The ‘infrastructure deal’ America must make with itself

As part of President Biden’s ambitious plan for the U.S. to effectively address climate change, for the country to transition to net-zero emissions by 2050 there has been a whole-of-government push to incorporate more and more renewable generation into the national grid. In addition, newly-released details of the bipartisan Senate infrastructure deal “opens the gateway,” Sen. Sheldon Whitehouse (D-R.I.) contended in his review, to a near-term reconciliation package that will “accomplish much more on climate.”

However, I would contend that these ambitions will remain hollow talking points if America’s efforts are not accompanied by a practical plan for the U.S. to secure what are today critically-necessary materials — those needed to power this “green revolution.” And we’ll have to face the reality of our present stockpiles and what is needed to bolster them quickly.

Recently, the Department of Energy launched the “Energy Earthshots Initiative,” which lists among its goals the reduction of costs to build lithium-ion batteries down by 90 percent. 

“If we want to get to net-zero emissions, we not only need to deploy solutions that are already proven, like wind and solar power,” Energy Secretary Jennifer Granholm told the New York Times. “We also have to figure out how to take clean-energy technologies that have been demonstrated in a laboratory and scale them up in the world. There’s a real sense of urgency about this.”

There is also growing consensus that we need to plan for a future transition to electric vehicles, renewable energy and long-duration energy storage systems. The Energy Department’s battery initiative, for example, will direct experts at its national labs to focus on improving such technologies while it seeks funding from Congress for pilot projects. However, there is a major component missing: There has been little thought given to where we will source the raw materials.

Tesla has proposed selling 20 million electric vehicles (EVs) before 2030, but such an endeavor would require over three times the current total global lithium supply — and Tesla is just one EV company. Ford, GM, Toyota, Honda, Volkswagen, Volvo and other major car manufacturers have also announced plans to shift heavily, if not entirely, toward EVs over the next 10 years. 

This dramatic increase in demand for batteries from the automotive industry alone must be met with an expanded supply of materials necessary to build them. However, supplies of rare earth minerals, which are said to form “the fabric of human development,” are difficult to harness. They require extraction, processing and refining, endeavors that pose technical, political and environmental dilemmas that must be addressed. 

Moreover, most rare earth elements required to build up a fleet of EVs, as well as military weapons systems (i.e., lithium-ion batteries to fuel them), satellites and wind turbines are mined and presently refined outside of the United States. This means that our country, already spending $600 billion on procurement, is overwhelmingly dependent on imports for these critical inputs.

According to the Center for Strategic and International Studies (CSIS), over 85 percent of the global supply of rare earth elements comes from China. For lithium-ion battery manufacturing, China also has a majority of processing capacity for key components (such as cathodes, anodes, separators and electrolytes), as well as almost 80 percent of global battery cell manufacturing capacity. 

China’s preferential position, with respect to their supply of raw materials, has been largely unabated nor counterbalanced, granting them a 20-year head start on the United States. Michael Stumo, CEO of the Coalition for a Prosperous America, has noted, “It’s time to bring our supply chains home, including mining and critical materials. Failing to do so will lead to taxpayer money slipping away to China — an unfortunate loss of both good jobs and national self-sufficiency.” 

Broadly speaking, as Rich Nolan writes in Real Clear Energy, “Providing smart incentives for manufacturers to use domestically (and responsibly) produced materials will not only support U.S. jobs and reduce mineral-import reliance but also provide the necessary signals to drive investment in sustainable domestic supply chains.”

Where there is great opportunity, there is also great challenge. According to the U.S. Geological Survey, lithium reserves within the United States are ranked fourth worldwide, but actual production is minuscule. There was just one active U.S. operation in 2019 — a brine-extraction project in Nevada — despite projections that lithium demand is expected to soar by more than 500 percent by 2030, and that it will be a necessary component of America’s renewable transition. 

Yes, in light of the looming threat of climate change, the world is undergoing a dramatic shift in how each country produces and utilizes energy. However, we must understand that to shift toward renewable sources of electricity, minerals must come out of the ground — albeit in an environment, social and governance (ESG)-adherent manner. This is imperative in order to create the industry America needs to realistically succeed.

Brian Menell, chairman and CEO of TechMet, a private company partly owned by the U.S. government, told me, “To meet the projections of the global automotive sector, for example, over the next 10 years we need more than three times the present global annual supply of cobalt, five times the present global annual supply of lithium, and 12 times the present global supply of battery-grade nickel. This equates to a massive transformation for the global mining and processing industries, especially as the procurement of these strategic metals rightfully needs to be undertaken with increasing adherence to high ESG standards and with a low carbon footprint.” 

To adequately supply this energy transition and electric vehicle revolution, he added, “the private sector requires significantly more public-sector engagement, from a funding and regulatory point of view.”  

Ultimately, if the United States fails to significantly increase its mining and processing capacity, it risks losing its place on the global industrial stage. It is imperative that, concurrent to focusing on the environmental impact of manufacturing materials, U.S. manufacturers source their materials domestically. 

In short, the Biden administration’s “Made in America, Build Back Better” mindset and methodology should also include “Mined in America.” The development of resources is not a competitor to a greener, sustainable energy future, but a requirement for realizing it.

Ivan Sascha Sheehan is an associate professor and executive director of the School of Public and International Affairs at the University of Baltimore, where he specializes in global terrorism, counterterrorism, U.S. foreign policy and international conflict management.