Biden’s Climate Bill Boosts China’s Battery Market
President Joe Biden’s Signature Climate Bill Boosts China’s Battery Market
President Joe Biden’s signature climate bill, the Inflation Reduction Act (IRA), has been a game-changer for China’s battery market.
In August 2022, Biden officially signed the IRA into law. This legislation introduced a range of green energy subsidies aimed at shifting the United States away from fossil fuels and, as Biden himself stated before signing the bill, “competing with China.”
Since the implementation of the IRA, the import of Chinese components for electric vehicles in the U.S. has skyrocketed, according to a review of government data by The Washington Free Beacon. These findings raise doubts about whether the IRA has achieved one of its key objectives.
China is a major supplier of rare earth minerals used in green energy technologies like solar panels, electric cars, and wind turbines. While imports of components utilizing these minerals have been increasing during Biden’s presidency, the surge became even more pronounced after the IRA was put into effect.
From January 2021, when Biden took office, to July 2022, Chinese lithium-ion battery imports to the U.S. averaged $473 million per month. However, the month after Biden signed the IRA into law, these imports soared to an average of over $1 billion per month, as reported by the Free Beacon.
In addition to batteries, China is also reaping the benefits of the IRA through mining companies in Africa.
“Nearly 70 percent of cobalt is produced in Africa, mainly in the Congo,”
explained James Madison Institute senior vice president Sal Nuzzo to the Free Beacon.
“So you can put the regulation in place — it’s got to be sourced from a friendly country. But who owns the facility that the materials are coming out of?”
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Apart from concerns about its impact on China, the IRA has recently faced criticism for its connection to sticky, high inflation in the U.S., as reported by the Financial Times. Georgia Governor Brian Kemp has blamed the IRA for damaging his state’s economy by rapidly driving up prices.
“A lot of what the IRA has done, besides throwing money at something that was coming anyway, is also heated the market up and driven costs to go up,”
stated Kemp in an interview with the Financial Times.
“It’s really tried to manipulate the market, versus the market moving in that direction.”
Despite Georgia receiving approximately $15 billion in green energy project investments, primarily in manufacturing, as a result of the IRA, polls indicate that Biden is struggling to win over American voters regarding his handling of the economy. According to RealClearPolitics’ polling average, the majority of Americans disapprove of Biden’s economic management, with a disapproval rating of 56.8% compared to an approval rating of 39.4%.
What are the concerns regarding the influx of Chinese battery imports and their impact on U.S. national security and economic independence?
Wo and two together and understand that if we’re going to be expanding our use of batteries, we’re going to be dependent on that [cobalt] supply from Africa, and the Chinese are leveraging that.”
The influx of Chinese battery imports has raised concerns about U.S. national security and the dependence on foreign suppliers. As the Biden administration seeks to transition to a greener economy, it risks strengthening China’s position as a dominant player in the battery market. The Biden administration’s focus on climate change and reducing greenhouse gas emissions is commendable. However, the unintended consequences of legislation such as the IRA must be carefully considered. While the aim of competing with China and promoting green energy is crucial, it should not come at the cost of compromising U.S. national security and economic independence. To address these concerns, the U.S. government should prioritize domestic production and invest in research and development to reduce dependence on foreign battery imports. By promoting the growth of the U.S. battery industry, the government can ensure supply chain resilience and bolster national security. Collaboration with allies in Europe and other countries with advanced battery technology can also enhance the collective ability to compete with China. By pooling resources and expertise, these nations can develop innovative and sustainable battery technologies that can challenge China’s dominance in the market. Furthermore, establishing stringent regulations and standards for the sourcing of minerals in green energy technologies can help prevent environmental degradation and human rights abuses associated with mining operations in regions like Africa. By holding mining companies accountable for their practices, the U.S. and its allies can ensure that the transition to a green economy is not at the expense of vulnerable communities and the planet. President Biden’s signature climate bill, the IRA, has undoubtedly boosted China’s battery market. While the intent was to compete with China and promote green energy, the unintended consequences of increased dependence on Chinese battery imports raise concerns about national security and economic independence. It is crucial for the U.S. government to prioritize domestic production, invest in research and development, and collaborate with allies to develop innovative and sustainable battery technologies. Additionally, stringent regulations and standards must be established to ensure responsible sourcing of minerals in green energy technologies. Only by addressing these issues can the U.S. achieve its climate goals while safeguarding its national interests.
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