President Biden Invokes Defense Production Act to Accelerate Domestic Manufacturing of Clean Energy
President Biden issued presidential determinations providing the U.S. Department of Energy (DOE) with the authority to utilize the Defense Production Act (DPA) to accelerate domestic production of five key energy technologies: (1) solar; (2) transformers and electric grid components; (3) heat pumps; (4) insulation; and (5) electrolyzers, fuel cells, and platinum group metals. The DPA determinations are part of the Biden-Harris Administration's plan to lower energy costs for families, strengthen national security, and achieve lasting American energy independence that reduces demand for fossil fuels and bolsters our clean energy economy.
"President Biden has invoked the Defense Production Act so that the U.S. can take ownership of its clean energy independence," said U.S. Secretary of Energy Jennifer M. Granholm. "For too long the nation's clean energy supply chain has been over-reliant on foreign sources and adversarial nations. With the new DPA authority, DOE can help strengthen domestic solar, heat pump and grid manufacturing industries while fortifying America's economic security and creating good-paying jobs, and lowering utility costs along the way."
"Reducing America's dependence on gas and oil is critical to U.S. national security," saidDeputy Secretary of Defense Dr. Kathleen Hicks. "In conflict, fossil fuel supply lines are especially vulnerable. The actions President Biden announced today will help strengthen our supply chains and ensure that the United States is a leader in producing the energy technologies that are essential to our future success. They will also help accelerate DoD's transition toward clean energy technologies that can help strengthen military capability while creating good jobs for American workers."
Demand for clean energy technologies such as solar panels, heat pumps, and electrolyzers for hydrogen has increased significantly as the costs of these technologies have plummeted over the last decade. As the world transitions to a clean energy economy, global demand for these essential products and components is set to skyrocket by 400-600% over the next several decades. Unless the U.S. expands new manufacturing, processing, and installation capacity, we will be forced to continue to rely on clean energy imports—exposing the nation to supply chain vulnerabilities, while simultaneously missing out on the enormous job opportunities associated with the energy transition.
Defense Production Act Authority
We must harness the United States's untapped potential to support greater domestic production for domestic use and export. With today's DPA actions, the Biden-Harris Administration is taking bold action to support U.S. clean energy manufacturing and supply chains. This will strengthen U.S. national and climate security while reducing energy costs for American families. These technologies, products, and component materials will be made in America, creating more good-paying union jobs. In using the DPA to support clean energy manufacturing, the Department will encourage recipients of federal support to use strong labor standards, including project labor agreements and community benefits agreements that include local hire provisions. In addition, the Department encourages use of the tools unlocked by the DPA to support low-income communities who have been hard-hit with pollution.
Technologies Included in the President's DPA Announcement
DPA authority, with the necessary funding appropriated by Congress, will allow the federal government to invest in companies that can build clean energy facilities, expand clean energy manufacturing, process clean energy components, and install clean energy technologies for consumers.
- Solar — Solar photovoltaic (PV) energy is the largest source of new U.S. electricity generation capacity and the cheapest new electricity source in many regions of the country. However, domestic solar PV production does not meet current demand. By supporting a secure, stable, diversified, and competitive domestic solar supply chain, President Biden's actions will increase national security, promote energy independence, help to address the urgent threat of climate change, and drive down energy costs for American consumers.
- Transformers and Grid Components — The U.S. is highly reliant on foreign-sourced critical electric grid components. Traditional industrial efforts are insufficient to meet the unprecedented growth in electrification necessary to support U.S. decarbonization, defense against cyber-security attacks, and critical infrastructure maintenance, and are not positioned to respond to the demands of U.S. electricity needs in the near-term. By expanding the domestic production of transformers and critical grid components to enable the reliable and increased use of the electric power system, the U.S. would immediately enhance its domestic energy security, decrease vulnerability of U.S. infrastructure, and ultimately support climate security and stability worldwide. Supply chain delays are leading to wait times in rural and urban parts of the U.S. of up to two years for crucial grid components. Independent estimates indicate that we need to expand electricity transmission systems by 60% by 2030 and may need to triple it by 2050 to meet the country's increase in renewable generation and expanding electrification needs. President Biden's invocation of the DPA will support a robust domestic supply of modern grid components, which is necessary to strengthen and modernize the nation's grid and will accelerate customers' ability to get electricity from clean sources.
- Heat Pumps — Our nation's buildings, homes, offices, schools, hospitals, military bases, and other critical facilities drive more than 40% of all U.S. energy consumption. To reduce the amount of energy needed in our buildings, leading to less reliance by the U.S. and allies on adversaries such as Russia for oil and gas, heat pumps are an important solution. Their use by the U.S. and allies can shrink Russian revenue for war and reduce climate instability. However, currently, U.S. HVAC manufacturers are not producing heat pumps at the rate needed. The Biden-Harris Administration can help American manufacturing expand and expedite the installation of heat pumps in homes and residential buildings by qualified building professionals.
- Insulation — About half of all homes in the U.S. were built before modern-day building energy codes, meaning they lack contemporary insulation, causing energy to seep out. At a time when conserving energy means limiting the reliance by the U.S. and allies on adversaries such as Russia for oil and gas, building retrofits can reduce energy use by 50% or more. In addition to lowering energy costs for families and increasing the domestic clean energy workforce, well-insulated buildings also provide "passive survivability," meaning that they can retain a safe indoor temperature for longer in the event of energy disruptions, reducing casualties from extreme weather. While U.S. insulation production is currently sufficient to cover new construction and some retrofits, we must also rapidly insulate older buildings to further reduce energy demand. President Biden's actions will help expand insulation manufacturing to meet this need.
- Electrolyzers, Fuel Cells, and Platinum Group Metals — Electrolyzers, fuel cells, and platinum group metal (PGM) catalysts are vital for increasing domestic production and utilization of clean hydrogen, a versatile energy carrier. Clean hydrogen produced through electrolysis is projected to contribute significantly to achieving U.S. decarbonization goals. President Biden's actions supporting domestic supply chains for electrolyzers, fuel cells, and PGM catalysts will enhance national and energy security by reducing U.S. reliance on imported fossil fuels, particularly Russia (the world's second-largest producer of PGMs) and China. Consumers will benefit from clean hydrogen's price stability relative to fossil fuels, cost reductions as the hydrogen economy scales up, and resilient domestic supply chains.
DOE's Continued Commitment to Bolstering a Domestic Clean Energy Supply Chain
In February, DOE launched the new Office of Manufacturing and Energy Supply Chains to secure energy supply chains needed to modernize America's energy infrastructure and support the full transition to clean energy. DOE will also partner with the energy and utility industry, labor unions, and community groups to explore a variety of options on supply chain issues, including through the Electricity Subsector Coordinating Council. DOE recently released a major set of reports on the energy supply chain laying out the nation's first comprehensive strategy for the energy industrial base with a focus on securing the transition to clean energy.
Following this announcement, DOE and the White House will continue to convene relevant industry, labor, and community stakeholders as we maximize the impact of the DPA tools made available by President Biden's actions and strengthen domestic clean energy manufacturing.