Energy Secretary Jennifer Granholm emphasized that the $3 billion investment in domestic battery processing, manufacturing, and recycling projects will reduce America’s dependence on critical materials from countries like China.
âThese investments are also going to help end Americaâs reliance on critical materials from our economic competitors like China,â Energy Secretary Jennifer Granholm told reporters before the announcement.
According to Granholm, with the cumulative investment from the Biden administration, the United States is on track to supply a quarter of the global lithium and produce half of the worldâs battery cells by 2030.
Lael Brainard, director of the National Economic Council under the White House, said the investments would address the vulnerability of depending on China for critical minerals and battery supply chains.
The grants, a second round of federal funding, include 25 projects in 14 states, which could create as many as 12,000 jobs. According to senior Department of Energy officials, the budget has already been appropriated under the bipartisan infrastructure law, allowing the department to issue grants once finalized.
The first round closed in 2022 with $1.82 billion for 14 projects, while the initial announcement was $2.8 billion for 21 projects. Officials said it was common for some projects to fall out during the negotiations, which are expected to conclude in January 2025.
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China is a dominant player in the global lithium-ion market.
The countryâs output was over 940 gigawatt-hours last year, at the same level of estimated global demand. Seventy percent, or $13.1 billion, of the U.S. lithium-ion battery imports in 2023 were directly from China. The percentage increased to over 80 for the first half of this year owing to the marketâs anticipation of higher tariffs.
Brainard said that the Biden administration is âusing every tool at our disposal, from grants and loans to allocated tax credits, through an approach leveraging $120 billion in private sector investment in recent years.â
She added that Washington would protect the announced domestic investments with âtough, targeted measures,â such as the high tariffs finalized last week.
Currently, China doesnât restrict exports of lithium-ion batteries. However, on Dec. 1, 2023, it began export controls on high-grade graphite, an essential component of lithium-ion batteries for electric vehicles.
If China cuts its supply of lithium-ion batteries, the United States could âface severe shortages of key defense products, such as drones, F-35 fighter jets, surface-to-air missiles, and even radios,â according to a January report by the Atlantic Council, a Washington-based think tank.
