In the weeks since President Biden signed a comprehensive climate bill devised to encourage investment in electric vehicles and clean energy, companies have come to create the kinds of technologies the bill aims to promote. has announced a series of high-priced projects.
Toyota said it will invest another $2.5 billion in its North Carolina plant to produce batteries for electric and hybrid vehicles. Honda and LG Energy Solutions have announced a joint venture to build a $4.4 billion battery plant.
Mining company Piedmont Lithium Build a factory in Tennessee It will help ease America’s dependence on Chinese refineries, a major objective of the Biden administration. Leading solar panel maker First Solar said it will invest up to $1.2 billion to build his fourth factory in the United States.
But these projects, announced last week, show how much work remains to be done. Building a factory will take time, and until then, electric vehicles may remain rare and expensive. Toyota’s plant in North Carolina and Honda’s joint venture with LG won’t produce batteries until 2025.
Some projects were underway before federal law was passed and before California added an extra push to ban the sale of new gasoline vehicles by 2035. The big climate bill, the Inflation Reduction Act, is the latest in a series of policy moves. Geopolitical developments that have encouraged automakers and suppliers to invest in the United States. The trade war with China, supply chain disruptions caused by the pandemic, changes to free trade agreements with Canada and Mexico, and last year’s bipartisan infrastructure law have all had a significant impact on where companies will build factories. I was.
It was a coincidence that Toyota made the announcement two weeks after Biden signed into law, said Noam Bahhunno, senior vice president of Toyota Motor North America, which oversees the North Carolina plant.
But he added that the law could be a “catalyst for domestic battery production.” Toyota also said it is working hard to implement provisions in the bill that encourage companies to source battery raw materials and components from the United States and its trading allies.
In times of economic uncertainty, the law will give businesses greater confidence that they can profit from their bets. The investment confirms the intentions of political leaders to further accelerate America’s transition away from fossil fuels and reduce its reliance on foreign suppliers, particularly those from China.
Investments in renewable energy will total $1.2 trillion by 2035, analysts say. Wood Mackenzie This is estimated to be significantly higher than without legislation. Spending on solar installations, for example, would be two-thirds higher for him by law, the consultancy said.
“We’re inundated with interest from all sorts of companies,” including automakers, battery suppliers and mining companies, said Isaac, a partner in the Chicago office of management consultancy Roland Berger, who advises clients in the automotive industry. Mr Chan said. The climate package “does the math better if we produce our EVs in North America instead of making them in Asia and importing them,” he said.
Contents of the Inflation Control Law
Contents of the Inflation Control Law
substantive law. The $370 billion climate, tax and healthcare package signed by President Biden on August 16 could have far-reaching environmental and economic impacts. Here are some of the key provisions:
Even with the $369 billion in direct money, loans and loan guarantees that the Inflation Reduction Act will pour into businesses, consumers and states, reducing greenhouse gas emissions remains a challenge, analysts and industry representatives say. says.
For example, money alone cannot solve some of the major hurdles in upgrading the long-distance transmission lines and distribution equipment needed to power homes and businesses from solar and wind farms. Getting approval for such a project can be a daunting and difficult task due to the sheer amount of land affected.
Transmission projects are a big part of the Biden administration’s plans. Because it will be needed to transport clean energy from areas that produce solar and wind power to areas that need it. Biden wants thousands of turbines to generate electricity on the East and West coasts, requiring heavy investment in transmission lines.
“We need to be able to build infrastructure in this country to meet our clean energy and climate goals,” says Grid Strategies, a company that aims to reduce carbon emissions from the grid through the use of clean energy. said Rob Gramlich, president of He said electricity transmission “is key to the growth of wind and solar, which in turn is key to the decarbonisation of transport and building heating.”
But landowners, environmentalists and businesses have expressed concern about offshore wind farms near power lines that cross fishing and farmlands.
“Local and state issues, and the biggest challenge we will face, is building power lines through farmland,” said Illinois, who is participating in the Energy Task Force of the State Legislative Assembly. State Senator Sue Rezin, a state Republican, said. “And I support farmers.”
Following the clean energy industry’s major wins, organizations such as the Solar Energy Industry Association will increase their focus on marketing the benefits of clean energy projects to those affected by the projects.
Association President Abigail Ross Hopper said: “I think we need a good education.”
Battery raw materials are also a major concern. The bill includes a number of provisions to encourage automakers and battery makers to purchase lithium, nickel and other key raw materials from North American suppliers or US trade allies.
The only lithium-producing mine in the United States is located in Silver Peak, Nevada, and is operated by Charlotte, North Carolina-based mining company Albemarle. To be refined into battery-grade material, it must be sent overseas.
According to Ellen Lenny-Pessagno, Albemarle’s vice president of government and community affairs, the money from the bill will help Albemarle set up refineries and develop more mines in the United States, as well as sell electric vehicles. and help fund plans to spur overall demand for lithium.
“This is an incredibly positive step,” she said of the law.
Several industry groups have criticized the climate change measures, saying that they are so stringent that few electric vehicles qualify for the $7,500 tax credit. The law sets standards for how much of battery components and raw materials must be sourced from the United States or its trading allies, and has become stricter over time.
It may take several years for automakers to adjust their supply chains to comply with the requirements, but once they do, electric cars could become cheaper to buy than gas-powered vehicles. In addition to the $7,500 tax credit, the legislation provides thousands of dollars worth of financial incentives for automakers using U.S.-made batteries. If the automaker passes all the savings on to the buyer, the $50,000 electric car will cost far less than his $40,000, and less than the average new car in the US.
Chan of Roland Berger said the climate law “has a very serious carrot hanging”. “If the supply chain takes years to develop, it is within the intent of the law.”
Still, automakers have a responsibility to make electric cars affordable, Toyota’s Mr. Bajunno said. While demand for battery-powered vehicles is high, so are prices. Bajunno said an electric car will cost about $16,000 more than a comparable gasoline model.
“Is it sustainable for everyone long-term?” he said. “We certainly think no. To bring them on par, we need to cut costs. And that will take time.”