Biden wants to create millions of clean-energy jobs. China and Europe are way ahead of him.
As the Biden administration promises to jump-start the clean-energy economy, it faces an uphill climb: The United States has fallen behind Asia and Europe in the race to produce the central technology — the high-tech batteries that power electric cars and store solar and wind energy.
China dominates battery production today, with 93 “gigafactories” that manufacture lithium-ion battery cells, versus only four in the United States, according to Benchmark Mineral Intelligence, a prominent data provider. If current trends continue, China is projected to have 140 gigafactories by 2030, while Europe will have 17 and the United States, just 10.
That would leave the United States dependent on China and other trading partners for much of its battery supply, a risky proposition not just for the auto industry but for the military, which is planning to electrify more of its vehicles and gear. It would also mean missing out on much of the jobs boom the sector is expected to bring.
“This could be a game changer when it comes to jobs, but we have to find a way to ensure we keep the technology in the U.S. and incentivize companies to produce it in the U.S.,” said Venkat Srinivasan, a top battery expert at Argonne National Laboratory in Lemont, Ill.
That will happen, say U.S. companies and clean-energy supporters, only if the federal government helps coordinate and finance an aggressive push to boost domestic manufacturing of batteries and their raw materials, as governments in China, Korea and Europe are doing.
“We’re naive to pretend this will happen without government dynamism and action,” says Danny Kennedy, CEO of New Energy Nexus, a nonprofit in Oakland, Calif., that funds and advises start-ups.
The calls are part of a renewed embrace of industrial policy to help the United States keep its technological edge in an increasingly competitive global economy. Backers of federal action say that without it, the United States risks losing out on another major technology boom — as it did with solar panels and 5G mobile network equipment.
Thanks to its federally funded universities and national labs, the United States has some of the best early-stage battery research in the world. It also has Tesla, an electric-car leader with big plans for domestic battery production. But other countries are doing far more to support their battery industries and ensure that production jobs stay local.
China is bolstering its battery and electric-vehicle companies with tens of billions of dollars of state support, including research and development funding, subsidies for manufacturers and financing for battery-charging stations. It has also driven demand by subsidizing consumer purchases of electric vehicles, and by making buyers of gasoline-fueled cars wait much longer for a license plate.
The European Union is also closely involved in supporting its battery sector, having established a European Battery Alliance in 2017 that set sweeping goals for manufacturing, charging infrastructure and electric-car uptake. Germany is requiring all gas stations to offer electric-car charging. And last month, the European Commission said it would spend $3.5 billion to subsidize Tesla, BMW and other companies to produce more batteries in Europe and help cut imports from China.
Under the Obama administration, the United States offered federal loan guarantees to support clean-energy companies including Tesla, which is now one of the world’s most valuable auto companies. It also introduced a $7,500 tax credit for electric-car purchases, but the perk was limited to 200,000 cars per manufacturer, which Tesla and GM have already exhausted.
Some of this federal support dried up during the Trump administration, under withering criticism from conservatives, who dismissed clean energy as a liberal priority.
Aside from California, which has adopted many incentives and regulations to boost electric vehicles and renewable energy, the United States has largely left the sector to the free market.
President Biden has said he will “use all the levers of the federal government, from purchasing power, R&D, tax, trade, and investment policies” to “position America to be the global leader in the manufacture of electric vehicles and their input materials.”
He took a first step by signing an executive order calling on government agencies, including the U.S. Postal Service, to start converting their fleets to electric vehicles. He’s also pledged to build 500,000 charging stations, revise and extend tax credits for buyers and tighten fuel economy standards for gas-powered vehicles, which the Trump administration relaxed.
And his Cabinet members and nominees have stressed the need to act quickly to create clean-energy jobs.
“We’d better believe China is in this game. They are competing aggressively,” former Michigan governor Jennifer Granholm, Biden’s nominee for energy secretary, told a Senate hearing on Jan. 27. “Without a federal partner to make sure we can get these jobs in America then we will be losing globally.”
Republicans have long expressed skepticism about government involvement in the economy and heaped criticism on the Obama administration when a solar-panel company failed after receiving a federal loan guarantee. But some have started to support more government intervention as necessary for competing with China.
Doug Campbell, co-founder of battery start-up Solid Power in Louisville, Colo., said the United States should boost tax breaks and other financial support for companies building manufacturing plants.
“One thing we do great here is innovate,” said Campbell, whose company was spun out of the University of Colorado. “But where there is a chasm is when it gets to manufacturing scale. That is where other nations step in and provide some of that capital before a bank is willing to lean in.”
He added, “We can choose to step in and entice industry and growth, or we cannot and run the risk that we are ceding all of this overseas.” Solid Power so far has established a limited manufacturing line to produce thousands of cells a year, which automakers including Ford and BMW are testing.
Lithium-ion batteries grew out of research that won the 2019 Nobel Prize in chemistry. The powerful, rechargeable batteries first appeared in Sony camcorders in the early 1990s and are now used in everything from smartphones and laptops to electric vehicles.
They are also crucial for harnessing renewable energy, allowing power companies to store solar- and wind-energy for use when the sun goes down and the wind stops blowing. Cars, buses and power companies use large battery packs containing thousands of individual battery cells.
The Pentagon is “very interested in electrifying” as a means to lower its fuel costs, said Sam Jaffe, a battery expert at Cairn Energy Research Advisors in Boulder, Colo. Drones and other electronic gear are already battery powered, and in the future ships and aircraft may be, too, he said.
That heightens the need for strong domestic production, said William Acker, executive director of NY-BEST, a nonprofit promoting the battery sector in New York.
“If all of our batteries are coming from Asia and you need them to conduct military operations, that’s a very concerning situation,” Acker said.
Tesla and its Japanese partner, Panasonic, manufacture lithium-ion battery cells at a giant factory in Nevada. At Tesla’s “Battery Day” presentation in September, CEO Elon Musk said the company was preparing to build a new battery-cell factory that would dramatically increase output and cut costs.
Musk didn’t say where the plant would be located, but in January Tesla tweeted job postings for battery production at Giga Texas, the new auto factory Tesla is building near Austin.
Musk also said Tesla would begin extracting lithium from a deposit in Nevada to supply the new battery factory. He said the mining would involve using salt to extract lithium from heaps of dirt, and then returning the dirt to its original place, a process he called “environmentally friendly.”
Tesla’s goal is to exert control over the whole battery supply chain, from base battery materials to the building of battery cells, to their installation directly into Tesla’s cars, Musk and other Tesla executives said at Battery Day.
General Motors and its partner, South Korea’s LG Chem, began building a battery-cell plant in Lordstown, Ohio, last summer that will eventually create 1,100 jobs. The factory is part of GM’s big push to stop selling gas-powered cars and switch to electric by 2035, which the automaker promoted with a Super Bowl ad starring Will Ferrell.
The Chinese company Envision Group gained control of a lithium-ion battery plant in Smyrna, Tenn., after acquiring the battery business of Japan’s Nissan in 2019. The factory makes batteries for a nearby Nissan Leaf plant.
And South Korea’s SK Innovation is building two lithium-ion battery factories in Commerce, Ga.
To maximize job creation and to ensure the United States has a secure supply of batteries, it needs to develop the industries that mine and refine the materials needed for production, including lithium, says Kennedy, the head of New Energy Nexus. At the moment, China dominates much of the trade of these materials.
The United Nations warned in a report last year that some battery-related mining has caused environmental damage. Much of the world’s current lithium supply comes from Latin America, where some mining has caused groundwater depletion, soil contamination and other forms of environmental degradation, the report said.
The U.N. called the global boom in electric vehicles “great news” for reducing greenhouse gas emissions, but said industry should invest in greener mining techniques and better ways to recycle materials from spent batteries.
Kennedy and others point to a fledgling project in Southern California called Lithium Valley, which seeks to extract the mineral from the Salton Sea.
Supporters of the project say the lithium could be extracted in an environmentally friendly manner, as a byproduct of geothermal energy production already underway in the area. The California Energy Commission has expressed interest in the idea, and has given grants for further study of the project. California also set up a commission to study the environmental impact.
California is the largest market in the United States for electric vehicles and energy-storage batteries for power grids, “and now we’d like to do more manufacturing of the intermediate steps,” David Hochschild, chair of the California Energy Commission, said in an interview. “We have the end use of electric vehicles and energy storage, and we have the raw materials, so the vision of Lithium Valley is to get the full supply chain.”
Europe is also pursuing development of its own lithium mines, to reduce its reliance on imports.