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State Department Hopeful More Nations Will Join Energy Resource Governance Initiative in the Wake of COVID

***posted by Daniel McGroarty***

As demand for renewable energy continues to grow despite the ongoing coronavirus pandemic, the U.S. Department of State hopes to expand the Energy Resource Governance Initiative (ERGI) – an initiative launched last year by the United States and joined by ten other countries, including Canada, Australia and Brazil – aimed at improving supply chain security for the metals and minerals underpinning green energy technology. 

Under the initiative announced in June, the U.S. ”will share mining expertise with member countries to help them discover and develop their minerals such as lithium, copper and cobalt, as well as advise on management and governance frameworks to help ensure their industries are attractive to international investors.”

Earlier this month, Frank Fannon, a top-ranking U.S. energy diplomat, told Reuters that “[w]e are very much looking to expand ERGI to include other governments as well as governmental institutions,” stating that he has been in talks with the European Commission, and that an expansion of the initiative could “include emerging-economy countries around the world, as well as Japan and other developed countries in Asia with strong energy demand.” 

The announcement ties into broader efforts to reduce U.S. reliance on foreign (and especially Chinese) critical raw materials in the post-COVID context now gaining momentum in Washington, D.C., several of which ARPN’s own Sandra Wirtz outlined in an op-ed for The Economic Standard last week: 

“The new urgency is exemplified by new legislation introduced by Sen. Ted Cruz (R-Texas): The Onshoring Rare Earths Act of 2020, or ORE Act, seeks to reduce U.S. reliance on China for critical minerals. Defined as the 17 rare earths, plus four key minerals underpinning battery technology (lithium, cobalt, graphite and manganese), the ‘Cruz Criticals’ are key to establishing a domestic supply chain. The bill proposes a series of measures aimed at encouraging domestic mineral production, and strengthens existing federal statutes prohibiting rare earth magnet sourcing from China, Russia, Iran and North Korea. Recognizing that mineral production can take many forms, from traditional mining to recycling, reclamation from legacy mines, coal waste and even fracking water, it also sets up a federally-funded pilot program for traditional mining of critical minerals as well as what Cruz terms ‘secondary recovery projects.’  (…)

Meanwhile, the Department of Energy (DOE) is broadening its target list to include the above-referenced building blocks of battery tech. In a list close in composition to the Cruz Criticals, DOE is asking for project proposals to develop, in cooperation with its technology hubs, next generation technologies to extract, separate and process ‘key critical materials’: five rare earths — neodymium, praesodymium, dysprosium, terbium, and samarium — as well as cobalt, lithium, manganese, and natural graphite.

At the White House, two new Executive Orders take aim at strategic materials and critical mineral development.  One Order, directing an executive branch review to reduce the regulatory burdens under NEPA — the longstanding National Environmental Policy Act — in order to speed infrastructure, energy and mining projects, has triggered threats of legal action that, if successful, could stop the regulatory review even before it begins. While receiving far less media attention, the second Executive Order, delegating Defense Production Act (DPA) Title III emergency authorities to the U.S. Development Finance Corporation, including the authority to underwrite loans to support strategic material production, could prove more meaningful.  And unlike a standard-issue Executive Order, which can be undone by a successor president with the stroke of a pen, the DPA allows any president to delegate authorities by law — without requiring Congressional approval.”  

This list of initiatives provides a snapshot, and several additional pieces of legislation aimed at reducing U.S. mineral resource dependencies have been introduced.

As Wirtz closed last week’s op-ed: 

“All of which is to say that, after long period of inaction, the U.S. Government seems to be viewing strategic materials and critical minerals issues with a new seriousness.  That’s a welcome development.  COVID, with its sudden disruption of supply chains, should be the last warning the U.S. needs to bolster our mineral resource security going forward.”

Read the full op-ed here.