US Moves to Secure Renewable Energy Capabilities

For decades the world economy has been going global. However, the COVID pandemic has changed that calculus. The supply chain for products that had grown over those decades was thought to be robust and other than black swan events, almost indestructible. While true that the COVID outbreak was itself a black swan occurrence, the chaos that it caused in global supply chains, and the difficulty that industry had putting things back together, threw up a lot of questions about the wisdom of relying on a huge number of widely dispersed links around the globe. There are storage facilities around the world filled with products that can’t be sold as they are missing vital parts, and that has been the situation for almost two years in some cases as manufacturers try source parts, or redesign products to exclude hard to source components.

To make things worse, hard on the heels of the pandemic came the war in Ukraine, which caused more disruption, including for the automotive industry again as Ukraine is a major supplier of vehicle cable harnesses. Even worse, fully half the fuel that industry runs on throughout the EU is imported from Russia. The sanctions that were applied to Russia because of its aggression in Ukraine will cut EU oil imports from the country by 90% by the end of this year. Countries and businesses are now learning that energy is as much of the global supply chain as any component and are starting to see energy supply as a vital national interest. Germany has already announced a huge investment of 200 billion euros to attempt to fulfil all of its electricity needs from renewable sources by 2035. Much of that investment is front loaded to ramp up renewable production as soon as possible.

The US has also taken steps this week to do the same. Not just to use renewable energy itself, but to ensure that the expertise and supply chain for renewable sources are kept in the country. President Biden provided the U.S. Department of Energy (DOE) with the authority to use the Defense Production Act (DPA) to accelerate domestic production of solar energy, transformers and electric grid components, heat pumps, insulation, and electrolyzers, fuel cells, and platinum group metals. In doing so, U.S. Secretary of Energy Jennifer M. Granholm made it clear that it was in the national interest, “President Biden has invoked the DPA so that the U.S. can take ownership of its clean energy independence. For too long the nation’s clean energy supply chain has been over-reliant on foreign sources and adversarial nations.”

Demand for clean energy technologies such as solar panels, heat pumps, and electrolyzers for hydrogen has increased significantly as the costs of these technologies have plummeted. Global demand for these essential products and components is set to skyrocket by 400-600% over the next decades. Unless the U.S. expands new manufacturing, processing, and installation capacity, it will be forced to continue to rely on clean energy imports—exposing the nation to supply chain vulnerabilities, while missing out on the job opportunities associated with the energy transition.

The U.S. Interior Department will also roll out a new policy that will lower costs for renewable energy projects on public lands. The plan is expected to cut rents and fees by more than 50% on average for wind, solar and other renewable energy facilities in onshore federal areas, Interior's Bureau of Land Management projected.