US President Joe Biden is reportedly considering using wartime powers to boost domestic production of electric vehicle batteries. The administration would like to add the necessary raw materials to the Defense Production Act (DPA) drafted at the start of the Korean War in 1950.
Originally designed to give the federal government more control over the U.S. economy (particularly over raw materials) throughout the Cold War, the law was also leveraged by the Department of Health. Defense to advance new technologies beginning in the 1980s. In 2011, Barack Obama invoked the law to compel telecommunications companies to provide detailed information to the Commerce Department’s Bureau of Industry and Security. Donald Trump will later invoke the DPA to identify a range of products deemed essential to national security as the trade war with China escalates, then again to direct domestic production of materials and goods related to the COVID pandemic. -19.
Biden actually used it on his second day in office to further ramp up production of pandemic-related supplies, and then again in March 2021 to supply equipment to Merck facilities manufacturing Johnson & Johnson vaccines. He invoked the Defense Protection Act a third time in September to top up the supply of fire hoses to fight an unusually high number of West Coast wildfires.
This time, the goal is to incorporate lithium, nickel, graphite, cobalt and manganese into the government’s list of extra-important materials. According to Bloomberg, the officials who leaked the plan (who they say asked to remain anonymous) believe the mining companies involved could access $750 million under the Defense Production Act’s Title III fund. Funds and relief can also be set up to encourage new battery recycling centers.
Instead of loans or direct purchases of minerals, the directive would fund the production of current operations, productivity and safety improvements and feasibility studies, the person said. In addition to EV batteries, the directive would also apply to large capacity batteries.
Administration officials are working to ensure that production will take place in accordance with strict environmental and labor standards, one of the people familiar said. Amid concerns from critics, including some Democratic members of Congress, aides are taking steps to ensure presidential actions will not circumvent environmental reviews or permit regulations, the person said.
Several departments, including Energy and Interior, will oversee the effort, the person said.
The directive would also pave the way for Congress to allocate more resources to the effort, said Ben Steinberg, co-chair of the critical infrastructure group at lobbying firm DC Venn Strategies.
“The president’s signature is an important signal, but it’s up to Congress to appropriate dollars commensurate with the challenge,” Steinberg told the outlet, adding that the funding available through the DPA may not be enough because it must currently cover many industries.
A bipartisan group of US senators – including Joe Manchin (D-WV), Lisa Murkowski (R-AK), James Risch (R-ID) and Bill Cassidy (R-LA) – have previously asked the White House to consider take advantage of the Defense Production Act to encourage localized production of batteries. The following weeks included rampant speculation that he was under consideration. But this is the first time we’ve heard the news that the Biden administration was planning to move forward.
Critics will no doubt cite this as an example of the Biden administration using wartime provisions to advance its green agenda. But it’s not that simple. One of my many criticisms of the shift to electric vehicles in the West was that it would massively benefit Chinese battery producers who already dominate the market. Getting the government to give a boost to domestic rivals, while also focusing on the need to source raw materials, seems prudent if the transition to electric vehicles is to continue at the breakneck pace desired. While valid concerns will remain about which parties will receive favorable treatment, how the funding will ultimately be allocated, and what that means in terms of the ongoing relationship between big business and the United States government.
The Biden administration has already set aside billions of dollars in funding for electric vehicles in numerous infrastructure bills. But the prices of their raw materials have skyrocketed lately and have only gotten worse due to the war in Ukraine. Bloomberg speculated that it could be a boon to mining operations and help cut costs while also serving as a way to endear the administration to an industry it previously shunned. Unfortunately, this risks putting the White House at odds with environmental activists who want people to drive all-electric vehicles without having to dig into the ground to acquire the necessary metals.
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