U.S. President Joe Biden is said to be considering utilizing wartime powers to spur domestic electric vehicle battery production. The administration reportedly wants to add the necessary raw materials to the Defense Production Act (DPA) penned at the start of the Korean War in 1950.
Originally designed to give the federal government more control of the U.S. economy (especially in regard to raw materials) throughout the Cold War, the law has also been leveraged by the Department of Defense to advance new technologies starting in the 1980s. In 2011, Barack Obama invoked the act to force telecommunications companies to provide detailed information to the Commerce Department’s Bureau of Industry and Security. Donald Trump would later invoke the DPA to identify an array of products deemed critical to national security as the trade war with China heated up, and then again to spearhead domestic production of materials and goods pertaining to the COVID-19 pandemic.
Biden actually used it on his second day in office to further increase production of supplies related to the pandemic and then again in March of 2021 to supply equipment to Merck facilities manufacturing Johnson & Johnson vaccines. He invoked the Defense Protection Act a third time in September to supplement the supply of fire hoses intended to combat an unusually high number of wildfires taking place on the West Coast.
This time, the goal is to incorporate lithium, nickel, graphite, cobalt, and manganese into the government list of extra-important materials. According to Bloomberg, officials that leaked the plan (who it said asked to remain anonymous) believe the relevant mining companies could access $750 million under the Defense Production Act’s Title III fund. Funds and relief may also be established to encourage new battery recycling centers.
From Bloomberg:
Instead of loans or direct purchases for minerals, the directive would fund production at current operations, productivity and safety upgrades, and feasibility studies, the person said. In addition to EV batteries, the directive also would apply to large-capacity batteries.
Administration officials are working to ensure production will occur under strong 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 make sure the presidential actions won’t skirt environmental reviews or permit regulations, the person said.
Several departments, including Energy and Interior, will oversee the effort, the person said.
The directive also would pave the way for Congress to allocate more resources to the effort, said Ben Steinberg, co-chair of the critical infrastructure group at D.C. lobbying firm Venn Strategies.
“The president’s signature is a big signal, but it’s incumbent on the Congress to appropriate dollars that are commensurate with the challenge,” Steinberg told the outlet, adding that the funding available via the DPA might not be sufficient since it currently has to cover numerous industries.
A bipartisan group of U.S. senators — including Joe Manchin (D-WV), Lisa Murkowski (R-AK), James Risch (R-ID), and Bill Cassidy (R-LA) — previously asked the White House to consider leveraging the Defense Production Act to encourage localized battery production. The following weeks included rampant speculation that it 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 undoubtedly point to this as an example of the Biden administration utilizing wartime provisions to advance its green agenda. But it’s not so cut and dried as that. One of my many criticisms regarding the transition to electric vehicles in the West was that it would overwhelmingly advantage Chinese battery producers that already dominate the market. Having the government provide domestic rivals with a leg up, while also focusing on the need to procure raw materials, seems prudent if the shift toward EVs is to continue at the desired breakneck pace. Though valid concerns will remain as to which parties will be getting favorable treatment, how 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 in funding for EVs in numerous infrastructure bills. But prices pertaining to their raw materials have been skyrocketing of late and have only been made worse due to the war in Ukraine. Bloomberg speculated that this could be a boon for mining operations and help tamp down costs while also serving as a way to endear the administration to an industry it previously shunned. Unfortunately, this runs the risk of placing the White House at odds with environmental activists that want people to drive all-electric vehicles without having to bore into the earth to acquire the necessary metals.
[Image: Orhan Cam/Shutterstock]
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