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President Biden Invokes Defense Production Act to Accelerate Domestic Manufacturing of Clean Energy

President Biden Invokes Defense Production Act to Accelerate Domestic Manufacturing of Clean Energy

President Biden recently 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.  

“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,” said U.S. Secretary of Energy Jennifer M. Granholm.

“Reducing America’s dependence on gas and oil is critical to U.S. national security,” said Deputy Secretary of Defense Dr. Kathleen Hicks.

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.

According to the DOE, Unless the U.S. expands new manufacturing, processing, and installation capacity, our nation will be forced to continue to rely on clean energy imports. This will expose the U.S. to supply chain vulnerabilities while simultaneously missing out on the enormous job opportunities associated with the energy transition.  

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
  • 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.
  • 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. 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. 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. 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.

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