A top White House adviser acknowledged this week that the US has some work to do quickly if it is to ensure the reliability of its supply chains and its independence from competitors like China. Country.
“Look, this is a huge concern for the United States and I think for the rest of the world. As we move towards a completely new, cleaner, greener energy system, we have to. make sure you have a diversified supply chain,” Presidential Special Coordinator Amos Hochstein told CNBC’s Hadley Gamble on Monday.
“We cannot have a centralized supply chain in any country, no matter what country it is,” he said. “We have to make sure that from mining and refining to building batteries and wind turbines, we have a diverse system that we can be fully powered with. It’s the only way to do this. this works from an economic perspective.”
Asked if the US was behind the effort, Hochstein, who also served in the Obama administration as chief energy envoy, replied: “We’re definitely behind.” However, he added, “That doesn’t mean we’re out.”
Workers transport soil containing rare earth elements for export at a port in Lianyungang, Jiangsu province, China, October 31, 2010.
Threading Machine | Reuters
China controls about 60% of the world’s production of minerals and rare earth materials. According to a recent report by Rice University’s Baker Public Policy Institute. Those resources include lithium, cobalt, nickel, graphite, manganese and other rare earth elements that are vital to making things like electric cars, batteries, computers and home appliances.
They are also essential to renewable technology such as solar panels and wind turbines, which are central to US efforts to transition energy away from fossil fuels. Just an example, China refines 95% of the world’s manganese — a chemical element used in the production of batteries and steel — despite tapping less than 10% of the global supply.
For the United States, who relations with China can currently be described as the most strained, which poses a number of security risks, should China decide to weaponize that market dominance at any point. The Covid-19 pandemic and the Russia-Ukraine war also highlight the fragility of global supply chains.
‘We haven’t invested’
The White House, in a February 2022 fact sheet, wrote that “the United States is increasingly dependent on foreign sources for many processed versions of these minerals. Globally, China controls most of the market for processing and refining cobalt, lithium, rare earths and other important minerals.”
“We have to admit that we didn’t invest, and that’s what the United States is trying to do now, not just say the same thing that we want a partnership,” Hochstein said. “We’ll come to this table with our G7 allies, we’ll pool our resources, we’ll make sure the money is there.”
This includes dedicated business and financial incentives, says Hochstein. The Biden administration’s massive 2022 Inflation Reduction Act aims to invest heavily in the supply and access of key minerals in allied nations, while providing approximately $369 billion in funding and tax credits to promote renewable energy technology and the production of important minerals.
“We’re encouraging, through an IRA, to tell companies ‘look, if you’re sure you’re mining in the US or in other countries and bring it to the US for refining, processing, management and battery production, then there’s that kind of financial incentive there,'” he said.
Despite warnings about supply chain risks, Hochstein dismissed the idea that the United States was being held hostage by China.
“I don’t want to talk about being held hostage, China is doing what they think is right for them after all,” he said. “They’re trying to build an energy economy in the clean energy space, and we all need to do the same.”
“We have to learn from what we’ve been through in the oil and gas energy sector, as we move into a new energy market that still relies on natural resources,” he added.
“They may not be oil and gas, but they are still natural resources – they are not abundant everywhere in the world – so we have to make sure from the US perspective that we have a supply chain. for the United States, and that’s what the legislation we’ve passed in the United States is trying to do.”
