Building American Strength and Resiliency in Critical Minerals for Energy Storage

By: Jeremy J. Michalek, Aaron Bartnick, Erica R.H. Fuchs, Costa Samaras, Mike Starz

The U.S. government has galvanized national focus and action on the supply chain vulnerabilities for critical minerals vital to national security, economic competitiveness and societal well-being. Carnegie Mellon University research shows how strategic alignment in  policy, trade agreements, materials recovery and workforce training is vital for U.S. critical mineral resilience.

Why it matters: America’s strategic economic and military strength depends on reliable access to critical materials for energy storage. Energy storage is central to both civilian and military capabilities. Demand for energy storage is expected to account for half of mineral demand growth from clean energy technologies over the next two decades, and energy is key for defense.

Key insight: CMU Critical Technology Initiative research shows how the supply of critical minerals used to make batteries is highly concentrated and how disruptions in that supply can have far-reaching consequences.

• Concentrated supply: Critical minerals used to make batteries are extracted primarily from a handful of nations around the world, and the refining, processing and manufacturing of battery materials is heavily concentrated in China, posing supply chain risks for the U.S. economy and military. Because China dominates multiple stages of the supply chain, if China were to stop exports, 80% to 92% of global supply of some common battery chemistries could be disrupted.
• Supply disruptions: Realistic supply chain disruption scenarios, such as export restrictions from China or natural disasters in the Democratic Republic of Congo, could raise new car prices, including gasoline cars, by more than $1,000 each, costing consumers over $10 billion.

Policy takeaways: Alignment in manufacturing policy, trade partnerships, materials recovery and workforce training can help bolster U.S. critical minerals strength and resiliency.

• Manufacturing policy: The U.S. represents a small fraction of global battery and battery material production today, in part because China has heavily invested in and subsidized the industry.
  • But U.S. production costs can be competitive with China given relatively modest U.S. incentives.
  • In particular, the lithium iron phosphate (LFP) battery chemistry is the cheapest, most robust and lowest polluting of the lithium ion battery chemistries with the fewest critical materials to source. But China produces 90% of LFP cathode material and has invested so much capacity that it is difficult for other nations to compete on cost.
  • Targeted U.S. investment in innovation to improve energy density or in developing U.S. production could be an important part of a national strategy, and U.S. investment in lithium production could provide the primary critical material and reduce disruption effects.
• Trade partnerships: Growing and deepening robust trade relationships with partners and allies can reduce risks for emerging materials.
• Materials recovery: While the U.S. does not have all of the critical minerals it needs on its own soil, we can reduce reliance on imports cost effectively by recovering materials from used batteries and repurposing used batteries for second life stationary storage applications. Such strategies could also mitigate supply chain disruption effects.
• Workforce training: Investment in U.S. production requires a prepared workforce. Strategic location targeting and workforce training can help match worker skills with industrial skill demand, which can be larger for electric than conventional technologies. It can also create pipelines between occupations with declining or threatened employment and growth opportunities.

The bottom line: Energy security is national security. Today, a growing portion of our energy security is dependent on minerals and batteries produced largely in a few locations that include adversaries and unstable nations. The United States has the capacity and the national security imperative to address this by making targeted investments in technology, industry, trade, materials recovery and workforce training.