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Biden looks to charge up US battery sector

10 June 2021 Keiron Greenhalgh

The Biden administration released a battleplan for strengthening the US lithium-ion battery industry 8 June, taking another step forward in support of its decarbonization and electrification targets.

At the same time, it promised a task force to tackle related supply chain issues, and warned it is considering tariffs on imports of at least one key electrification component.

Spurred by Executive Order 14017, and a 100-day deadline for the reviews demanded, the National Blueprint for Lithium Batteries aims to transform US capabilities in the storage and electric vehicle battery sector, create jobs, and pare back reliance on imports and overseas supply chains over the next decade.

February's executive order wasn't just concerned with batteries, as the administration sought to tackle supply chain bottlenecks and shortages in the critical minerals, semiconductor, and pharmaceutical industries too. On 8 June, the administration said it would establish a supply chain disruptions task force to address what it called "mismatches" in near-term supply and demand

The centerpiece of the administration's response was the blueprint, helmed by five goals:

  • Secure access to raw and refined materials and discover alternates for critical minerals for commercial and defense applications;
  • Support the growth of a US materials-processing base able to meet domestic battery manufacturing demand;
  • Stimulate the US electrode, cell, and pack manufacturing sectors;
  • Enable US end-of-life reuse and critical materials recycling at scale and a full competitive value chain in the US, and;
  • Maintain and advance US battery technology leadership by strongly supporting scientific R&D, STEM education, and workforce development.

To aid the quest, the Department of Energy (DOE) will convene a stakeholder roundtable on 14 June.

The blueprint, task force, and other moves are "the strongest indication yet of North America's ambitions to build a local battery supply chain to ensure supply of this," said IHS Markit Research and Analysis Director Sam Wilkinson.

"Today, over 80% of li-ion battery cell manufacturing is located in China, and we expect this to fall as major economies push for localized battery manufacturing in order to secure supply," he added.

Industry representatives were enthusiastic about the result of the reviews.

"The Biden administration understands that we can't build a clean energy future that's wholly based on imports," said Lindsay Gorrill, CEO of Couer d'Alene, Idaho-based battery manufacturer KORE Power.

"Investing in the US energy storage supply chain will turn today's vulnerability into tomorrow's opportunity. It's an opportunity we can't afford to miss," he added.

Stimulating demand in the US for batteries and other energy storage technologies is the "single most important determinant to greater investment and innovation in American battery manufacturing capabilities," Energy Storage Association Interim CEO Jason Burwen added separately.

Zero Emission Transportation Association Executive Director Joe Britton said that if fully implemented, the recommendations are set to put the US on a path for sustainable development that will benefit not only electric vehicles (EVs), but the "entire clean energy economy" in the US. "It's paramount for Congress to now advance the policies that will drive consumer adoption of EVs called for," he added.

At the end of May, the Biden administration released its fiscal year 2022 spending plan, which requires congressional approval. The budget called for rebates to subsidize EV purchases by consumers and direct spending on federal purchases of EVs that would reach close to $1 billion in FY 2022. In addition, a new tax credit would be created for purchases of medium- and heavy-duty zero emission trucks.

Also, the budget envisions tax credits worth $236 million in FY 2022 for installation of EV chargers, as well as hundreds of millions more to upgrade the power transmission system, which would benefit EV users. The DOE budget request seeks $45 million for its minerals sustainability program, including extra funding for critical minerals efforts.

The US Chamber of Commerce expressed support for what the pro-business lobby group regarded as a "deliberative, evidence-based approach." Chief Policy Officer Neil Bradley said in a statement that crafting "pragmatic, balanced approaches," including critical mineral extraction permitting reforms, was paramount.

Meantime, analysis released 9 June by the California Energy Commission shows the state will need nearly 1.2 million public and shared chargers by 2030 to meet the fueling demands of the 7.5 million passenger plug-in EVs anticipated to be on California roads. A September 2020 executive order by California Governor Gavin Newsom requires all new passenger vehicles sold in the state to be zero-emission by 2035.

Mining options

All those EVs, as well as the storage batteries, solar panels, and wind turbines require base metals such as copper and nickel, critical minerals, and rare earth minerals that the US doesn't produce enough of at the moment to meet future expectations.

So, part of the journey toward greater self-sufficiency in the energy transition, the White House admitted, could involve mining more of such raw materials.

The Department of Interior is set to establish a working group, which will also involve the Department of Agriculture and the Environmental Protection Agency, to identify sites where critical minerals could be produced and processed in the US, the White House said, although it made sure to note that this would include "adhering to the highest environmental, labor, and sustainability standards."

The administration also plans to establish an interagency team that will identify gaps in critical mineral statutes and regulations that may need to be updated, it said.

In addition, the DOE Loan Programs Office, through its Title 17 Renewable Energy and Efficiency Energy Projects solicitation, has more than $3 billion in loan guarantees available to support efficient end-use energy technologies, such as mining, extraction, processing, recovery, or recycling technologies, the White House said in a fact sheet on the plans.

However, Institute for Energy Research President Thomas Pyle said the plans on additional funding and mining don't go far enough, arguing the administration should offer loans with less strictures and give the green light to mines with existing permit applications before the federal government.

Pyle said there are four copper mines the nonprofit believes should receive backing: the Pebble Mine in Alaska; the Resolution mine in Arizona; the Rosemont mine, also in Arizona; and the Twin Metals mine in Minnesota. President Joe Biden expressed opposition to the controversial Alaskan project while on the campaign trail in 2020.

Existing tools not forgotten

In its efforts to foster greater growth in the US battery sector, the White House said DOE will also rely on an existing device in its toolbox, highlighting the capabilities of the DOE's $17 billion Advanced Technology Vehicles Manufacturing (AVTM) Loan Program.

The last ATVM loan was issued in 2011. The ATVM program closed on about $8 billion in loans to five companies in its first phase as the Obama administration sought to kickstart a US economy battered by banking woes, tumult in the housing sector, and what became known as the Great Recession.

Among the borrowers was Tesla, which received a $465 million loan and went on to become the world's largest EC manufacturer to date as well as a major player in solar and battery storage.

DOE declined to comment on whether any applications for ATVM program funding had been received in 2021.

The Trump administration tried to goose the domestic critical mineral sector through the ATVM program. The Trump-era DOE issued a clarification in December 2020 about ATVM program applications, inviting aspirant borrowers involved in the production, manufacturing, recycling, processing, recovery, or reuse of critical minerals and other minerals.

Previously, the program only provided loans to automotive or component manufacturers for "re-equipping, expanding, or establishing manufacturing facilities in the US that produce fuel-efficient advanced technology vehicles or qualifying components, or for engineering integration performed in the US for advanced technology vehicles or qualifying components."

But a 1 February deadline for US critical mineral project developers came too early, sources told IHS Markit at the start of 2021.

Tariff strikes

The ATVM program isn't the only tool its predecessor used that the Biden administration is eyeing in its quest to reverse decades of losing ground to China. Tariffs are also a possibility, it said.

The Department of Commerce is set to evaluate whether to initiate an investigation into neodymium magnets, which are also known as permanent magnets and used in the drive motors for hybrid and electric vehicles plus wind turbine electric generators among other things, the White House said. The investigation would be under the remit of Section 232 of the Trade Expansion Act of 1962. Section 232 was used to impose tariffs on steel and aluminum imports by the Trump administration.

But that isn't all. The administration plans to establish a "trade strike force" led by the US Trade Representative to propose "unilateral and multilateral enforcement actions against unfair foreign trade practices" that have hurt critical supply chains.

Posted 10 June 2021 by Keiron Greenhalgh, Editor, Climate & Sustainability Group, IHS Markit

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