The “Inflation Reduction Act” boondoggle that amounts to a payoff for Democrat donors relies heavily on transitioning to green energy derived from wind and solar. Nuclear, hydroelectric, and natural gas are all going the way of the dodo bird, according to Democrats. The legislation should be called the “Enriching China with Unworkable Energy Policy Act,” because almost everything we need for wind and solar comes from there.
According to Bloomberg, in 2020, Chinese companies controlled 60% of global capacity for every step in the solar supply chain:
In the same year, China had a virtual monopoly on producing and processing rare earth metals. Batteries and other green energy components require these minerals. Not surprisingly, China also had a monopoly on lithium-ion batteries for electric vehicle applications. Congress figured this out when they passed the tax credits for electric vehicles in the climate and tax bill. Almost no cars qualify now because they are not made in America. Fewer will qualify in January 2023, when restrictions on source materials for batteries go into effect. Those materials and the battery cannot come from China.
While the United States has deposits of rare minerals, there are significant regulations that inhibit mining them. It would be difficult to see how the environmental Left would react to a whole new era of strip mining to realize their green dreams. Additionally, a plan to ramp up mines and advanced battery production to meet U.S. demand in the next four months is not based on reality.
All of the Biden administration’s spending and policies aim to increase the use of green energy. President Biden vowed to end fossil fuels throughout his campaign. He has chosen to beg Venezuela and Saudi Arabia for the oil we need to maintain our economy since taking office. The United States does not have the infrastructure or the manufacturing capacity to make a complete green energy transition and be self-sufficient. Certainly not at the speed Team Biden is pushing for. Biden’s policies are putting the cart before the horse, to be sure.
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And now China may kick a wheel off the cart. A significant manufacturing zone in China is rationing power. Even with a dominant fossil fuel generation sector, China has invested significantly in hydroelectric power over the last few decades. All the major rivers in the region except the Ganges originate on the Tibetan plateau, which the Communist Chinese Party (CCP) occupies. The regime weaponized fresh water by diverting the flow of these rivers back to mainland China through a complex system of dams and tunnels.
China is witnessing the worst heat wave since the nation began recording weather in 1961. The increased temperatures started in mid-June, and in Sichuan province, reservoirs that provide power to 84 million residents have fallen by as much as 50%. According to Dun and Bradstreet, Sichuan is home to over 110,000 manufacturing companies. A scan of the list includes pharmaceutical manufacturers, food and construction manufacturers, suppliers for Apple, fertilizer plants, and solar equipment manufacturers.
Last week, the provincial government told 19 out of 21 cities to suspend production at all factories from Monday to Saturday. The decision ensured enough power was available for residential use, an unusual prioritization for the CCP. According to CNN:
Sichuan is rich in mineral resources like lithium and polysilicon — key raw materials in the solar photovoltaic and electronics industry. Many international semiconductor companies have plants in Sichuan, including Texas Instruments (TXN), Intel, Onsemi, and Foxconn. Chinese lithium battery giant CATL, which supplies batteries to Tesla (TSLA), also has a factory in the region.
Shutting down factories for the week could tighten the supply of polysilicon and lithium and push prices higher, Daiwa Capital analysts said in a note to clients.
Several Chinese companies have warned their production could be affected by the Sichuan power cut, including Sichuan Haowu Electromechanical, an auto part manufacturer, and Sichuan Lutianhua, which produces fertilizers and chemical products.
Just as Biden’s Energy Secretary Jennifer Granholm is telling Americans to weatherize their homes and take advantage of 30% off solar panels to deal with rising energy costs, the price of the equipment is likely to increase. And while Transportation Secretary Pete Buttigieg tells Americans to buy an electric vehicle, batteries and other essential components may soon be in even shorter supply than they are now. Chip shortages and a looming battery shortage have already caused lengthy wait times across many popular EV manufacturers. Thanks to the most recent shutdown in China, new shortages will only worsen the delays for all green energy products and continue to increase the price.
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