background-image: url("images/blue.jpg") background-size: cover class: inverse <br><br><br><br> ## U.S.-China Clean Energy Relationship:<br>Reflections on the Inflation Reduction Act<br>and Future Direction **.white[John Paul Helveston]**, George Washington University February 21, 2025 --- ## .center[Chinese firms dominate EV and solar industries] .leftcol[ #### .center[EV sales (Jul. '23 - Dec. '24)] <center> <img src="images/global-ev-sales.png" width=95%> </center> .font60[https://www.reuters.com/business/autos-transportation/global-electric-vehicle-sales-up-25-record-2024-2025-01-14/] ] .rightcol[ #### .center[Solar module production ('10 - '21)] <center> <img src="images/fig1_pv_production.png" width=80%> </center> .font60[Helveston, J.P., He, G., & Davidson, M.R. (2022) “Quantifying the cost savings of global solar photovoltaic supply chains” Nature.] ] --- ## .center[Chinese firms dominate EV and solar _supply chains_] .leftcol[ #### .center[EV battery supply chain] <center> <img src="images/battery-supply-chain.png" width=100%> </center> .font60[Cheng, Anthony L., et al. "Electric vehicle battery chemistry affects supply chain disruption vulnerabilities." Nature Communications 15.1 (2024): 2143.] ] .rightcol[ #### .center[Solar module supply chain] <center> <img src="images/solar-supply-chain.png" width=100%> </center> .font60[IEA Special report 2022: Solar PV Global Supply Chains, https://www.iea.org/reports/solar-pv-global-supply-chains] ] --- # .center[**Bipartisan goal**: The US needs to counter China's lead in clean energy tech] <br> -- ## **Keep Chinese clean tech out of US market**: Steep tariffs on imported Chinese EVs, batteries, PV modules -- ## **Keep Chinese firms out of US clean tech supply chains**: IRA restrictions on EV subsidy elligiblity, unclear guidance on Foreign Entities of Concern (FEOC) rules --- # .center[Countering China & Investing in Manufacturing] <br> ## **IRA Strategy**: Investing in *manufacturing* will lead to enduring support for clean tech through local jobs & economic benefits -- ## To what extent are counter-China policies helping or harming the clean tech manufacturing goal? --- class: inverse, middle, center # Solar PV --- ## Solar PV ### Total available U.S. federal subsidies: $0.16 / W ### Average U.S. module price (Q1 2024): $0.33 / W <br><br><br><br> Sources: - https://www.nrel.gov/docs/fy24osti/91209.pdf - Michael Davidson, “U.S.-China Clean Energy Race: Accelerating Innovation, Manufacturing and Adoption”, https://web.sas.upenn.edu/future-of-us-china-relations/climate-and-environment/ --- ## Solar PV ### Total available U.S. federal subsidies: $0.16 / W ### Average U.S. module price (Q1 2024): $0.33 / W ### Average cost of production in China: **$0.10 / W** <br><br> Sources: - https://www.nrel.gov/docs/fy24osti/91209.pdf - Michael Davidson, “U.S.-China Clean Energy Race: Accelerating Innovation, Manufacturing and Adoption”, https://web.sas.upenn.edu/future-of-us-china-relations/climate-and-environment/ --- ## Solar PV ### Total available U.S. federal subsidies: $0.16 / W ### Average U.S. module price (Q1 2024): $0.33 / W ### Average cost of production in China: $0.10 / W ### **Risk**: U.S. producers may not be globally competitive Sources: - https://www.nrel.gov/docs/fy24osti/91209.pdf - Michael Davidson, “U.S.-China Clean Energy Race: Accelerating Innovation, Manufacturing and Adoption”, https://web.sas.upenn.edu/future-of-us-china-relations/climate-and-environment/ --- background-color: #fff ## Solar unlikely to produce desired # of manufacturing jobs .leftcol70[ <center> <img src="images/solar-jobs.png" width=100%> </center> ] .rightcol30[ ### Installation and project development accounts for 2/3 of solar jobs. ### Manufacturing is 12% .footer[https://irecusa.org/census-solar-job-trends/] ] --- # We need diversification ## China has enough solar PV capacity to meet annual global demand through 2032. Source: Wood Mackenzie, https://www.reuters.com/world/china/china-will-dominate-solar-supply-chain-years-wood-mackenzie-2023-11-07/ -- <br> ## But do we need _onshoring_? --- class: inverse, middle, center # Electric Vehicles --- background-color: #fff <center> <img src="images/annual-sales.png" width=80%> </center> --- background-color: #fff ## .center[EV sales in US reaching ~10% of sales] <center> <img src="images/ev-sales-us.png" width=70%> </center> .font80[Source: Argonne National Lab, https://www.anl.gov/ev-facts/model-sales] --- class: center background-color: #fff ## EV sector has an affordability problem (except in China) .font70[Price gap between the sales-weighted average price of BEV and ICEV, before subsidy, by size, in 2018 and 2022] <center> <img src="images/ev-affordability.png" width=89%> </center> .font70[Source: IEA, https://www.iea.org/reports/global-ev-outlook-2024/executive-summary] --- .leftcol75[ <center> <img src="images/covid.png" width=100%> </center> .font60[Source: Roberson, Laura A., *Pantha, S., & Helveston, J.P. (2024) “Battery-Powered Bargains? Assessing Electric Vehicle Resale Value in the United States” Environmental Research Letters.] ] .rightcol25[ ### .center[Used market is more affordable, but post-COVID prices are up in all markets, not just EVs] ] --- class: center background-color: #fff # There are still affordable EV deserts <center> <img src="images/burden_map_25k.png" width=100%> </center> --- # Things that don't help affordability: <br> -- ## 100% tariff on imported Chinese EVs -- ## Effectively banning the use of Chinese suppliers (inc. raw materials) in US EVs -- ## Inflation --- ## Chinese FDI into U.S. ### **Gotion batteries**: Multi-billion dollar investments in Illinois and Michigan ### Challenge: Uncertainty around Foreign Entities of Concern (FEOC) status -- <br> ## Technology Licensing Agreements ### **Ford-CATL**: Licensing battery technology in a Michigan plant ### Challenge: CATL was recently added to DOD's list of “Chinese military companies” --- class: middle, center, inverse # The biggest competitor to an EV<br>is not a Chinese EV,<br>it's gas cars --- class: inverse background-image: url("images/blue.jpg") background-size: cover <br> # Thanks! 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