To combat the climate crisis, the United States has committed to achieving 100 percent clean electricity production by 2035 and attaining net zero greenhouse gas emissions by 2050. Meeting these ambitious goals will involve a massive investment in clean energy technologies and a significant scale-up of domestic and global supply chains.
Executive Order 14107, signed by President Biden last year, directed federal agencies to review the challenges faced by the United States in attempting to improve the domestic supply chain. In response to the Executive Order, the United States Department of Energy (DOE) recently issued a report entitled "America's Strategy to Secure the Supply Chain for a Robust Clean Energy Transition" (the Report), detailing the DOE's comprehensive plan to build out the Energy Sector Industrial Base (ESIB).1
The Report summarizes the crucial components of the domestic and foreign energy supply chains, examines key technologies, and presents approved and proposed steps the U.S. government should employ to strengthen and secure domestic clean energy supply chains. Highlighting opportunities for action within the EISB, the Report groups common threats, risks, and vulnerabilities into seven main categories:
- Increasing availability of domestic raw material;
- Expanding domestic manufacturing capabilities;
- Investing in and supporting the formation of diverse and reliable foreign supply chains to meet global climate ambitions;
- Increasing the adoption and deployment of clean energy;
- Improving end-of-life waste management;
- Attracting and supporting a skilled U.S. workforce for the clean energy transition; and
- Enhancing supply chain knowledge and decision-making.
The DOE also included corresponding "deep dive" supply chain assessments in the Report, focusing on risks and vulnerabilities within the following 11 technology sectors: carbon capture materials; electric grids including transformers and high voltage direct current (HVDC); energy storage; fuel cells and electrolyzers; hydropower including pumped storage hydropower (PSH); neodymium magnets; nuclear energy; platinum group metals and other catalysts; semiconductors; solar photovoltaics (PV); and wind. The agency further included in-depth assessments for each of these sectors on commercialization and competitiveness, cybersecurity, and digital components.
Within the 11 corresponding assessments, the Report identifies specific key issues to tackle in addressing risks and vulnerabilities in the ESIB, including improving hydrogen and captured CO2 infrastructure, re-envisioning fuel cell and electrolyzer resources, addressing logistical needs for land-based wind turbines, upgrading port and vessel infrastructure for offshore wind turbines, modernizing aged electric grid and nuclear components, accelerating focus on energy gains for semiconductors, developing commercial variety in grid-scale energy storage, and improving access to capital to rehabilitate aging hydropower facilities.
A major aspect of the Report highlights the U.S.'s dependency on "insecure" global sources of materials and components necessary to meet our climate change goals. Vulnerable technologies in securing the supply chain for energy dependence include silicon production in China (solar PV); cobalt production in the Democratic Republic of Congo (batteries); lithium and cobalt refining in China (batteries); rare earth element magnet manufacturing in China (wind); and platinum group element mining in Russia (catalysts).
To address these vulnerabilities, the Report recommends leveraging trade remedies to protect domestic manufacturing from dumping and competition from the "insecure" global sources. In coordination with the Department of Commerce and the Department of Defense, the DOE will develop a preference list of critical materials and will connect U.S. processing and manufacturing companies with foreign critical mineral producers and supply sources from trusted allies. The Report also proposes an increase in federal government financial support to eligible U.S. companies with a particular focus on projects that address the growth of domestic input of materials that other supply chain segments have not been able to meet through other domestic avenues.
According to the Report, the DOE plans to use funding from the bipartisan Infrastructure Investment and Jobs Act to invest $140 million for a domestic rare earth element refining facility and more than $6 billion for domestic battery materials processing. The DOE will also create a new "Manufacturing and Energy Supply Chain" office within the agency to coordinate with stakeholders and private-sector companies in implementing the various proposals reflected in the Report.
Recognizing the importance of legislation in facilitating the growth of the clean energy sector, the Report calls on Congress to enact legislation to provide tax incentives that support clean energy manufacturing and deployment, upgrade port and vessel infrastructure for offshore wind turbines, appropriate funds to support domestic critical material supply, establish training programs to improve the manufacturing workforce, and fund electricity grid upgrades to promote clean energy deployment.
Though the Report details an exhaustive list of steps (both proposed and approved) to address the vulnerabilities within the global supply chain, many of these concerns are not novel and will require vast coordination and oversight to meet our climate change goals. Russia's invasion of Ukraine, the attendant roiling of worldwide energy prices and markets, and the impending U.S. mid-term elections will all affect the implementation and attainment of the Report's ambitious recommendations.
On one hand, Russia's invasion has underscored the peril of undue dependence on foreign supply chains for crucial energy supply and materials, which should buoy supporters of the Report's recommendations. But with the Biden Administration absorbing some criticism for high energy prices and allowing the United States' oil and gas independence to be squandered and control of Congress in play this November, the Report's expansive legislative recommendations seem imperiled.
Once the war in Ukraine mercifully concludes and the U.S. elections are held, we will have a better sense of how domestic and foreign clean energy supply chains have been damaged and what the United States can realistically do to repair them.