Secure American energy supply chains — before China does

Bipartisanship is a rare but critical commodity in Washington these days. So, it’s all the more laudable that a recently introduced Senate bill will promote U.S. production of minerals and materials critical to clean energy and electric vehicle value chains. The Minerals Security Act is an important first step in recognizing  — and responding to — the fact that China is outcompeting the U.S in the transition to new energy technologies and vehicles. It’s time for Congress to take up this and other measures that will enhance the competitiveness of the United States in the critical years to come.       

The legislation is sponsored by Sen. Lisa Murkowski (R-Alaska) and Sen. Joe Manchin (D-W.Va.), and has bipartisan co-sponsors. It would streamline many regulatory and permitting processes related to the domestic mining for minerals like lithium and graphite that are essential for clean energy, electric vehicle and defense applications.

{mosads}The legislation comes at an important time. Tesla recently warned of a looming shortage in the minerals necessary for electric vehicle battery production. Meanwhile, China is consolidating its control over the mines, processing plants and broader supply chains that utilize these minerals. China is currently the top resource holder for 10 of the minerals and materials essential to wind, solar and battery storage technologies. The next closest country is Australia, at five. The United States doesn’t lead in any of these resources, but it is in the top-five for 10 different resources. Unlike China, however, it is doing little to harness them.

China currently accounts for two-thirds of worldwide lithium-ion battery manufacturing (versus 5 percent for the U.S.), and boasts the world’s largest electric vehicle manufacturer, BYD. It also is home to 99 percent of the world’s electric buses.

Increased domestic mining, conducted in a responsible and sustainable manner, will be a boon for U.S. industry, national security and the continued growth of clean energy and transport technologies globally. But the country can, and should, go further, especially when it comes to a broader strategy for securing the entire clean energy and transport supply chain.

Automakers will spend $300 billion over the next decade on electric vehicles, with China currently poised to receive the lion’s share of that investment — at least $136 billion. The United States, by comparison, is set to attract only $34 billion, $5 billion less than American firms (including Fiat-Chrysler) plan to spend in total.

These figures paint a clear portrait: In the transportation technologies that will define the 21st century, China is poised to attract capital and investment. The United States is poised to send it abroad.

This is not an inevitable future. China’s size means it will naturally be a major player in battery and electric vehicle manufacturing, and will play an important role in driving innovation and cost declines. But the United States must strive to compete, rather than cede the marketplace.

This could start with a dramatic expansion of an Energy Department program to provide funding to help auto manufacturers and parts suppliers produce new transportation technologies such as electric cars. That program played a key role in Nissan choosing Tennessee for manufacturing its Leaf electric vehicle, driving billions of investment and thousands of new highly-skilled jobs, and could also help create a new future for the GM plant closing down in Lordstown, Ohio.

Unfortunately, the program is proposed to be eliminated in the president’s 2020 budget. Congress should fight to keep, and fully fund, this important program.

Congress should also consider reforming the federal electric vehicle tax credit to better benefit low- and middle-income households and stimulate further innovation. This would include eliminating the current cap on how many vehicles each manufacturer can apply the credit to, and extending the credit to the mid-2020s, when electric vehicles will reach price parity with traditional ones. Policymakers should also extend the hydrogen fuel cell credit to give businesses the long-term certainty they need to commercialize this pivotal technology, which could alleviate many of the concerns around supply chain vulnerabilities for minerals such as lithium that are used in the vast majority of today’s current batteries.

{mossecondads}In the meantime, more should be done to commercialize batteries that are less dependent on critical resources and therefore lessen our dependence on them over time. This can be done through both expanded government funding for research and development, and more creative harnessing of public-private partnerships, including with America’s leading public research laboratories.

America can catch up to secure the clean energy future. The Minerals Security Act is a solid first step. It should not be our last. 

David Livingston is deputy director for Climate & Advanced Energy at the Atlantic Council, and a fellow in the Payne Institute for Public Policy at the Colorado School of Mines.