President Biden’s lofty climate goals – a carbon-free U.S. electricity grid by 2035 and a net zero-emissions economy by 2050 – require just about anything to go well.
What can be an overlooked challenge to achieving this are supply chain obstacles, according to a new report from the Center for American Progress.
The concern is that manufacturing large-scale solar panels, wind turbines, batteries and other products to generate clean energy will remain centered in places like China.
If the United States “is not able to secure a privileged, or at least competitive, place in these supply chains, its business prospects will be dramatically altered,” the report notes. It “is not inconceivable that the renewable energy industry could follow the path of semiconductors and consumer electronics, in which the engineering and design takes place in the United States, but most of the production occurs abroad with foreign components “.
Mike Williams, one of the report’s authors, said America “had a significant part” of the semiconductor supply chain before countries like Taiwan and South Korea took over, ” mainly because they have invested directly in it “.
This change left the United States exposed when the global chip shortage hit. US manufacturers now have to queue for their orders to be filled. Trevor Sutton, the other author of the report, added that people barely knew until the problem arose. “It’s not a problem until it is,” he said.
In addition to semiconductors slowing the U.S. auto industry year round, vulnerabilities in the healthcare supply were evident at the height of the COVID-19 pandemic, with medical equipment failing to arrive on time. manufacturing centers like China.
And this year, supply chain issues prompted VP Kamala Harris to note that “if you want to have Christmas toys for your kids, maybe it’s time to start buying them because the delay can take many months ”.
Amanda Agati, chief investment officer at PNC Financial Services, recently told Yahoo Finance Live (video above) that “supply chain disruptions will continue”, calling them “structural obstacles [that] are going to stay here in the short term.
Demand “will grow exponentially over the next few years”
According to the World Bank, the Paris climate agreements have opened up “nearly $ 23 trillion in climate-smart investment opportunities in emerging markets by 2030”.
As such, according to the report, the materials needed to “fuel this growth in production will increase exponentially over the next several years”, and the coming decade is critical “to implanting the technology manufacturing supply chains. clean ”.
A recent article from the Alliance for American Manufacturing warned, “The solar industry is a warning for America’s clean energy future.
Sutton said a tightening of the green power supply chain could be under the radar for years, but would suddenly occur based on “a number of contingencies,” another pandemic to new US-Chinese tensions. He also said the United States could face increasingly difficult choices between keeping supply chains intact and talking about human rights “in the absence of a concerted effort to ensure that these supply chains are either strong nationally or at least concentrated in like-minded countries ”. (The essential components of the solar panels come from China’s Xinjiang region, which has links to forced labor, according to reports.)
“A clear path for manufacturers”
The report from the Center for American Progress, a left-wing think tank founded by John Podesta, who served as President Bill Clinton’s chief of staff, concludes that a lot is needed to meet Biden’s climate goals – “most importantly, the fate of climate legislation in Congress.
The multibillion-dollar reconciliation program on Capitol Hill would currently provide $ 273 billion in tax credits for Biden’s climate goals.
The report argues that Biden’s plan “creates a clear path for manufacturers to take over much of the clean energy supply chain.” But the path to enactment of the bill remains uncertain, with moderate Democratic senators demanding that the overall price of the proposal – initially set at $ 3.5 trillion – to drop significantly.
On Monday, Biden said: “I laid out what I thought [the bill] should be, “but if it passes,” it’s not going to be that, it’s going to be less. Discussion among Democrats in the coming weeks will likely focus on what to cut, weighing the merits of climate initiatives alongside other programs like the Child Tax Credit.
Overall, the report warns that if the reconciliation bill fails or the climate provisions are removed, supply chain issues could soon become a national security concern.
“Energy security is one of the pillars of our foreign policy,” Sutton said, adding that the implications of energy disruptions on national security are generally related to oil, but “people haven’t really started to think about it. in the context of renewable energies “.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
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