The Biden administration is drafting an executive order invoking the Defense Production Act to alleviate shortages of key minerals needed for the technology to store clean energy, according to The Intercept. Using the DPA in this way would bolster the manufacturing capacity of electric vehicle producers. It also indicates the administration is open to using executive power to achieve progressive policy goals, even as Congress refuses to pass key parts of Biden’s green energy agenda. What is the Defense Production Act? For the answer to that question, we turn to Wikipedia:
“The Act contains three major sections. The first authorizes the president to require businesses to accept and prioritize contracts for materials deemed necessary for national defense, regardless of a loss incurred on business. The law also allows the president to designate materials to be prohibited from hoarding or price gouging.
“The law does not state what would occur if a business refuses or is unable to complete a request on time. However, any person who performs any act prohibited or willfully fails to perform any act required by the Defense Production Act may be charged with a felony that results in a fine up to $10,000 or imprisonment for up to one year or both.
“The second section authorizes the president to establish mechanisms (such as regulations, orders or agencies) to allocate materials, services and facilities to promote national defense. The third section authorizes the president to control the civilian economy so that scarce and critical materials necessary to the national defense effort are available for defense needs.
“The Act also authorizes the President to requisition property, force industry to expand production and the supply of basic resources, settle labor disputes, control consumer and real estate credit, establish contractual priorities, and allocate raw materials towards national defense.”
The executive order is in the “pre-decisional” phase, which is how government officials say, “We haven’t lined up enough support for this yet, so we are rushing around finding out what bribes we have to pay to get key people to agree.” It would declare that “ensuring robust, resilient, and sustainable domestic industrial base to meet the requirements of the clean energy economy is essential to our national security.” In addition, the order would say “domestic mining, beneficiation, and value-added processing of strategic and critical materials from sustainable sources for the production of large capacity batteries for the automotive, e-mobility, and stationary storage sectors is essential to national defense.”
Senators Markey, Warren, Heinrich, Booker, and Merkleh sent a letter to the President on Wednesday asking him to use the Defense Production Act to “support and increase manufacturing capacity and supply chain security for technologies that reduce fossil fuel demand and fuel costs, such as electric heat pumps, efficient electric appliances, renewable energy generation and storage, and other clean technologies. Producing efficient electric products and exporting those goods to the E.U. and other foreign markets would help many countries lower their dependency on fossil fuels, and thereby strengthen their own energy security.”
The Defense Production Act & The Marshall Plan
The Defense Production Act is not the only policy from the past being dusted off as the aftershocks of Russian aggression roil the global economy. Last week, Energy Secretary Jennifer Granholm invoked the Marshall Plan in comments she made in Paris. “I think it’s a moment for us to ask at this point in our history, what is going to be our version of the Marshall Plan for clean and secure energy in 2022 and beyond? This clean energy transition could be the peace project of our time. But peace always comes after struggle. So let’s give this peace project the focus and the commitment and the resources of a war time effort — our Marshall Plan.”
Fossil Fuel Companies See An Opportunity
The Intercept says Biden has stuck to his belief that the long term solution to high gas prices and dependence on criminal serial killers like Putin is a transition to a clean energy economy. The assault on Ukraine “should motivate us to accelerate the transition to clean energy,” he said in a speech earlier this month.
However, the oil industry is also using the Russian invasion as an opportunity to push back on Biden’s energy policies and lobby for increased production. It’s “Drill, Baby, Drill” time inside the Beltway. In a meeting at the White House attended by the President and executives from several oil and gas companies, Jamie Dimon, CEO of JPMorgan Chase, urged the administration to increase energy production to help protect Europe from the machinations of lunatics like Putin. included more liquefied natural gas facilities in Europe. More LNG terminals in Europe are key part of that plan.
A Contrary View
William Shughart is the research director of the Independent Institute. While it may be independent, it espouses a lot of the doctrinaire policy arguments favored by conservative dogma. In an opinion piece for The Hill, he argues that while it is true that foreign countries — especially China — control 80% of the raw materials that are essential to the digital age, the reason for that is not because the US doesn’t have them in abundance — it does — but restrictive environmental laws make it impossible to get at them. He writes:
“The irony is that neither globalization nor supply chain interruptions explain why the United States relies heavily on foreign suppliers of production-critical minerals. Such resources — worth an estimated $6.2 trillion — are available in the ground here. They remain unexploited, though, because of environmental and other regulations that hamstring domestic mining operations.
“A decade or more is required nowadays just to obtain the permits needed to open a new mine, assuming that the permits eventually are granted. Minerals production can be “re-shored” by lightening the regulatory burden on U.S. mining operations and speeding the permitting process.
“Invoking the Korean War-era Defense Production Act is an ill-considered response to a supply chain crisis for which Washington itself largely is responsible. It represents crony capitalism at its worst, empowering politicians and bureaucrats to shower financial incentives on some U.S. mining companies but not others.
“Getting Washington out of the way and allowing market price and profit signals to guide resources into the mining of “critical” minerals is a surer path to supply-chain security than channeling taxpayer-financed largesse to a few favored recipients. Mobilizing one policy tool (the Defense Production Act) to offset the counter-productive effects of another (keeping minerals “in the ground”) is a fool’s errand, but it’s business as usual in our nation’s capital.”
As much of a curmudgeon as Shughart may be, there is a kernel of wisdom in his “Dig, Baby, Dig” suggestion. It used to be that it was easier to avoid the NIMBY wars and the screams of outrage from environmentalists by simply looking to other countries to provide the materials necessary for our economic prosperity. But doing so has placed us at the mercy of lunatics and tyrants. That is something that could easily have been predicted — I myself have opined in the past that future wars would be fought over lithium instead of oil — but it was much easier to ignore the obvious and take the path of least resistance. Which is why we are in panic mode today.
More mining would increase America’s access to raw materials, but does that mean ripping the tops off our mountains to get at them? Surely there must be some middle ground between mineral extraction, national security, and respect for the environment. There is research suggesting nickel can be obtained from plants, for instance. It will be essential to find that middle ground soon so the hard work of building a zero emissions economy can move forward.
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