the top contributor to the U.S. global trade deficit in the sector.

In a story this week on the United States, China and green energy, I laid out the United Steelworkers’ allegations:

The United Steelworkers, in a September petition to the Obama administration, argue that China is unfairly subsidizing exports to encourage companies in the country to send their clean energy products around the world. At the same time, the union accuses China of limiting the exports of certain rare-earth minerals necessary to produce solar panels so that foreign companies will settle in the country.

Both of these charges would be violations of international trading rules, and the United Steelworkers are hoping that the Obama administration will raise the issue in front of the World Trade Organization. “I do think they will take up some of this because some of it is so obvious,” said Linda Andros, legislative counsel on trade law issues at the United Steelworkers. “They don’t have to. They have discretion. But on the merits the case is there. The blatant stuff you’ve just got to take up.”

China established itself years ago as one of the world's leading producers of solar energy equipment. (Imaginechina/ZUMApress.com)

In a last-ditch effort to build support in the Senate for a comprehensive climate bill this July, President Obama told the White House press corps that a failure to pass the legislation could help cement China’s position as the world clean energy industry leader.

[Environment1] “We can’t stand by as we let China race ahead to create the clean energy jobs and industries of the future,” he said. “We should be developing those renewable energy sources, and creating those high-wage, high-skill jobs right here in the United States of America.”

Conjuring up images of the Cold War, the race metaphor has become a go-to talking point for American politicians during the last year. By all accounts, the United States is getting lapped in the race for the so-called clean energy economy. During the last year or so, the Chinese government has made huge strides in reducing its carbon dioxide emissions and, above all else, making the country a veritable testing ground for research, development and large-scale deployment of wind and solar technology.

The United States, on the other hand, has failed to pass even scaled-back energy and climate change legislation. The Obama administration is betting that there is still hope — that the clean energy race is not yet won and the United States can come out on top.

But some experts say that while competition is essential, the metaphors used to describe our relationship with China on energy and climate change fail to account for a number of nuances, including the fact that the global supply chain makes any one country’s border less clear. In a sense, America and China are more like partners in a relay race, where each country’s advances helps the other get ahead.

Edward Steinfeld, a political economy professor at the Massachusetts Institute of Technology and director of the school’s China program, argues that framing the relationship between the United States and other countries as a race is “sort of divorced” from the way technology is developed and deployed. The parts necessary to manufacture a wind turbine, for example, are likely produced all over the country by multinational corporations.

“We’re talking about complicated systems,” he said. “We’re not talking about a shoe. Usually these systems involve constellations of companies, in most cases global companies. In the end, it’s really hard to identify exactly what flag is on any given product.”

Because China has positioned itself as a clean energy leader, many companies are looking to China to conduct necessary research and development. In order to bring costs down, research and development must be done in the location where the product can be deployed on a massive level. Right now, Steinfeld said, that place is China.

But although technologies are fine-tuned in China, they are not always manufactured by Chinese companies. For example, several years ago, as part of a massive effort to reduce greenhouse gas emissions from the country’s rapidly growing industrial sector, the Chinese government declared that all coal plants must install technology that keeps sulfur dioxide from entering the atmosphere.

“Out of nowhere, the world’s biggest market for smoke-stack scrubbers was in China,” Steinfeld said.

Though local technology companies came forward to design the scrubbers, the Chinese government opted to use designs from Europe, Japan and the United States, partly because there was little confidence in the skills of local companies and partly because the foreign technology was more developed, Steinfeld said.

The same thing is now happening with other Chinese policies. The country is looking outside its borders, and foreign companies, including many in the United States, are eager to step up to the plate.

“If you’re an American company, of course you’re going to go to China,” Steinfeld says. “Where else are you going to go? You need to team up with the people that are going to let you develop the technology.”

Because companies are able to use China as a testing ground for their clean energy technologies, the price of solar panels and wind turbines has gone down.

“I think the most tangible impact of China’s energy policies is that we’re now buying not just wind turbines, but solar panels from China,” said Sierra Club Director of International Climate Policy John Coequyt, “and the price of those products is very competitive.”

Therein lies the problem for many in the Obama administration and elsewhere. Though in some ways it’s good that Chinese development has made the cost of parts for wind turbines and solar panels cheaper, it makes it much more difficult to develop a domestic clean energy manufacturing base here in the United States.

The United Steelworkers, in a September petition to the Obama administration, argue that China is unfairly subsidizing exports to encourage companies in the country to send their clean energy products around the world. At the same time, the union accuses China of limiting the exports of certain rare-earth minerals necessary to produce solar panels so that foreign companies will settle in the country.

Both of these charges would be violations of international trading rules, and the United Steelworkers are hoping that the Obama administration will raise the issue in front of the World Trade Organization. “I do think they will take up some of this because some of it is so obvious,” said Linda Andros, legislative counsel on trade law issues at the United Steelworkers. “They don’t have to. They have discretion. But on the merits the case is there. The blatant stuff you’ve just got to take up.”

But some experts argue that regardless of whether the United States can compete with China on clean energy manufacturing, expanding U.S. reliance on wind and solar will create local jobs that can’t be exported to China.

Lutz Weischer, research analyst at the World Resources Institute, says many solar facilities create a significant number of local, American jobs. “If you look at job creation in the solar industry, most jobs are in construction, installation and maintenance,” he said. “Those jobs have to be local. If you import panels that are cheap, you’re able to install more panels and create more local jobs.”

“That’s the thing you have to weigh. It’s pretty likely that you’ll have less manufacturing jobs in the United States,” he said. “But you have to look at the entire supply chain. You’re gaining jobs elsewhere.”

Weischer also says that Chinese manufacturing has helped to lower the cost of solar panels, which fell in price by some 40 percent in 2009 as compared to 2008. “Even though this decline has a number of reasons — including technological progress, less demand due to the recession and changing policies in Spain, etc. — it would not have been possible without China producing large quantities of low-cost modules,” said Weischer.

The Chinese market is also important because it often functions as a “laboratory” to test new technology. Because the United States has lagged behind other countries in developing a stable investment environment for the wind industry, for example, General Electric has focused much of its attention on China. It recently announced a partnership with Harbin Power Equipment, a Chinese company, to expand its presence in the country, which currently has the largest wind market in the world.

For these reasons, Weischer says the race metaphor might not work for the relationship between China and the United States on clean energy. “The problem with the race image is that it suggests that only one country can win,” he says. “But if you look at wind, every country that has decided to focus on wind has won. You win if you decide to play.”

Like other experts, Barbara Finamore, China Program Director at the Natural Resources Defense Council, said the clean energy race metaphor oversimplifies the way global supply chains work. “Race is not necessarily the right term here,” she says. “Because of the way supply chains are interconnected, you can’t win the clean energy race by banning technologies from other countries or by banning investment because it hurts U.S. companies.”

There are a number of examples of Chinese companies coming to the United States and creating jobs for American workers. Suntech, a Chinese solar company, began production this month at a solar manufacturing facility in Arizona, the first in the country. The facility will create almost 100 American manufacturing jobs.

At the same time, despite initial resistance, the United Steelworkers signed an agreement in August with A-Power Energy Generation Systems, a Chinese company, to allow the construction of a wind power plant in Texas and a wind turbine manufacturing plant in Nevada. Despite the fact that the company is Chinese, the thinking goes, the jobs created will be American.

Finamore says there are a number of reasons that China is eclipsing the United States in terms of its clean energy development. But at the end of the day, the main reason is because the United States has not enacted policies that create a stable investment climate.

“The countries that establish strong national policies to reduce greenhouse gas emissions and incentivize renewable energy are the ones that are establishing strong positions in the clean energy economy,” she said.

While the numbers are noteworthy, the real significance here lies in the sponsors of the agreement. Energy and Commerce Chairman Henry Waxman (D-Calif.) and Energy and Environment Subcommittee Chairman Ed Markey (D-Mass.) are, not surprisingly, at the top of the press release. But so are Rep. John D. Dingell (D-Mich.), Rep. Rick Boucher (D-Va.), Rep. Bart Gordon (D-Tenn.), and Rep. Mike Doyle (D-Pa.) — all moderate Congressmen from coal- or industry-reliant states who were considered swing votes on the bill.

Boucher said he was “pleased with the product we are able to put forward on this issue,” while Dingell, the former Energy and Commerce chairman who has expressed strong reservations about the bill, said the compromise “moves the ball forward significantly in terms of renewable energy, but does so in a framework within which all states can operate.”

The renewable electricity standard is merely one of several controversial components of the legislation. Still, Waxman appears open to compromise, and the moderate Democrats on the committee, who previously expressed concern over the renewable energy provisions, have agreed to what is really only a modest change. Democrats may indeed be able to vote this bill out of committee by Waxman’s Memorial Day target.

Update: Just a few minutes later, the Energy and Commerce leadership sent out another press release, announcing a compromise on the allocation of carbon allowances to the auto industry. The Obama administration has pushed for all allowances to be auctioned off to polluters, not given away for free. The Alliance of Automobile Manufacturers, representing eleven major vehicle manufacturers, has asked Congress to give the auto industry 5 percent of all allowances for free. The compromise: the industry gets 3 percent of allowances until 2017, and then 1 percent until 2025. Again, Dingell’s name is on the press release. One step closer to a bill that House Democrats can pass.

Update 2: And now they’ve released a compromise on allowances for “energy-intensive, trade-exposed industries,” which will receive 15 percent of allowances, as expected. In 2025, the president (whoever that may be) will determine whether the continued allocation of allowances is needed. What remains: the allocation to electric utilities, which are expected to receive 35 percent of allowances.

It’s an issue that’s gotten lots of attention in other countries, such as Bolivia, where I was reporting on this a few years ago, but has remained largely under the radar here in the United States. Like the World Trade Organization rules that Ed wrote about, Bilateral Investment Treaties, which are negotiated between two countries, allow a foreign company to challenge the domestic laws of the country it’s investing in, and to claim they act as an unlawful restraint of trade by expropriating the value of the company’s investment.

In Bolivia, the fear was that multinational oil companies would use bilateral investment treaties to challenge President Evo Morales’s attempts to gain more control over the nation’s natural gas industry, which had long enriched foreign companies but did little to raise the living standards of Bolivians. (In fact, the companies did use those treaties to limit the president’s actions.)

When President George W. Bush was negotiating the Central American Free Trade Agreement, which contained similar protections for foreign companies, environmental groups worried that the treaty would make it impossible for the government to pass rules limiting the use of toxic chemicals — like cyanide — that could contaminate groundwater, a problem I wrote about at the time for The Washington Post.

In South Africa, bilateral trade treaties have been used by mining companies to challenge post-apartheid laws aimed at opening up the mining industry to black South Africans who’d for years been kept out of the nation’s most lucrative industry.

The point is that these complex trade agreements allow a foreign corporation to sue a national government for monetary damages if it believes that the actions of the federal, state or local government in a given country are discriminatory, violate international law or can be considered — directly or indirectly — an expropriation of the company’s investment. If complying with an environmental regulation makes a project no longer worth the cost, then, a company can claim that its investment has been expropriated by the state.

What makes matters worse is that whether the company is in the right won’t be decided by an independent judge.  Instead, under a World Bank-governed system, it’s decided by a panel of three private international arbitrators chosen by the parties involved. These arbitrators are often corporate lawyers, who, in another case, could be representing the multinational corporation investor. Local residents of the countries affected by the project — whether in Michigan or Guatemala — are not parties to the case. The government’s right to protect the water supply in Guatemala or the residents living near an explosive natural gas facility in Michigan, then, could be decided by private British or American lawyers.

Although the WTO system is a little different, the principles are the same: they give foreign companies rights that domestic corporations don’t have, and an unelected, nonjudicial foreign body the right to decide whether and how domestic authorities can regulate corporations to protect the local people most affected by them.

It’s not just foreign countries that are affected: Canadian mining companies have similarly tried to assert these rights in California.

These are broad and dangerous rights ceded in poorly designed trade agreements that, as Ed points out in his groundbreaking and carefully reported story today, demand renewed scrutiny by Congress and the new administration.