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U.S. Lithium Industry Set for Massive Growth

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For quite some time, the United States has been lagging behind in the global shift towards clean energy. Unlike other energy-producing countries that have been making significant investments in transitioning away from fossil fuels, the abundance of inexpensive oil and gas from the West Texas Permian Basin, coupled with the deeply ingrained economic and cultural support for the petroleum industry, has resulted in the stalling of growth in the American renewable energy sector. But trends suggest inevitable growth of lithium industry in the US.

The Biden administration is making efforts to catch up and become a strong player in the renewable energy industry, by matching the progress of countries such as China and Europe. The Inflation Reduction Act, passed last year, has been acknowledged as the most far-reaching climate legislation in the history of the United States by the Environmental Protection Agency (EPA). Despite being a scaled-down version of the Build Back Better Act, it includes extensive financial assistance for the domestic renewable energy industry, with an estimated $370 billion in subsidies for solar, wind, and electric vehicle production. These measures are all part of the government’s goal to decrease greenhouse gas emissions by 40% below 2005 levels by 2030.

Efforts to jumpstart growth in the electric vehicle and renewable energy sectors are faced with several significant obstacles. One such challenge is recruiting enough workers in a job market that has traditionally been tight. Another obstacle is lithium, which is a crucial component in the batteries that power electric vehicles and store energy generated by renewable sources such as wind and solar. This poses new geopolitical challenges, as a select few countries, particularly Australia, Chile, and China, dominate the global supply of lithium. While the United States has some of its own lithium reserves, currently, there is only one operating lithium plant in the entire country, the Silver Peak facility in Nevada. To be able to increase production of electric vehicles and renewable energy without relying on China for lithium, it is crucial and urgent for the United States to develop more domestic lithium production.

As a result, the federal government is investing heavily in lithium producers to establish lithium supply chains that can keep pace with the rapid growth of the renewable energy sector as outlined in the Inflation Reduction Act. Recently, Australian lithium company Ioneer received a conditional commitment of a loan of up to $700 million from the U.S. Department of Energy. The company’s primary project will be located in Nevada, at the Rhyolite Ridge Lithium-Boron Project in Esmeralda County, which is set to produce enough lithium for 400,000 electric vehicles, and also produce boron, as reported by CNBC. The Rhyolite Ridge project is only one of many lithium companies that have announced new or expanded plants in the United States following the unveiling of the Inflation Reduction Act. In addition to Nevada facilities, plans have also been announced for lithium production centers in North Carolina and Tennessee.

The Rhyolite Ridge plant is yet to start operations, but major EV manufacturers such as Ford and Toyota have already secured offtake agreements with Ioneer, highlighting the increasing concern that there may not be enough lithium to sustain the growth of EVs and short-term renewable energy storage. This anxiety is understandable, as if all gasoline-powered cars were replaced with electric cars overnight, estimates show that the world’s lithium supply would be exhausted within fifty years. It’s important to note that even renewable technologies rely on finite resources. At present, only 1% of cars on American roads are electric, however, the global number of electric cars is expected to soar in the next decade, reaching an estimated 125 million by 2030.

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