Global race for rare earths underlines climate investment surge
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The U.S. weakness in rare earth minerals, critical to any transition from fossil fuels to an electrified economy, is popping up in every corner of the investment and government policy world early this year in a rare combination of interests under the current Trump administration.
The joint interest in securing the materials for the next stage of the data center arms race for AI is creating a new channel of climate investment, even though the mining associated with the minerals is far from climate friendly.
Venture capitalists invested more than $600 million in U.S. rare earth startups last year, up from almost nothing the previous year, according to Bloomberg, citing Pitchbook. Companies from Apple AAPL 0.00%↑ to Amazon AMZN 0.00%↑ are doing rare earths deals to bulk up on minerals such as copper for their data centers.
The Trump administration itself has made rare earths a priority, investing some $400 million in MP Materials MP 0.00%↑ last year and of course, threatening countries far and wide with rare earth minerals, from Venezuela to Greenland. And just this week a largely Republican group of members of the U.S. Congress floated the idea of a U.S. strategic reserve of rare earths, according to a scoop by Axios.
At the center of all this activity is the unescapable fact that China controls the majority of the world’s available rare earths, some 70% compared to about 12% for the U.S. If Silicon Valley and Washington want America to become the world’s AI leader, securing more rare earths becomes an investment priority, or a national security issue, according to the administration.
Cooler heads might warn that the activity is just another manifestation of the AI data center craze that, like nuclear energy, grid infrastructure, and to some extent green energy itself, will take far longer and involve far more investment than anyone expects before any sort of AI profits start rolling in.
But for now, the ever-flowing ripples from the AI dream continue to fixate the markets.
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Zeus: BP clears the decks for new CEO
. . . . BP’s $4 billion to $5 billion writeoff this week to cover its ongoing exit from its green businesses after a decade’s investment valued them much less than investors had thought. But that wasn’t the main surprise, writes David Callaway. Nor was it out of the ordinary that the British oil giant wanted to clear the decks ahead of its new CEO’s arrival later this spring. The real thing that should give energy and climate investors pause is bad timing, coming in a week when scientists confirmed that last year was the third hottest on record. The removal of one of the oil giants from the renewables business will leave a big hole in an industry badly in need of all forms of energy.
Thursday’s subscriber insights
Here come the data center pledges
. . . . Microsoft MSFT 0.00%↑ this week pledged to do its part to keep electricity prices affordable in coming years by introducing a “community plan” to tread carefully anywhere it builds a data center for AI in coming years.
The company pledged to pay higher than normal utility rates and to work with utilities and grids on delivering affordable electricity to make sure its outsized demand on electricity markets doesn’t impact consumer prices. The plan was announced after consultations with the White House on keeping electricity affordable in the next few years, especially election years.
This begins the era of data center community pledges by tech giants as the issue becomes increasingly political. Like their climate and ESG pledges of five years ago — largely ignored as soon as the data center frenzy began in 2023 — these pledges will receive generous headlines and promotional backing. Like the climate pledges, they will come with no real responsibility or legal exposure.
President Donald Trump praised Microsoft, whose shares fell, for the commitment and said the White House is working to extract similar pledges from the rest of the data center gang. The proof will be in the price pudding, though.
Electricity prices only rose 1% last year, according to the Department of Energy, but are forecast to rise more in 2026 and the years after as the data center craze moves into construction and deployment.
Unlike with climate commitments, though, Americans already nervous about higher prices will be able to easily monitor monthly progress of these pledges through their electric bills.
Editor’s picks: America’s oil interests; plus, an ammonia-powered tugboat
Watch the video: After the United States’ dramatic raid and capture of Venezuelan President Nicolás Maduro, the Trump administration announced that U.S. oil companies would step into the high-cost, high-risk venture of rebuilding the Venezuelan industry. But will they? Given Venezuela’s murky political future, few analysts expect a rush to invest the billions needed to pump more oil from the world’s largest reserves. Inside Climate News Executive Editor Vernon Loeb and Washington Bureau Chief Marianne Lavelle discuss the complex and uncertain future of America’s oil interests in Venezuela.
Ammonia-powered tugboat
A tugboat that used to run on diesel fuel is now powered by ammonia and has sailed for the first time to show how the maritime industry can slash planet-warming carbon dioxide emissions, the AP reports. The New York-based startup company Amogy bought the 67-year-old ship to switch it to cleanly-made ammonia, a new, carbon-free fuel. The tugboat’s first sail in September was a milestone in a race to develop zero-emissions propulsion using renewable fuel. The tug is named NH3 Kraken, after the chemical formula for ammonia and the method of “cracking” it into hydrogen and nitrogen. Amogy’s system uses ammonia to make hydrogen for a fuel cell, making the tug an electric-powered ship.
Latest findings: New research, studies and projects
Honey bees may go hungry
Plant-pollinator interactions are essential for plant productivity but face growing threats from climate change, including vegetation loss and mismatches in flowering, say the authors of new research titled Honey bee food resources under threat from climate change. Yet, the consequences for bee food resources remain poorly understood at continental scales. Researchers analyzed 2,500 samples collected by honey bees (Apis mellifera) between May and August 2023 from 310 locations across Europe. The findings reveal that rising temperatures and reduced precipitation decrease the diversity of foraging resources across Europe, pushing many plants beyond critical limits. When both warming and drying coincide, the potential for resilience through temporal or spatial buffering is strongly constrained. These declines pose serious risks to bee nutrition, ecosystem functioning, and food security. “Our study underscores the urgency of mitigating climate change to preserve vital plant-pollinator systems and the services they sustain.” Authors: Quaresma, A., Baveco, J.M., Brodschneider, R. et al. (2025).
Words to live by . . . .
“It’s not climate change that needs to be tackled. It is the political power of the fossil fuel industry.” — Richard Denniss, chief economist at The Australian Institute.