Department of Energy Takes Immediate Action to Shore Up Battery Supply Chain, U.S. Competitiveness and Spur Job Creation
On February 25, 2021, President Biden signed Executive Order 14017, which directed the Administration to immediately launch a 100-day review to develop a strategic process to address vulnerabilities and opportunities in the supply chains of four key products, including advanced batteries. The report on advanced batteries, led by the Department of Energy (DOE), and its recommendations have been submitted to the President, and today the Biden Administration is announcing a set of immediate actions it will take to make the U.S. more competitive in the battery market. The Administration is also recommending Congress make critical investments to grow America’s ability to produce high-capacity batteries and products that use batteries, like EVs and stationary storage.
Advanced, high-capacity batteries play an integral role in 21st-century technologies that are critical to the clean energy transition and national security capabilities around the world—from electric vehicles, to stationary energy storage, to defense applications. Demand for these products is set to grow as supply chain constraints, geopolitical and economic competition, and other vulnerabilities are increasing as well.
Today, America relies heavily on importing the inputs for fabricated advanced battery packs from abroad, exposing the nation to supply chain vulnerabilities that threaten to disrupt the availability and cost of the critical technologies that rely on them and the workforce that manufactures them. With the global lithium battery market expected to grow by a factor of five to ten by 2030, it is imperative that the United States invests immediately in scaling up a secure, diversified supply chain for high-capacity batteries here at home. That means seizing a critical opportunity to increase domestic battery manufacturing while investing to scale the full lithium battery supply chain, including the sustainable sourcing and processing of the critical minerals used in battery production all the way through to end-of-life battery collection and recycling.
Through strong collaboration across the federal government, with U.S. industrial stakeholders, the research community, and international allies, the U.S. must develop a durable strategy that invests and scales our potential industrial strengths to meet this challenge. Success will secure the nation’s economic competitiveness, spur domestic manufacturing jobs for American workers, and position America to lead an emerging market developing products that will be crucial to our national security and clean energy future.
Immediate Actions to Strengthen the Domestic Advanced Battery Supply Chain:
- Strengthen U.S. manufacturing requirements in federally-funded grants, cooperative agreements, and research and development (R&D) contracts. DOE announced today a new policy to ensure that all innovations that are developed with taxpayer dollars through DOE Science and Energy Programs require awardees to substantially manufacture those products in the United States, creating well-paying domestic jobs. DOE will implement these actions through a Determination of Exceptional Circumstances under the Bayh-Dole Act, which will apply to all DOE Science and Energy Programs including funding that supports R&D for all applications of advanced batteries such as EVs, stationary storage, and other uses. This policy change will cover the more than $8 billion in climate and energy innovation funding requested in DOE’s FY22 budget, including more than $200 million to support battery technology research, development, and demonstration—ensuring those taxpayer dollars support manufacturing in the U.S. rather than exporting U.S. manufacturing jobs.
- Procure stationary battery storage. In support of the Administration’s goal for 100% clean electricity by 2035, the Federal Energy Management Program (FEMP)—housed in DOE—is kicking off a federal government-wide energy storage opportunity diagnostic that will evaluate the current opportunity for deploying battery storage at federal sites. FEMP will also launch a call for projects from federal sites interested in deploying energy storage projects, and provide the necessary technical assistance to get those projects built. These actions build on steps taken earlier this year to leverage $13 million in FEMP’s Assisting Federal Facilities with Energy Conservation Technologies (AFFECT) grants to unlock an estimated $260 million or more in project investments, including battery storage projects.
- Provide financing to the advanced battery supply chain for electric vehicles. DOE’s Loan Programs Office (LPO) published guidance and released a factsheet to clarify the various uses of the Advanced Technology Vehicles Manufacturing Loan Program (ATVM), which has approximately $17 billion in loan authority. The ATVM program can make loans to manufacturers of advanced technology vehicle battery cells and packs for re-equipping, expanding or establishing such manufacturing facilities in the United States.
- Release the National Blueprint for Lithium Batteries. The Federal Consortium on Advanced Batteries (FCAB), which is chaired by DOE and includes other key federal agencies is also engaged to support the domestic advanced battery supply chain. Today the FCAB released the “National Blueprint for Lithium Batteries” to codify the findings of the Advanced Battery Supply Chain EO Report into a 10-year government-wide plan to urgently develop a domestic lithium battery supply chain that creates equitable clean energy economy jobs in America.
The Department of Energy Report Recommends Congress:
- Catalyze private capital with new federal grant programs. In line with the American Jobs Plan, we recommend Congress establish a cost-sharing grant program to support battery cell and pack manufacturing in the U.S. This model helps entrepreneurs who do not have the ability to access tax credits in the short run, while ensuring taxpayers share in the upside of the investment. Production of high-capacity battery cells in the United States is highly concentrated in a small number of companies. Establishing a grant program for cell manufacturing could create high-value manufacturing jobs, while increasing a more diverse and resilient industrial base.
- Electrify the nation’s school bus fleet. We recommend Congress provide new federal grant funding to subsidize the incremental up-front cost of new school buses, charging infrastructure, and workforce training to accelerate the transition from diesel, and provide funding certainty for suppliers to expand their production lines. Initial estimates indicate $20 billion could support transitioning 20% of the existing school bus fleet to zero-emission technologies. Approximately 95% of America’s school buses currently run on diesel—to date, limited federal funds have been available to support transitions to zero-emission technology despite the documented climate and health benefits of moving from diesel to battery electric propulsion.
- Accelerate the electrification of the nation’s transit bus fleet. We recommend Congress fund the Federal Transit Administration’s Low and No Emissions (“Lo-No”) grant program to accelerate the adoption of zero-emission transit vehicles, by providing capital funding for transit agencies to pursue contracts and market certainty for manufacturers to build production capacity. Initial estimates indicate that a $25 billion program could support replacing 20,000 transit vehicles—including buses, but also smaller shuttles, vans, and cars operated by transit agencies.
- Provide consumer rebates and tax incentives to spur consumer adoption of EVs. We recommend Congress authorize new and expanded incentives to spur consumer adoption of U.S.-made electric vehicles. In addition, we recommend Congress approve $5 billion to electrify the federal fleet with U.S.-made EVs and $15 billion in infrastructure investment to build a national charging infrastructure to facilitate the nationwide adoption of EVs.
- Invest in the production of high-capacity batteries and products that use these batteries to support good-paying, union jobs. Tax credits, lending and grants offered to businesses to produce in the U.S. must require the creation of quality jobs with the right to organize for workers. We recommend Congress pass the PRO Act. And new appropriations should include prevailing wage requirements, similar to those included in the American Recovery and Reinvestment Act of 2009. Other standards that should be included are: (1) mandated hiring percentages from registered apprenticeships and other labor or labor-management training programs, (2) project labor, community labor and local hire requirements, and (3) employer neutrality agreements.
- Develop strong environmental review permitting practices for the extraction of critical minerals. We recommend Congress develop legislation to replace outdated mining laws including the General Mining Law (GML) of 1872 governing locatable minerals (including nickel) on federal lands, the Materials Disposal Act of 1947 to dispose of minerals found on federal lands, and the Mineral Land Leasing Act of 1920 among others. These should be updated to have stronger environmental standards, up-to-date fiscal reforms, better enforcement, inspection and bonding requirements, and clear reclamation planning requirements.