green energy transition

Underscoring the importance of the green energy transition to modern society, the U.S. Senate earlier this week passed a resolution, the U.S. House of Representatives  introduced a corresponding resolution, and several governors issued their own declarations designating September 26^th through 30^th “National Clean Energy Week.”

National Clean Energy Week is billed as an annual week-long “celebration of clean energy innovation” to “help solve the world’s most pressing challenges in nuclear, solar, wind, wave, hydropower, geothermal, natural gas, biomass, carbon capture, storage and waste-to-energy technologies.”

The bipartisan event organized by Citizens for Responsible Energy Solutions (CRES) and sponsored by a broad list of sponsors ranging from industry groups over trade associations and advocacy groups, culminates in a virtual Policy Makers Symposium with presentations from the Biden Administration, Members of Congress from both sides of the political aisle, as well as industry experts discussing the challenges and opportunities for America in the context of the green energy transition. Among other issues, panels have and continue to focus on

• critical minerals, supply chains and domestic manufacturing;
• innovation and emission reduction in carbon-intensive sectors;
• U.S. competitiveness; and
• workable solutions for nature.

From an ARPN perspective, it was good to see that the forum kicked off with a discussion focused on critical mineral supply chains and domestic manufacturing, because, as our followers well know, “without massive investments in base metals and key minerals, Europe and North America will fail to meet their carbon emission targets and face a new form of energy insecurity,” as Forbes contributor Wal van Lierop wrote last month.

The Biden Administration has taken several steps to strengthen critical mineral supply chains, including the invocation of the Defense Production Act for the “battery criticals” lithium, cobalt, graphite, nickel and manganese, and recently enacted provisions in the federal Inflation Reduction Act (IRA) are expected to send a strong signal to industry that the United States are serious about confronting the critical minerals supply chain challenge head-on.

With much more remaining to be done, lawmakers have used the occasion of National Clean Energy Week to highlight additional legislation aimed at promoting responsible clean energy development and strengthening critical mineral supply chains and we will continue to monitor if and how these proposals make their ways through Congress in the coming weeks.  After a bipartisan passage of the IRA, partisan politics is rearing its head again with the congressional midterm elections only weeks away.

As Shane Lasley, author of the must-read “Critical Mineral Alliances 2022” outlined, we have a broad arsenal from which we can draw, but it will take a concerted, bipartisan effort:

“[t]he optimum solution to laying the foundation for the next epoch of human progress will only be discovered through the forging of unlikely alliances between the woke and old school, environmental conservationists and natural resource developers, liberals and conservatives, national laboratories and private sector entrepreneurs, local stakeholders and global mining companies, venture capitalists and innovators, and everyone else with visions of a cleaner, greener, and high-tech future.”

As we stated before, “from where we stand, the challenge of the 21st Century’s Tech Metals Age begins with a change in mindset toward mining.” 

In a comprehensive new piece for Foreign Policy, director of the Payne Institute and professor of public policy at the Colorado School of Mines Morgan Bazilian, and postdoctoral fellow at the Jackson Institute for Global Affairs at Yale University Gregory Brew take a closer look at the recently passed Inflation Reduction Act’s energy provisions, which in their view holds the key to “reclaiming critical mineral chains.”

While providing billions of dollars to “buttress U.S. energy security while also addressing climate change,” the IRA ties EV tax credits to strict sourcing restrictions:

Qualified cars must be assembled in North America and adhere to mandated “escalating levels of critical minerals to be sourced from the U.S. or a country with a free-trade agreement with the U.S.”

The escalating levels of sourcing requirements for applicable battery critical minerals (with the bill defining an extensive list of applicable minerals) are as follows:

“40% for a vehicle placed in service before 1 January 2024;

50% for a vehicle placed in the service during calendar year 2024;

60% for a vehicle placed in service during calendar year 2025;

70% for a vehicle placed in service during calendar year 2026; and

80% for a vehicle placed in service after 31 December 2026.

The bill places similar restrictions on the percentage of value of the components, but leading up to a 100% requirement for vehicles placed in service after 31 December 2028.”

Write Bazilian and Brew:

“For the first time, U.S. policy is directly tying the supply of these little-understood minerals to a massive paradigm shift in the automobile market. As the markets for these materials are diverse, global, and dominated largely by China, this offers a rare instance of bipartisan concern.

The purpose of the policy is threefold. The Biden administration wants to accelerate the energy transition to low carbon technologies; encourage domestic manufacturing; and improve U.S. energy security, ostensibly by reducing its dependence on foreign supplies of the minerals needed to support the energy transition.”

However, as followers of ARPN well know, the sourcing requirements pose a fundamental challenge for the United States, leading Bazilian and Brew to conclude that “[w]here the 20th century featured battles over access to oil, the 21st century will likely be defined by a struggle over critical minerals, particularly as the United States views China as a global competitor and strives to limit its reliance on Chinese supplies for EV manufacturing and a wide variety of energy and defense technologies.”

Outlining the scope of the geopolitical challenges and China’s dominance along the critical minerals value chain, as well as the United States’ need to catch up, Bazilian and Brew identify “five essential areas” that can “help provide the basis for a vibrant, more resilient, and more robust set of supply chains – and thus support energy transitions effectively”:

1. A focus on sustainable mining, building on the dramatic improvements of mining practices over the last decades, will not only provide cutting edge solutions but also allow “for a new narrative to emerge for the sector” which is still seen as “dirty, outmoded and unsophisticated.”
2. Increasing transparency and functionality in critical mineral markets can help eliminate “ineffective market signals for investment, obstacles that can cause huge roadblocks to production and trade.
3. Reframing the debate on critical minerals in the context of supply chains rather than “just rocks,” and taking into consideration the “gateway metal” and “coproduct” relationships (Bazilian and Brew use different terminology but invoke the same concept ARPN followers are familiar with) of many critical minerals will help stakeholders design effective policy solutions.
4. Circular economy concepts in which recycling of materials once products reach the end of their life span need to be emphasized and strengthened and harnessed in the U.S., where rates are “terribly low.”  
5. A focus on permitting as well as social acceptance will hold “a key to success in the critical mineral space.” 

Bazilian and Brew conclude:

“The IRA promises a drastic reduction in U.S. carbon emissions and an acceleration of the energy transition away from fossil fuels. The United States needs more wind turbines, solar panels, and electric cars. But to make that possible, it will need more mines.”

As Shane Lasley outlines in his most recent publication, “Critical Mineral Alliances 2022,” we have an entire arsenal from which we can draw to succeed in the 21^st Century battle over critical minerals, but it will take a concerted effort, and one that requires reaching across the political aisle:

“[t]he optimum solution to laying the foundation for the next epoch of human progress will only be discovered through the forging of unlikely alliances between the woke and old school, environmental conservationists and natural resource developers, liberals and conservatives, national laboratories and private sector entrepreneurs, local stakeholders and global mining companies, venture capitalists and innovators, and everyone else with visions of a cleaner, greener, and high-tech future.”

From where we stand, the challenge of the 21^st Century’s Tech Metals Age begins with a change in mindset toward mining.

Against the backdrop of ongoing supply chain challenges around the globe, the urgency of untangling and securing critical mineral supply chains essential to a net zero carbon emissions future is becoming increasingly clear. Following on the heels of the Biden Administration invoking the Defense Production Act for the “Battery Criticals” – lithium, cobalt, graphite, nickel and manganese [...]

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In a new piece for RealClearEnergy, John Adams, U.S. Army brigadier general (ret.), argues that the newly proposed Inflation Reduction Act, negotiated by Senators Chuck Schumer (D-NY) and Joe Manchin (D-WV) is not only the most ambitious climate bill in U.S. history, but also represents an opportunity to bolster our nation’s economic and national security.  General [...]

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