April 1, 2022 Biden Invokes Defense Production Act to Boost Renewables

President Biden promotes the bipartisan infrastructure deal and his now stalled Build Back Better Act on Sept. 14, 2021, at the National Renewable Energy Laboratory in Arvada, Colorado, saying the policies will help the U.S. address climate change and environmental justice. Credit: Helen H. Richardson/MediaNews Group/The Denver Post via Getty Images

President Joe Biden invoked the Defense Production Act on Thursday as part of his larger effort to accelerate the transition of the United States to renewable energy and drastically reduce the nation’s carbon emissions by the end of the decade. The Cold War-era law provides serious financial incentives for companies to develop a domestic supply chain for lithium, nickel and other materials used in the batteries for solar and wind farms, as well as electric vehicles.

That’s a big deal since those materials are predominantly produced outside of the United States, a fact that has put the U.S. at a disadvantage to countries like China and has helped to drive Republican opposition to renewable energy and EVs. 

In 2019, China was responsible for 80 percent of rare earths imports, according to the U.S. Geological Survey. Conversely, the U.S. has only a handful of mines that produce key minerals for large-capacity batteries, including just one active mine in Nevada that produces lithium.

“We need to end our long-term reliance on China and other countries for inputs that will power the future,” Biden said Thursday at a White House press conference, where he also announced that the U.S. would release one million barrels of oil per day from the Strategic Petroleum Reserve.

Debate over the clean energy transition, which scientists say is necessary to slow the climate crisis and avoid its worst consequences, has only intensified as Russia’s war in Ukraine exacerbates already record high global energy prices. By releasing oil reserves, Biden hopes to temper those rising costs. And by agreeing to increase U.S. exports of natural gas to Europe, he hopes to help countries break their dependence on Russian fossil fuels as punishment for President Vladimir Putin’s unprovoked aggression.

But many analysts have said that increasing fossil fuel production is a short-sighted solution and that moving to renewable energy and electric vehicles is the best way to loosen Russia’s grip on the energy market and tame long-term market volatility.

Last month, the U.S. and the 30 other member nations of the International Energy Agency launched a critical minerals security program, which could eventually include steps such as the stockpiling of metals needed for EVs and other renewable energy applications, ICN’s political reporter Marianne Lavelle reported.

“We don’t want supply-chain bottlenecks to prevent us from being able to electrify the transportation sector,” U.S. Energy Secretary Jennifer Granholm said at an international energy conference in Paris last week. 

By invoking the Defense Production Act, Biden is now sending further signals to the private sector to start developing a strong local supply chain around renewable energy by ensuring the government will help pay for some of the costs, such as feasibility studies for new mines. The move could help speed up several new and proposed lithium mining and extracting projects that are in various stages of development in states including Maine, North Carolina, California and Nevada. Though some of those projects are already facing opposition from environmental groups, the Associated Press reported.

The law also gives the president significant emergency authority to control domestic industries for the purpose of national defense. President Trump, for example, invoked the act in 2020 to help clear up supply-chain issues encountered in the manufacturing of ventilators and to ensure the production of additional N95 face masks as the coronavirus pandemic overwhelmed the nation’s health care system and roiled the global economy. Biden also invoked the act last year to speed up Covid vaccination and testing efforts.

Biden’s latest use of the law comes at a time when U.S. demand for battery storage is skyrocketing and supply is lagging. Last year, the U.S. market added 3,508 megawatts of battery storage capacity, more than double what was added in 2020, according to a report issued last week by the research firm Wood Mackenzie and the American Clean Power Association, a trade group. It’s a record growth that would have been far stronger had there not been issues with rising costs of raw materials like lithium, and delays in international shipping, the report said.

“Demand is just really high,” Chloe Holden, a co-author of the report, told ICN’s clean energy reporter Dan Gearino. “Supply is constrained.”

That’s it this week for Today’s Climate. Thanks for reading. The newsletter will take a break next Tuesday, since I’ll be at ICN’s annual retreat, interacting with colleagues face-to-face for the first time in nearly a year. But I’ll be back in your inbox on Friday.

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