June 2021
While the US currently lags behind others in making clean energy technologies, President Biden has pledged to restore the country's manufacturing might. The Biden administration announced on June 8 that it was forming a task force to address bottlenecks and increase domestic production capacity for crucial goods, such as semiconductors.

The Energy Department (DoE) has released a national blueprint to develop the domestic lithium battery supply chain, announcing US$200m in funding over the next five years. This is in addition to providing roughly US$17bn in loans to support manufacturers of advanced battery cells and packs that would help shift the country to electric vehicles. In April, the DoE announced a US$162m package in April to improve efficiency and reduce carbon emissions from transportation.

The DoE’s battery supply chain assessment found that the US has less than a 10% global market share for battery component and cell fabrication manufacturing. It also announced a new policy in which future funding of new clean-energy technologies would require recipients to “substantially manufacture those products in the US.

“America has a clear opportunity to build back our domestic supply chain and manufacturing sectors, so we can capture the full benefits of an emerging US$23tn global clean energy economy,” said Energy Secretary Jennifer M. Granholm at a DoE Battery Roundtable on June 14.

Meanwhile, the Interior Department will create a working group to determine where critical battery minerals can be produced and processed in the US. To support this, the Biden administration in its FY22 budget has called on Congress to increase funding for the US Geological Survey by 25% to US$1.6bn. The efforts are aligned with President Biden's US$1tn-plus infrastructure plan, designed to drive economic and employment growth by building a clean energy economy.

Most of the world’s lithium, a key ingredient for electric vehicle batteries, is mined in Australia, China, Chile and Argentina. China currently dominates the market, with 77% of the world's capacity for producing battery cells and 80% of its raw-material refining. US companies are rushing to unlock lithium supplies in states like Nevada and North Dakota but are facing a tricky path because of their environmental impacts. For example, US Fish and Wildlife will propose listing the Tiehm's buckwheat flower as an endangered species, which could impede ioneer's proposed Rhyolite Ridge lithium mine in Nevada. That's not to say there isn't positive developments. Piedmont Lithium's proposed lithium hydroxide project in North Carolina could be one of the largest and lowest cost producers, according to an updated scoping study.

As part of the announcement, the Commerce Department plans to increase investments within the semiconductor industry, while the US Trade Representative will lead a strike force to target foreign competitors with unfair practices that have eroded supply chains.


Bolstering Competitiveness

Looking more broadly, the US Senate overwhelmingly passed a huge industrial policy bill last week to bolster technological and industrial capacity to counter China’s rising influence. The June 8 decision marked a rare bipartisan development as lawmakers embrace a US$250bn investment in critical technologies, such as semiconductor manufacturing, amid concerns that the US is falling behind its biggest global competitor.

The legislation authorizes US$190bn in spending, much of it being poured into scientific research and development to encourage new technology breakthroughs. It also includes US$52bn to help domestic semiconductor manufacturers expand production, which has gained new urgency given the current global chip shortage, which has idled US auto plants and disrupted production of consumer electronics. The measure comes amid concerns that the US is too reliant on countries such as Taiwan, while China is striving to build up its chip capacity.

The nations that harness new technologies and innovations will shape the world in their image, said Senator Chuck Schumer, the Democratic majority leader.  “Do we want that image to be a democratic image? Or do we want it to be an authoritarian image?” he said.

The measure reflects President Biden's call to increase federal government spending on R&D. Last year, it amounted to 0.7% of GDP, according to the National Science Foundation, which was in part due to the pandemic-hit. US R&D spending peaked at 2.2% of GDP in 1964 and was followed by decades of breakthroughs, such as the moon landing and development of the internet.

The House of Representatives is expected to soon start debating its own China bill, which is expected to be merged into a package that would garner enough support in Congress and be signed into law by Biden.

The Biden Administration is also taking steps to reduce US dependence on Chinese supply chains and protect national security by expanding former President Trump's order banning Americans from investing in 59 Chinese companies. This includes Semiconductor Manufacturing International Corporation (SMIC), the largest Chinese chipmaker. The ban, which will take effect on August 2, also includes surveillance companies, such as Hikvision, which have alleged links to Uyghur persecution. China’s foreign ministry accused the US of “overextending the concept of national security and abusing its national power”.

The ban marks the Biden administration's increasingly hawkish stance on China on everything from Xinjiang, Tibet, Hong Kong to security in the East and South China Seas, as well as economic coercion. The bill “smears China’s development path and domestic and foreign policies,” said a statement from a National People’s Congress committee, and “interferes in China’s internal affairs under the banner of innovation and competition.”

Mr. Biden broadly cast the G7 meeting as an effort to rally the US and its allies in an existential battle between democracy and autocracy. “I believe we’re in an inflection point in world history,” said Mr Biden in a speech to American troops at RAF Mildenhall on June 10, “a moment where it falls to us to prove that democracies not just endure, but they will excel as we rise to seize enormous opportunities in the new age.”


NATO Views China as Global Security Challenge

NATO leaders on Monday (June 14) expressed a new concern about China’s rising military ambitions, marking a fundamental shift in the attentions of the 30-nation alliance devoted to protecting Europe and North America—not Asia. "China's stated ambitions and assertive behaviour present systemic challenges to the rules-based international order and to areas relevant to alliance security," NATO said in its communiqué.

Russia is also repeatedly described as a “threat” to NATO in the document, with criticisms of the country's weaponry build-up, its hacking and disinformation assaults on Western countries, as well as the 2014 annexation of Crimea from Ukraine. Mr. Biden called Mr. Putin “a worthy adversary” and said he would look for areas of cooperation with Russia.

By contrast, China is described as presenting “challenges.” “China is not our adversary, but the balance of power is shifting,’’ NATO Secretary General Jens Stoltenberg said. “And China is coming closer to us. We see them in cyberspace, we see China in Africa, but we also see China investing heavily in our own critical infrastructure,” he said. “We need to respond together as an alliance.”



Chinese officials reacted sharply to the NATO communiqué, calling it “a slander of China’s peaceful development, a misjudgment of the international situation and its own role, and a continuation of the Cold War mentality.” China said its defence budget this year is US$209bn, more than 5.6 times less than NATO's US$1.7tn budget.

The European Union has been hardening its views of China but does not see the country as quite the threat perceived by the US. Chancellor Angela Merkel of Germany said after the meeting: “If you look at the cyberthreats and the hybrid threats, if you look at the cooperation between Russia and China, you cannot simply ignore China.’’ But she also said: “One must not overrate it, either—we need to find the right balance."