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The Inflation Reduction Act Could Cut EV Tax Credits But Boost Battery Metals Mining in the U.S.
The Inflation Reduction Act Could Cut EV Tax Credits But Boost Battery Metals Mining in the U.S.-February 2024
2024-02-19 EST 22:10:25

The Pumpkin Hollow Copper Mine is in Nevada, U.S.A.

The contains more than strict clauses. It also contains a number of subsidies and incentives to boost U.S. mining of battery metals, which most people are overlooking because of the threat to .

The imminent loss of tax credit eligibility is important, but it’s overshadowing the rest of the subsidies in the proposal, which earmarks a lot of its $370 billion budget to , according to .

Even groups opposed to the proposal outline what the subsidies are, like the . The AAI gathered the supply chain, purchasing and infrastructure provisions in a statement. We already know the purchasing clauses, but here’s some of the supply chain clauses per the AAI:

Provides an outline of credits available to those entities that produce materials used for clean energy production. Materials eligible for credits include the production of electrode active materials, battery cells, battery modules and applicable critical minerals. Credit phase outs do not apply to the production of critical minerals.

Appropriates $3 billion for the Secretary of Energy to make direct loans for the cost of establishing or expanding U.S. manufacturing facilities that produce advanced technology vehicles or components with low or zero greenhouse gas emissions.

Appropriates $2 billion for grants for electric hybrid, plug-in electric hybrid, plug-in electric drive and hydrogen fuel cell electric vehicles.

Includes $500 million (available until September 2024) for additional incentives to spur onshoring for critical minerals.

There’s more in the full proposal, but these are some of the biggies. Especially the last one, which the AAI mentions only briefly. In , the U.S. is noting the importance to national security of domestic battery metals.

That includes lithium, nickel, cobalt, graphite, and manganese. Given how critical these metals are to the production of EVs, the provision argues the U.S. should subsidize domestic mining and processing. It seems like a dramatic classification of mining to invoke its importance to national defense, but given the tariff and trade scuffle the U.S. had with China and the Russian invasion of Ukraine, it’s not that much of a stretch.

Drilling at a geothermal and lithium plant in the Salton Sea in Calipatria, California

Basically, the clause is meant to funnel money into U.S. EV metals mining, but even mining companies are upset about it. They say expanding U.S. projects quickly will be difficult, as reports. But whether it’s ten years or twenty, it looks like industries are always opposed to change.

Who’s to say that even with a longer timeline, miners or won’t just drag their feet that much longer? In the meantime, the U.S. can still get minerals from free-trade partners like Canada, Chile and Australia, and by recycling — although that’s in its nascent stage because there aren’t that many EVs at the end of their lifecycle to get batteries from.

Tha AAI what’s really needed is “expedited permitting for critical mineral mining and related processing” in the U.S., and some speed would help. Of course, we shouldn’t cut corners, which is what climate activists claim. But it’s telling that the industry is happy to let others and metals. It’s only a problem when someone says we should do it in the U.S. — under regulation and better work conditions and pay.

Lithium Mining in the Salar de Atacama

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