Gina McCarthy on President Biden's Clean Energy Plans And The Defense Production Act Announcement

Energy prices are hitting record highs. Climate-induced natural disasters are threatening to create another deadly summer. Congress is still at a stalemate on passing crucial clean energy and climate provisions in the Build Back Better Act.

Amid this chaos, on June 6th, President Biden invoked the Defense Production Act, bypassing Congress, in order to ramp up domestic clean energy manufacturing. And last week, White House National Climate Advisor Gina McCarthy spoke with us on The Climate Pod to explain this historic announcement.

“It’s going to make a huge difference in how quickly we can accelerate and deploy clean energy in this country.”

America has fallen behind in solar panel manufacturing, yet solar installations have increased 30,000% since President Obama was elected in 2008. While other countries have invested in solar panel manufacturing infrastructure, American solar installers have reaped the benefits of lower cost, foreign-made panels. However, American solar manufacturers have failed to compete with Southeast Asia manufacturers for a variety of reasons that make the promise of an American-built clean energy future nearly impossible. But the recent threat of new tariffs on imported panels turned into an existential crisis for American solar companies.

With this in mind, President Biden announced a three pronged approach that would increase solar manufacturing in the United States without stunting the growth of solar installations:

Defense Production Act

“The Defense Production Act is a pot of resources. It’s an investment fund that is generally managed by the Department of Defense. It provides an opportunity to have money available to address what we understand to be a national security issue,” Gina McCarthy explained on The Climate Pod. “We were losing our ability to keep moving forward to accelerate clean energy at the pace that we know climate change demands. And this is going to increasingly put us at risk. So the Defense Production Act, in the instance of solar, is about making sure that both the Department of Energy, who is taking the lead on this, works with the Department of Defense to establish a budgetary process that will allow us to advance domestic manufacturing of solar products right here in the United States.”

Established in the 1950s during the Korean War and used recently to ramp up domestic manufacturing of the COVID-19 vaccine, baby formula, and batteries, the Defense Production Act will jump start the supply side of the clean energy equation, something that has been lacking in America.

Federal Procurement Standards

To create more demand for solar installations in America, President Biden also issued Federal Procurement Standards requiring the Federal Government purchase American made solar panels and components. The Administration believes this alone will add a gigawatt of domestically produced solar modules in the near-term and up to ten gigawatts over the next decade from U.S. Government purchases alone.

And these Procurement Standards will also save taxpayers money.

“The Procurement Standards are going to require that the Federal Government puts Master Purchase Agreements together so that we can negotiate the best prices for solar panels and make them cost effective. And then states and cities can actually build off of those contracts and join in on the fun,” explained McCarthy.

Moratorium on Tariffs

If tariffs were placed on solar panels manufactured by Southeast Asia companies as a way to make American panels more cost competitive, analysts believe the cost of those imported panels would increase by 43%, making the economics for solar installations much worse. That kind of cost increase could kill nearly 100,000 solar jobs in America and slash new installations by nearly two-thirds.

Instead, President Biden promised that no new tariffs would be applied for the next two years.

“This 24-month bridge that the President has put in place is going to make sure that we get solar panels into our country now from Southeast Asia countries - not from China, because that’s heavily tariffed because of the challenges they have with forced labor. But from these other countries, we’re going to make sure we can get them in so that we can continue to move forward on solar. We’re going to triple the amount of solar in just this short period of time.”

“We’re looking at heat pumps, insulation, anything we can do to provide American consumers with less expensive energy.”

While solar made the headlines, the Defense Production Act also called for increased domestic manufacturing of other critical components of a decarbonized, better energy future - heat pumps, fuel cells, transformers, insulation, and more.

“We are all in at looking at the entire supply chain in order to make sure the United States can win the 21st Century clean energy economy for our benefit!” McCarthy exclaimed.

To hear what White House National Climate Advisor Gina McCarthy said about Russia’s influence over energy prices in America, the potential of the Supreme Court stripping powers from the Environmental Protection Agency, and the possibility of passing Build Back Better policies through Budget Reconciliation, check out the full episode of The Climate Pod on iTunes, Spotify, or wherever you listen to podcasts.