Critics’ claims that President Joe Biden’s “green energy” push is spurring investment in renewable energies dominated by Chinese mining companies, supply chains, and production capacities are accurate, said former Clinton administration chief of staff John Podesta, who chairs the White House’s National Climate Task Force.
“It is true that China dominates the supply chain. It is true because we have ceded this to them for decades, letting jobs and factories go overseas,” he said. “But we are rewriting the playbook.”
Mr. Podesta delivered the keynote remarks preceding two Oct. 11 Brookings Institution forums in Washington gauging the impacts of the Inflation Reduction Act (IRA) in the year since it was adopted in August 2022.
The IRA pumps up to $780 billion in federal tax credits for carbon-neutral energy generation over the next 10 years in what is “a transformation of the economy on a size and scale unlike anything ever done before,” he said. “Not just in the history of the country, but in the history of the world.”
Mr. Podesta rattled off statistics: $115 billion domestic investment in “clean energy manufacturing;” 170,000 new “clean energy jobs;” $70 billion private commitment to electric vehicle (EV) supply chains; $10 billion in solar manufacturing supply chains; $120 billion by utilities nationwide for “clean energy generation.”
But it comes with a dirty not-so-secret concession, he acknowledged.
“China still does, and will, dominate in sourcing key minerals. It mines and processes 75 percent of the world’s graphite,” Mr. Podesta said, adding China controls the markets for lithium and cobalt, and “completely outpaces the U.S.” in its mining and processing of the minerals needed to build EV batteries.
“In solar, China controls 90 percent of the upstream technology and production capacities” within the growing industry, Mr. Podesta said.
So, the plan is to play catch-up by entering the race all-in and allowing the market to drive a revolution that eventually eclipses whatever advantages China may temporarily have.
“President Biden is investing in every stage of the supply chain,” working with allies and trading partners in the EU [European Union], South Korea, and Japan to “front-shore resources and supply lines,” he said.
Mr. Podesta said sometimes China’s alleged prowess in certain technologies is exaggerated, noting “they are not ahead” in a range of emerging fields, including methane capture, and agricultural production.
Europeans: One Dependence For Another
Brookings Energy, Security, and Climate Initiative Director Samantha Gross said one of the “sources of frustration” Europeans cite with the IRA was its initial provisions weren’t aimed at benefiting “your friends and allies” but at crippling China’s hold on the emerging renewable energy industry.“There is an understanding that China is an important leader on climate, renewable energy [and] there is a sense that we are trading dependence on [Middle East and Russia fossil fuels] for dependence on China,” she said.
While “the answer to that is largely ‘no’ for a long list of reasons,” that question along with the IRA’s “protectionist instincts,” will both remain “challenges for a lot of political reasons,” she said.
There’s a blueprint to follow in how to “catch up” with technology leaders, Brookings Senior Fellow Emeritus on Foreign Policy Kenneth G. Lieberthal said.
China was in this position 40 years ago, he said. “They let us in”—Western corporations and businesses—“and learned from us and, eventually, pulled ahead of us in some areas. The way you close that gap, the way you get ahead if you are behind, is not to reinvent the wheel, it is a long-term approach” that benefits from what others have developed.
But, Mr. Lieberthal said he is “skeptical” such openness is possible now with the United States and the West increasingly at odds with the Chinese Communist Party’s unfair trade practices and technology thefts while intimidating South China Sea and Pacific neighbors.
“China is way ahead of us in most of those [developments] dealing with climate change,” he said. “They are way ahead of us” in some technologies because about 15 years ago, it began to make “enormous investments” in renewable energies.
“They scaled up far more dramatically than we did. Now here we are, eight to 10 years later and we’re in with both feet,” said Mr. Lieberthal, who served on the Clinton administration’s National Security Council.
In fact, he said, the adoption of the IRA “did not surprise the Chinese” who anticipated “the United States would try to limit its development” with such legislation.
Stay Warily Engaged With China
It would be a mistake for the United States to just not deal with Chinese companies and businesses, and to not invest in the developing green energy industry, he said.If the United States attempted to catch up solely on its own, “on its own time, [it] would only just fall further behind” and “it would simply delay our transition” from fossil fuels to renewable energies, a delay that would have devastating economic impacts, Mr. Lieberthal said.
“The administration recognizes very clearly we have to develop our own capacities over time, but it is going to take time,” he said.
Adding, the best policy is “both open to benefitting from what they have accomplished but also taking substantial measures to prevent them from engaging in unfair trade practices, [offering] huge subsidies to undermine your capacities while you’re buying from them,” and other subterfuge.
Despite devolving relations, “there is a lot of opportunity for diplomacy at a lower level,” such as establishing common standards for global use, Mr. Lieberthal said.
“There are all kinds of areas where we can do good work together, that should not be threatening, win-wins for both sides,” he said.
“I think the Chinese are very anxious at this time [about their economy]. I think they’re more than happy in seeking [buyers] in licensing battery technology.
“There is a lot that can be done,” he said, before adding, but in the contemporary political environment, “I’m skeptical about that.”
