The global race for dominance in the battery industry is powering ahead, and the United States is facing a critical juncture. Join us below as we explore how the U.S. can take the lead in the global battery race!
Contact: Betsy Barry
Communication Manager
706.206.7271
betsy.barry@acculonenergy.com
Table of Contents - Powering Potential: A Roadmap for a Domestic Supply Chain
The global race for dominance in the battery industry is powering ahead, and the United States is facing a critical juncture. While the demand for energy storage solutions skyrockets, driven by the need for more electricity generation, the US remains heavily reliant on foreign suppliers, particularly China. This dependence challenges our economic security and national competitiveness, which are front-burner issues for the new Trump administration.
Building a robust domestic battery supply chain is not just an economic imperative but a strategic necessity if the US is going to emerge as viable competition to China and make significant contributions to the global battery value chain. Domestic supply chains hold the key to unlocking a more sustainable energy future, creating high-paying jobs, and securing America’s position as a global leader in clean energy technologies–and to be clear, clean energy tech industries are advancing regardless of who occupies the White House.
So, how can the US charge ahead in this battery race? The answer lies in a multifaceted strategy that addresses each stage of the battery supply chain, from sourcing raw materials to recycling end-of-life batteries.
1. Unearth America’s Mineral Wealth:
The US has vast reserves of critical minerals essential for battery production, including sodium carbonate, lithium, cobalt, nickel, and manganese. The US Geological Survey-led study estimates that lithium reserves in southwestern Arkansas alone could satisfy projected global demand for lithium nine times over. However, outdated mining laws and regulations hinder the efficient and responsible development of these resources. To address these, the US must prioritize:
- Streamlining permitting processes to accelerate the development of domestic mines while ensuring robust environmental and worker protections.
- Investing in research and development of innovative mining techniques that minimize environmental impacts and enhance resource recovery.
- Engaging with Tribal communities and local stakeholders to ensure that mining operations are conducted responsibly and offer an economic benefit to surrounding communities while minimizing risks to the environment and workers.
Two key challenges make these strategies difficult: the volatility of critical mineral markets and the inability of domestically produced critical minerals to compete with inexpensive imports in the absence of subsidies or trade protections. This dynamic complicates negotiations between producers and potential buyers over a mutually acceptable price or price floor. Consequently, efforts to expand the domestic supply of critical minerals may lag behind the increasing demand for these resources. That said, there is no better time than the present for the US to address these challenges and become a global contender in the critical minerals arena.
2. Forge a Domestic Refining and Processing Powerhouse:
The US currently lacks sufficient capacity to refine and process raw materials into battery-grade components. This bottleneck forces American companies to rely on foreign refineries, increasing costs and vulnerabilities–vulnerabilities that were highlighted as a result of the pandemic and that are currently under scrutiny due to geopolitical tensions and trade disputes. For these challenges, the US needs to:
- Leverage existing programs like the Qualifying Advanced Energy Project Credit (48C) to support the construction and expansion of domestic refining and processing facilities.
- Invest in research and development of advanced refining technologies that enhance efficiency, reduce waste, and minimize environmental impacts.
- Prioritize the use of recycled materials in refining processes to create a more circular and sustainable supply chain.
It will be interesting to see if the current administration dismantles the incentives and tax credits from the Inflation Reduction Act that are instrumental in establishing these aspects of the domestic supply chain or fails to promote investment and government-business partnerships necessary to make refining and processing strategies a reality.
3. Power Up Domestic Cell and Battery Pack Manufacturing:
The heart of the battery supply chain lies in the manufacturing of battery cells, modules, and packs. The US needs to attract significant investments in large-scale production facilities to compete with established players like China that do not face the same barriers in terms of cost, regulatory hurdles, or access to critical raw materials. Potential strategies include:
- Providing tax incentives like the Advanced Manufacturing Production Credit (45X) to make domestic battery production more cost-competitive.
- Establishing regional clean energy industrial clusters to foster collaboration, innovation, and economies of scale in battery manufacturing.
- Investing in workforce development programs to ensure a pipeline of skilled workers to support this growing industry.
Again, the incentives and tax credits to advance domestic manufacturing put forth in the Inflation Reduction Act are already supporting reshoring and domestic manufacturing efforts. Additionally, while we are seeing some domestic momentum on projects like cell manufacturing, not all projects in the works will end up in the commercial pipeline. Hopefully, the new administration will see the utility and necessity of this kind of government support, as well as the long-term strategic benefits of continuing this kind of support, and even expanding similar incentives and support to ensure that the momentum in domestic manufacturing continues to ramp up in the future.
By implementing a multifaceted strategy that addresses each stage of the battery supply chain, from sourcing raw materials to recycling end-of-life batteries, the U.S. can charge ahead in the battery race & create a new key domestic supply chain.
4. Close the Loop with a Circular Battery Economy:
End-of-life battery recycling is crucial for minimizing environmental impacts and securing a sustainable supply of critical materials. To this end, the US can:
- Build upon the $320 million allocated for battery recycling research and development in the Bipartisan Infrastructure Law, focusing on technologies that maximize materials recovery and minimize waste.
- Implement policies that encourage battery manufacturers to design for recyclability, making it easier to disassemble and recover valuable components.
- Develop a nationwide network of battery collection and recycling facilities to ensure that end-of-life batteries are responsibly managed.
Advancing recycling technologies will require sustained funding and innovation to maximize efficiency and minimize waste. Additionally, establishing a nationwide network of collection and recycling facilities demands significant coordination, investment, and public awareness to ensure widespread participation. Encouraging manufacturers to prioritize recyclability may face resistance due to potential cost implications and design constraints; however, global regulatory measures and domestic sustainability initiatives can drive innovation, incentivize compliance, and create a competitive advantage for companies that embrace eco-friendly design practices.
5. Unite with Allies for a Stronger Supply Chain:
Despite the competitive landscape, the US should not go it alone in this battery race. Forging strategic partnerships with allies can help secure a diverse and reliable supply of critical minerals and components, reducing dependence on competitor nations.
Initiatives like the Minerals Security Partnership (MSP) are crucial for:
- Identifying and investing in projects related to extraction, processing, refining, and recycling of critical minerals and materials, particularly those needed for advanced batteries.
- Strengthening environmental and labor standards throughout the global supply chain.
- Promoting transparency and accountability to ensure responsible sourcing practices.
While initiatives like the Minerals Security Partnership offer significant promise, coordinating investments across multiple agencies and programs may prove complex, particularly when balancing differing global, and even domestic, environmental and labor standards. Additionally, promoting transparency and accountability in domestic supply chains in particular requires overcoming resistance from stakeholders who may prioritize cost savings over responsible sourcing. It will remain to be seen if the appetite for a strong domestic supply chain in the coming years will maintain a global perspective that may prove necessary for future success.
6. Provide a Clear and Steady Policy Compass:
A predictable and supportive policy environment is essential for attracting long-term investments in domestic battery production.
The US government needs to:
- Establish consistent policies regarding EV tax credits, renewable energy incentives, and trade regulations to instill confidence in investors–policies that outlast any one administration.
- Utilize federal purchasing power to procure domestically produced clean energy products, providing a stable demand signal for manufacturers.
- Invest in research and development of next-generation battery technologies</b/> to maintain a competitive edge in the global market.
Establishing long-term, consistent policies may face political gridlock or shifts in priorities between administrations, sowing seeds of uncertainty. Also, leveraging federal purchasing power could encounter budgetary constraints or pushback from stakeholders advocating for cheaper imports, despite “America first” rhetoric. Additionally, maintaining a competitive edge through R&D investments will require balancing immediate needs with long-term innovation, all while competing for talent and resources in a highly competitive global market; however, addressing these challenges will be key to sustaining growth in the entire battery value chain.
7. Empowering a Battery-Powered Future:
Shoring up domestic supply chains is vital to revitalizing domestic manufacturing, and addressing workforce-related challenges is a cornerstone of this effort. To build a robust battery supply chain, the U.S. must:
- Expand Registered Apprenticeship programs to equip workers with the specialized skills that are needed for mining, refining, and manufacturing.
- Collaborate with educational institutions and manufacturers to create targeted training programs aligned with commercial and industrial market needs.
- Promote STEM education to inspire and prepare the next generation of battery innovators and engineers.
The success of the strategies outlined here hinges on sustained government commitment, effective implementation of policies, and collaboration between the public and private sectors. By implementing these strategies, the U.S. can establish a domestic supply chain, which, in turn, will strengthen the domestic manufacturing base, create high-quality jobs, and become a locus for a battery industry that is poised to grow exponentially.