Biden's buy American goals conflict with emissions reductions targets | Energy & Environment

There is an inherent tension in President Joe Biden ‘s climate plans between reducing emissions as fast as possible and building up U.S. manufacturing of clean energy technologies to create a strong domestic workforce.

Meeting an aggressive timetable of adding more clean energy to the grid would likely mean importing a large supply of solar panels and electric car batteries from abroad because it would take time for American manufacturers to scale up.

“There is a little bit of a conflict between the two ideas,” said Marc Hafstead, an economist at Resources for the Future. “I certainly think achieving it will be challenging. We can’t make up new industries just because we want to do. It’s not to say it can’t be done, but it’s probably past this administration.”

On one level, Biden’s effort to promote domestic manufacturing aligns with his climate, economic development, and national security goals.

“Climate policy as a political issue in the U.S. will only be successful if there is an economic path for American workers and industries,” said Sasha Mackler, executive director of the energy project at Bipartisan Policy Center. “The industries of tomorrow will be cleaner, so developing a climate policy that keeps those offshore is a political loser.”

However, achieving the whole of that vision might make it more difficult to keep pace with Biden’s target as part of the Paris Agreement of cutting economy-wide emissions in half by 2030.

The conflict could factor into Biden’s efforts to pass his Build Back Better infrastructure agenda through Congress over the coming weeks.

Senate Majority Leader Chuck Schumer recently said that Democrats’ climate and infrastructure plans being pursued this fall could nearly fulfill Biden’s emissions reduction pledge for the end of this decade.

The biggest chunk of reductions, nearly half of it, would come from Democrats’ proposed “clean electricity payment program,” which would pay utilities to use more carbon-free power with the goal of generating 80% clean electricity by 2030, combined with a package of new and expanded tax subsidies for clean energy technologies.

But Biden and Democrats want to attach strings to their push for more clean energy use by prodding companies to source domestically, which could raise their costs.

They want to create new jobs not just from the installation and deployment of wind and solar, common jobs today that are often nonunionized and lower-paying, but also from manufacturing and federal government procurement of electric vehicles and the batteries that power them.

For example, a clean energy tax proposal from Senate Finance Committee Chairman Ron Wyden of Oregon that could become part of the Democratic-only reconciliation bill would offer extra incentives for electric cars that are manufactured entirely in the United States and with union workers. Democrats are also looking to ensure clean energy tax credits encourage domestic production and a unionized workforce.

A measure pushed by Democratic Sen. Joe Manchin of West Virginia would provide subsidies for companies to build or retrofit manufacturing and industrial facilities to make clean energy technologies. Another led by Sen. Chris Coons of Delaware would establish an Industrial Finance Corporation that could guarantees loans, issue bonds, and buy equity to support domestic manufacturing.

Democrats are especially keen to close the clean energy manufacturing gap with its main competitor, China, to prevent the world’s largest emitter from dominating industries of the future.

In recent years, China has lavished subsidies to dominate solar manufacturing and electric vehicles. Chinese companies now supply three-quarters of the world’s solar panels, and the country is the top producer of electric vehicles.

“China plays in a very different way from most of the rest of the world in that they are willing and able to do industrial policy in a way we look down on,” said Rich Powell, executive director of ClearPath, a conservative clean energy group. “They threw up enormous resources and heavily subsidized the production end, while we subsidized consumption of solar but were agnostic on where it was produced, leading us to the cheapest panels globally.”

China has also controlled much of the supply chain for critical minerals such as lithium that are in high demand as inputs for electric vehicle batteries and renewable energy.

“If your objective is to reduce carbon emissions as quickly and cheaply as possible, you would probably care less about issues like human rights and environment protection. The sourcing and processing would be less of an issue,” said Francis Fannon, the U.S. assistant secretary of state for energy resources in the Trump administration, who focused on boosting the domestic supply chain of critical minerals.

One illustration of the tensions of Biden’s twin goals is his use of trade policy to crack down on human rights abuses in China.

The Biden administration in June halted imports of certain products used in solar panels made in China’s Xinjiang region, which makes roughly half of the world’s supply of polysilicon, according to Bloomberg.

That could benefit U.S. solar manufacturers but make imports more expensive for project developers.

Sheldon Kimber, the CEO of San Francisco-based Intersect Power, one of the largest developers of wind and solar farms in the country, is an example of someone facing tricky sourcing decisions partially because of apprehension about trade tensions with China.

He said his company, launched in 2016, purchases its panels from American manufacturer First Solar, which makes them in the U.S. and Malaysia.

His prior company, Recurrent Energy, relied on Chinese panels in developing utility-scale solar power plants.

Although the lower cost from China is one consideration, he’s found it worth it to pay more for western supplies because he said Chinese firms were unreliable and sometimes changed their prices and the terms of contracts.

“For a young company where risk comes into factor as much as anything, we wanted to make sure we had the reliability and dependability of a western partner,” Kimber said.

Dan Reicher, a senior research scholar at Stanford University who is also a renewable energy project investor, noted the products that go into clean energy projects are increasingly being made in the U.S. and can eventually be exported globally.

“The next generation of several of these technologies are U.S.-based, from carbon capture to small modular nuclear reactors to advanced hydropower turbines, and increasingly even some of the best wind and solar equipment,” Reicher said.

Clean energy advocates and analysts also expect significant offshore wind development in the U.S. in the second half of this decade, which could create job opportunities for everything from marine construction to offshore service vessel companies to seismic work.

Most of the manufacturing jobs stemming from the U.S. offshore wind industry exist in Europe — for now.

“When you look at the full suite of technologies, some will not be a lot more domestic, but others are well situated to grow locally,” said Collin O’Mara, president and CEO of the National Wildlife Federation. “We are not starting from scratch. But if our clean energy future is manufactured in China, we will have massively failed.”

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