US President Joe Biden’s landmark clean-energy law — and the huge subsidies it offers — risk distorting the global market for essential minerals, a UK government minister said.
The Inflation Reduction Act has earmarked almost $400 billion in incentives and tax credits for clean technologies from electric cars to hydrogen production. While it’s aimed at boosting green-energy spending in the US and wresting back control of critical metal supply chains from China, it has spooked governments and companies across Europe.
“The IRA has been a huge challenge,” UK Business Minister Nusrat Ghani said Monday at the London Indaba mining conference. “The lure of the US is huge. It distorts the market.”
QuickTake Explainer: Why the Fight for ‘Critical Minerals’ Is Heating Up
The decarbonization of the global economy is dependent on a group of key metals needed to make batteries, solar panels and electrical wiring. China dominates the entire value chain in many of these products, accounting for more than half of the world’s output of battery metals including lithium, cobalt and manganese, and 100% of some rare earths.
Electric-vehicle tax rebates offered under the IRA have sparked a race to build new US refineries to process such minerals sourced from friendly countries. But the measures have also triggered a response from other Western governments keen to protect domestic manufacturing.
The European Union adopted a Critical Raw Materials Act in March to ease financing and permitting for mine and refinery projects, while facilitating trade alliances to cut the bloc’s dependence on Chinese suppliers. In the UK, Prime Minister Rishi Sunak has agreed to work with Biden on a critical minerals deal.
The IRA is “a challenge to other countries to put down their versions of this also, so we can force down prices and everyone will benefit,” Scott Woodard, acting director of the US Office of Energy Transformation, said at the same event. “The US cannot solve its supply-chain vulnerabilities alone.”
--With assistance from Alex Morales.