Securing America’s Critical Minerals:A Policy Priority Conundrum

“When I think about climate change, I think jobs”, U.S. President Joe Biden has repeatedly said. His landmark Inflation Reduction Act (IRA) embodies this phrase, tying together US climate and industrial policies with a vast array of subsidies aimed at sparking a green manufacturing boom. Built into these subsidies are mechanisms to secure U.S. supply chains and to shore up domestic manufacturing, which has atrophied in recent decades, strategic priorities that Biden inherited from his predecessor, Donald Trump. Although recent U.S. policymaking has exhibited a hyperfocus on supply chain security for semi-conductors and other dual-use items, an area of equal – arguably greater – strategic significance is the supply of critical minerals, the building blocks of most advanced technologies, including those with military application. <br/><br/>Critical minerals sit at the intersection of three policy objectives for the United States. First, policymakers must ensure national security. If China were to cut off supply of critical minerals, it could devastate the U.S. economy, with particular impacts for the manufacture of advanced technologies, including those with military application. This is why the U.S. is seeking to decouple and reshore supply chains. Second, policymakers are seeking to revive the U.S. manufacturing sector and catalyze job creation by embracing fast-growing green industries, in particular the EV sector. Third, policymakers are addressing the climate crisis by accelerating the rollout of green technologies. Although these three policy objectives are not directly in competition with one another, their implementation can lead to contradictory, even dysfunctional, outcomes.<br/>