For years, the United States has been falling behind in the clean energy race. While other energy producers around the world have been investing heavily into transitioning away from fossil fuels, a flood of cheap oil and gas from the West Texas Permian Basin over the last decades – on top of enormous inertia and petro-protectionism built into the nation’s economy and culture – has left the U.S. renewable energy sector in a state of arrested development.
Now, the Biden administration is making a bid to bring the country up to speed and become competitive with renewable energy powerhouses like China and Europe. Last year’s Inflation Reduction Act has been described as “the most significant climate legislation in U.S. history” according to the United States Environmental Protection Agency (EPA). The Act, which is actually a slimmed-down version of the Build Back Better Act, includes massive financial support for the domestic renewable energy sector. According to the Biden administration, the Act provides an estimated $370 billion in subsidies for solar, wind, and electric vehicle subsidies. These and other provisions are part of the government’s current goal to lower greenhouse gas emissions to a level 40% below 2005 levels by 2030.
Trying to kickstart growth in these sectors faces several major hurdles. One of these is finding enough labor in a historically tight job market. The other is lithium. The batteries that power electric vehicles and store energy created by variable renewable sources such as wind and solar depend on lithium and other non-renewable rare Earth minerals to function. This poses new challenges for geopolitics, as just a few countries – most notably Australia, Chile, and China – control the majority of the global supply.
The United States does have some of its own proven lithium reserves. But at present, there is just one operating lithium plant in the entire country – the Silver Peak facility on the western edge of Nevada. If the United States has any hope of boosting its EV and renewable energy production without relying on China for lithium, developing more domestic lithium production will be crucial, not to mention urgent.
As such, the federal government is throwing money at lithium producers to develop lithium supply chains fast enough to support the rapid renewable sector growth targeted by the Inflation Reduction Act. Just last week, Australian lithium company Ioneer said that the U.S. Department of Energy gave them a conditional commitment of a loan of up to USD $700 million. The company’s main project will be in Nevada, at the Rhyolite Ridge Lithium-Boron Project in Esmeralda County. “When fully operational, the site will produce enough lithium for 400,000 electric vehicles,” CNBC reports, “while also producing boron.” The Rhyolite Ridge project is just the latest in a series of lithium companies to introduce new or expanded plants in the U.S. since the unveiling of the Inflation Reduction Act. In addition to more Nevada facilities, plans have also been announced for lithium production centers in North Carolina and Tennessee.
The Rhyolite Ridge plant hasn’t even become operational, and already EV producers including Ford and Toyota have already inked offtake agreements with Ioneer, underscoring the growing anxiety that there might not be enough lithium to go around once EVs and short-term renewable energy storage take off in earnest. That anxiety is understandable. If all the gas-powered cars in the world were replaced with electric cars overnight, projections show that the global supply of lithium would be completely depleted in just fifty years. Of course, this is just a thought experiment, but it is an important reminder that even “renewable” technologies rely on finite resources. Currently, just 1% of cars on U.S. roads are electric, but the number of electric cars in the world is projected to skyrocket over the next decade, reaching a global fleet of approximately 125 million by 2030.
