28 Dec THE HILL : US may challenge China on batteries

Media Source:THE HILL
BY SHARON UDASIN AND SAUL ELBEIN
12/22/21 04:32 PM EST

China’s government has built the world’s leading electric vehicle battery manufacturer through a level of state support that is unavailable in the United States, The New York Times reported.

But while China has emerged as the center of gravity for the “third industrial revolution,” the U.S. still has a chance to build a truly green renewables industry that avoids China’s problems with greenwashing.

First words. Chinese battery giant CATL “seems like the concept and creation of a master plan,” former General Motors executive Michael Dunne told the Times.

Flipping the pattern: With China now boasting 14 times the electric car battery-making capacity of the U.S., CATL is part of a larger reversal in the longstanding industrial relationship between China and the West, at least when it comes to vehicles, former Chrysler executive Bill Russo told the Times.

“China’s problem with internal combustion engines was they were forever playing the game of catch-up. Now, the United States has to play the game of catch-up with electric vehicles,” Russo said.

A strategic plan for battery dominance: The Chinese government greased the skids for CATL’s rise through a decade of support ranging from outright protectionism, targeted subsidies and supply chain management blurring the line between public and private companies, the Times reported.

Protective barriers: Starting in 2011, for example, Beijing began to require foreign automakers in China to share their technology with local subsidiaries if they wanted their electric vehicles to qualify for up to $19,300 in subsidies — a key market advantage, the Times reported in 2011.

This was a measure similar in character, but far larger in scope, to one in the Democrats’ current Build Back Better bill: an additional $4,500 in electric vehicle tax credits offered to domestically produced, union-made electric vehicles, which Sen. Joe Manchin (D-W.Va.) opposes, as Forbes reported.

SECURING THE SUPPLY CHAIN

Another area where China has outpaced the U.S. is in locking down stores of key minerals like cobalt and lithium.

That’s been a mix of both private and state-supported action: In April, CATL paid $137 million for a 25-percent stake in a new cobalt mine in the Democratic Republic of the Congo, Reuters reported.

Chinese development banks also gave CATL more than $100 million to develop domestic lithium mines and continue to subsidize the company generously even though it is now profitable, the Times reported.

The U.S. has struggled to catch up. Proposed mining projects would provide enough domestic supply for millions of electric vehicles — but haven’t managed to win over opposition from ranchers, environmentalists and some Indigenous groups, Reuters reported.

“If we don’t start getting some mining projects under construction this coming year, then we will not have the raw materials domestically to support EV manufacturing,” lithium mining company CEO James Calaway told Reuters.

That’s partially a result of policies working at cross-purposes. The Department of Energy is considering a $300 million loan to a Nevada lithium mine, at the same time as the Fish and Wildlife Services is considering establishing protections for a local endangered species — a measure that could prevent the permit from being granted, Reuters reported.

But Chinese industry is weak in one key area: it’s plagued with “greenwashing,” or exaggerated-to-fraudulent environmental, social and governance (ESG) claims, Bloomberg reported.

That has the Chinese government plowing billions of subsidies intended for “low-carbon” industry into coal plants, and gas plants touting “carbon neutrality” plans while planning to increase methane emissions.

Takeaway: Though China has an unshakeable lead in battery production capacity, there’s a narrow opportunity for a U.S. batteries industry, if sufficiently supported, to compete with China on quality — particularly once ESG factors are included.

But to do that, the country has to resolve its mining disputes, establish a reliable ESG disclosure regime and build up domestic battery capacity — which with BBB hanging in the balance, are all big ifs.

SOURCE: https://thehill.com/policy/equilibrium-sustainability/587001-equilibrium-sustainability