To address climate change the United States needs to build out low- and zero-carbon infrastructure, including grid-scale batteries, carbon capture retrofits, electric vehicles and associated charging stations, wind turbines, and new power electronics that make the electric grid function more effectively. These clean infrastructure components require vast amounts of raw materials for which the United States is largely import-dependent. As we have seen from the recent invasion of Ukraine, relying on countries like Russia and China for these materials as well as the processing and manufacturing of the components creates significant national security and environmental concerns.
The Energy Act of 2020 (EA20) and the Infrastructure Investment and Jobs Act (IIJA) together set the United States on a course to significantly strengthen our domestic supply chains for clean energy materials. In the coming months, BPC will be exploring further policy steps that could be taken to enhance our national security and meet our decarbonization goals.
While lists for critical minerals have been developed in the years since a 2008 National Academies Report on the topic, the EA20 formally defines a process for the United States Geological Survey (USGS) to regularly publish a critical minerals list, along with the criteria for their selection. Critical materials was also defined by the EA20 to include all of the critical minerals as well as any non-fuel material that the energy secretary determines to: (1) have a high risk of a supply chain disruption; and (2) serve an essential function for energy technologies. This broad definition for critical materials allows flexibility for the Department of Energy to address energy supply chain concerns that go beyond the process required for designating new critical minerals at USGS.
Out of 50 critical minerals published in the USGS’s 2022 critical minerals list, the United States is 100% import-reliant on 10 minerals, and more than 50% import-reliant on 31 additional minerals. A first step to reducing our dependence on foreign supply chains is to fully understand the potential for domestic production of these critical resources—a task that was loosely included in the original charter for the USGS in 1879.
Geologic mapping and resource assessments have significantly ramped up over the past few decades, through programs like the National Cooperative Geologic Mapping (NCGM) Program, the U.S. Mineral Deposit Database, and the National Geological and Geophysical Data Preservation (NGGDP) Program, which produce and aggregate geologic maps and catalog historical samples. The IIJA reauthorizes and strengthens these existing programs, as well as formalizes a new Earth Mapping Resources Initiative (Earth MRI) at USGS to accelerate our understanding of domestic critical mineral deposits. The Earth MRI program is tasked with producing a comprehensive mapping of domestic mineral resources within 10 years. Anticipating demand for certain materials and progress toward future domestic production is an essential component to ensuring energy security and economic prosperity. To this end, the EA20 requires the USGS to produce an Annual Critical Minerals Outlook each year, similar to the DOE Energy Information Administration’s Annual Energy Outlook that forecasts future energy use and production. This forecasting capacity for critical minerals will help anticipate future supply chain constraints as clean energy technologies are rapidly deployed in the coming decades.
In tandem with understanding where available domestic resources exist, supply chain innovation has the potential to replace scarce materials with more prevalent alternatives, or to do “more with less” through innovative methods for processing wastes or repurposing existing materials. Researching and demonstrating innovative supply chain methods today will provide the United States with more advanced technologies and techniques in the future.
Building off existing work at DOE, the EA20 and IIJA authorize and appropriate more than $1.1 billion to DOE to carry out several new programs and initiatives to drive innovation in processing, recycling, and alternatives for critical minerals and critical materials. This includes support for a new program focused on recovering rare earth elements from coal and coal byproducts and the creation of a Critical Materials Consortium to serve as a central clearing house for collaborative research efforts on critical materials.
In addition to performing geologic surveys, the USGS also performs research on topics like mineral characterization, carbon utilization, and geologic storage capacity. To support and expand upon these activities the IIJA includes funding for a new energy and minerals research facility and incorporates USGS consultation into several DOE research programs.
Deploying the domestic supply chain of the future
An invigorated, domestic clean energy supply chain has the potential to support millions of jobs and unlock trillions of dollars in economic opportunity. Current supply chains have deeply entrenched networks and production capacity—especially in China, which holds close to 90% of the world’s rare earth processing capacity—giving legacy supply chains a significant economic advantage over newer pathways for critical mineral production in the United States.
Newer, domestically sourced supply chains that seek to disrupt incumbent industries abroad will need to build requisite infrastructure across all steps of the supply chain—including mining, processing, manufacturing, distribution, and recycling. To jump-start this deployment, the IIJA provides over $7.1 billion to seven new programs and initiatives aimed at deployment-scale material processing, collection, and workforce challenges.
A majority of this funding is directed at building up a domestic, end-to-end battery supply chain. Given increasing demand for electric vehicles and grid-scale storage, battery supply chains are projected to grow 32,000% world-wide by 2040. These batteries could be made domestically, rather than in China. To help drive domestic production, the IIJA creates new grant programs and prize competitions at DOE for battery material processing, manufacturing, and recycling. Currently, less than 5% of lithium-ion batteries are recycled, leaving the rest (and the lithium and cobalt they contain) to be discarded in landfills. According to the DOE, one ton of battery-grade cobalt can be recovered from just 5-15 tons of spent lithium-ion batteries, presenting a tremendous opportunity for repurposing and recycling batteries on U.S. soil.
An underappreciated barrier to a domestic clean energy supply chain are challenges associated with workforce training and consumer education. To this end, the EA20 tasks the Department of Labor and Department of the Interior to assess existing personnel that are essential for the domestic critical mineral supply chain. This effort is also linked to a new grant program that can be awarded to institutions of higher education looking to provide worker training for jobs that enable critical mineral supply chains. The EPA is also directed to carry out a new program for consumer education to enable end-use collection and repurposing.
Coordination between agencies and clear designation of leadership is key to success for removing bottlenecks to a domestic critical mineral and materials supply chain. Figure 3 shows how the different programs from the IIJA and EA 20 (listed in Table 1) are coordinated across different agencies. Notably, the IIJA also creates a new subcommittee on Critical Minerals R&D within the President’s National Science and Technology Council to ensure a cross agency outlook on all the existing and new programming for deploying a domestic critical mineral supply chain.
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