US’ critical minerals policy amid security, economic, climate objectives

The issue of critical minerals illustrates a challenging intersection of national security, economic growth, and climate policy in the United States.

President Joe Biden views climate change as an opportunity for job creation and has linked US climate and industrial policies through initiatives like the Inflation Reduction Act (IRA), which includes subsidies designed to jumpstart a green manufacturing sector and secure US supply chains that have weakened over recent decades, Caliber.Az reports per foreign media.

Despite a focus on the supply chain for semiconductors, critical minerals are equally vital as they are essential for advanced technologies, including military applications. However, the US faces significant challenges due to China's dominance in this market, where it produces a substantial share of essential minerals like cobalt, lithium, and graphite—all critical for producing lithium-ion batteries crucial to the green transition.

China's strength in the global supply chain, bolstered by extensive state subsidies, raises national security concerns. The US aims to decouple from China, fearing that disruptions in critical mineral supply could severely harm its economy and military capabilities. This scenario prompts competing policy goals: enhancing national security, revitalizing domestic manufacturing, and tackling climate change.

While the policies outlined by the IRA aim to address these objectives, contradictions often lead to ineffective outcomes. For instance, US tax credits for electric vehicles (EVs) require that they be made in North America with a significant percentage of battery components sourced from the US or trade partners. However, inconsistencies in policy implementation, such as allowing certain Chinese-produced components for tax credits, complicate this goal.

China has also demonstrated a willingness to use export controls as a tool of geopolitical leverage, evidenced by its restrictions on key materials like gallium and germanium. Thus, US policy aims to protect its critical mineral industries from increased reliance on Chinese imports.

To create sustainable strategies moving forward, there is a need to define what constitutes "critical minerals" and understand their varied implications. Not all minerals needed for military applications overlap with those essential for green technologies, complicating coherent policy formation.

Political dynamics further complicate future policies. With the possibility of a change in administration, particularly if former President Trump returns to power, strategies surrounding critical minerals could shift dramatically. Despite party differences on climate issues, both the Trump and Biden administrations have recognized the strategic importance of securing critical mineral supply chains.

Ultimately, finding a balance between these competing objectives will be crucial for the US as it seeks to enhance its industrial strength while avoiding escalatory tensions with China in the realm of critical minerals. The successful management of this dilemma will be vital for the US to maintain its leadership in both the global economy and the green technology revolution.