The push to green the U.S. economy in record time is getting some pushback, and not just from Republicans.
Other than concerns from energy-producing states about putting fossil fuels on the backburner at the expense of jobs and low-cost electricity, some of the biggest takeaways from a House Committee on Energy and Commerce hearing were warnings of simply outsourcing pollution – often at the benefit of China — and a shrinking automotive manufacturing sector, an issue that worries both parties.
“We need to understand the real-person impact of these policies,” said Rep. Cathy McMorris Rodgers (R-WA-5). “The drive to wind and solar…few are talking about how we are playing right into China’s strategic interests with these policies.”
China is the world’s leading producer of solar cells and solar modules. Eight of the 10 largest solar manufacturers are Chinese. The same holds for wind, though there is more of a European presence in that market. The only U.S. company is GE Renewables, which is actually headquartered in France. China’s Goldwind is the second largest onshore wind turbine supplier and the fourth largest in the offshore market. It is headquartered in Xinjiang. They installed 2 turbines in the U.S. in 2019, and over 40 in 2020, according to the Global Wind Energy Council.
As the U.S. follows in the footsteps of Europe to roll back climate change, President Biden has made it the centerpiece of his economic growth policies. He says, “when I think of climate change, I think jobs.”
No one in Congress disagreed with that sentiment. Where there is some disagreement is if setting a low carbon target will push some industry overseas, or benefit imports. The U.S. can then declare the economy is churning out less C02, while instead, China’s coal-fired power plants are keeping the lights on at factories making electric car batteries and – more likely – polysilicon and solar cells used in making solar panels.
One of the witnesses at Wednesday’s hearing, Michelle Michot Foss, Ph.D., a fellow in energy, minerals and materials at Rice University’s Baker Institute, told Congress that “a bulk of the supply chain” for things like electric car batteries does not come from the U.S. “Not even China has it, but they do control lithium supply and processing in other places. Because all our needs are outside of our country, we are stuck encouraging everyone else to be environmentally sound with their extraction of these minerals. What we are doing is shifting emissions around. You have to weigh this against all the consequences being created across supply chains,” she said.
Joel Britton, executive director for Zero Emissions Transportation Association, said that U.S. companies were also recycling metals from spent batteries. “Most people would be shocked about how much of these minerals we can recycle from these batteries,” he said. “Companies can get on average of 90% of those critical materials out of those batteries.”
CPA member American Manganese has a pilot project that recycles metals like lithium right off the shop floor in what they refer to as “urban mining.” At least two other companies are doing this as well.
“We Can’t Lose This Market”
This week, the WSJ reported on China being a dominant force in the global EV market. Most of that is because China just happens to be the world’s largest auto market. There is no flood, yet, of Chinese EVs coming to the U.S.
However, this will surely change, especially in Asia and throughout the Americas. China automakers are bigger on electrification than the Japanese and South Korean automakers. There are simply no indigenous automakers in Latin America. It’s all Asian and American factories there. If they go EV south of Texas, a lower-cost Polestar, XPev Model P5 or the entry-level Nio ET7 will be more affordable than a Ford Mach-E Mustang or a GM Hummer EV, that is for sure.
“Ford is going electric, GM is going electric, who do you see coming out on top in EVs: us or China?” asked Rep. Peter Welch, (D-VT).
A witness from the United Auto Workers, Josh Nassar, provided no solace to Congress.
“The real question is where are those jobs going to be,” Nassar said. “We have seen tax policies favor OEMs who then take those tax breaks and go elsewhere to make electric vehicles.”
The automotive job market in the U.S. will shrink. It takes hundreds of fewer parts to make an electric car than it does a traditional combustion engine. There are no carburetors, no mufflers. The sector has been laying off workers by the thousands at least since the 2008-09 recession.
EV manufacturing and the auto industry has the biggest, bipartisan fear factor out of any of the climate change-related industries highlighted in the Democrats CLEAN Future Acts, a compilation of three House bills targeting the automotive industry.
Rep. Debbie Dingell (D-MI-12) is the lead sponsor on one of those bills (H.R. 2308). Her bill — the Advanced Technology Vehicles Manufacturing Future Act of 2021 — provides tax incentives to manufacturing in the U.S., though there seem to be enough loopholes in this for Nassar to believe it will be hard for Congress to know if those loans are going to domestic production.
“As the auto industry makes this shift there is going to be risks and there are going to be opportunities,” Dingell said. “We have to get the policies right, or we leave this workforce behind.”
Rep. Kurt Schrader (D-OR-5) said he too has heard a lot about how climate change policies would lead to job creation. “A lot of people talk about all the new jobs that are going to be created with the electrification of the transportation fleet, but I am concerned about existing jobs. Can the men and women who work on (traditional) engines work for the EV sector?” he asked the UAW lawyer, Nassar.
Nassar put on his union hat on this one and said that the big car companies were not raising wages, and in some cases were reducing them. He did not provide details on that or any case evidence. But he warned that if the shift to EVs leads to wage stagnation and weaker labor markets, “We are going to see a backlash.”
Perhaps the two biggest warning shots came at the end of the hearing, one from Nassar, following a comment by Rep. Tom O’Halleran (D-AZ-1). “We owe it to the American people that we do not fall behind in the manufacturing of this new product,” he said. “We lost solar and wind. We cannot lose auto, too.”
The U.S. solar industry has staged a comeback thanks to tariff protections. Wind turbines and blades are made in the United States, as well.
Nassar summed up the entirety of the supply chain issue in Biden’s climate change economy. “We have massive supply chain problems. Look at semiconductors, a sector we have neglected for a long time. We have had tax policies that have cost us lots of jobs. We have to make sure that we are attaching all this proposed government funding to labor standards that match the U.S.,” he said, something CPA believes would be a blueprint for how to make every EV sedan in Mexico.
With that in mind, Nassar’s parting words make even more sense:
“There is no assurance that the EV auto labor market will be anything like the old automotive labor market that we are accustomed to,” he said. “This is the chance to act. If we get this wrong, we will regret it for many, many, many decades.”