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1/11/2024 Testimony of Deputy Secretary of the Treasury Wally Adeyemo Before the Energy and Natural Resources Committee, … Testimony of Deputy Secretary of the Treasury Wally Adeyemo Before the Energy and Natural Resources Committee, U.S. Senate January 11, 2024 As Prepared for Delivery Chairman Manchin, Ranking Member Barrasso, and members of the committee, thank you for having me here today. I look forward to discussing Treasuryʼs e orts to implement recent legislation in ways that help American workers and companies build an e ective supply chain to support our transition to clean energy and improve our energy security. The Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) jumpstarted the United Statesʼ ability to compete in the global market for electric vehicles (EVs). As you know, the Peopleʼs Republic of China (China) has, for over a decade, pursued nonmarket policies and practices to further state-led industrial targeting and channeled enormous amounts of financial support into developing its EV sector, seeking to help Chinese firms establish a dominant position in the global EV market. Chinaʼs targeted government intervention and investments in clean energy totaled over $500 billion in 2022 alone, nearly four times the investment in the U.S. and more than 1.5 times the U.S. and European Union combined.1 Today, China produces over half the worldʼs EVs and an even larger share of EV batteries.2 Critical minerals have been central to Chinaʼs EV sector development strategy. As of 2022, Chinese mines accounted for 65 percent of global production of graphite and 70 percent of rare earths.3 Chinaʼs refiners have 77 percent of global cobalt refining capacity and more than half of global lithium refining capacity.4 China produces 84 percent of anode battery components, 68 percent of cathode components, and 77 percent of battery cells globally.5 While China is ahead of us on EVs today, by enacting the IRA and IIJA, you have given the United States the ability to not only compete but to lead an e ort to build an alternative global supply chain. Of course, because our domestic system is di erent from Chinaʼs, our path to building a resilient domestic EV production base is also di erent. Instead of directing industry, the IRA and IIJA provide incentives that support the private sector in building the EV https://home.treasury.gov/news/press-releases/jy2020 1/3 1/11/2024 Testimony of Deputy Secretary of the Treasury Wally Adeyemo Before the Energy and Natural Resources Committee, … ecosystem, from manufacturing and procurement to adoption and charging. Importantly, these incentives foster competition. Because of the IRA and IIJA, American manufacturers are responding. Itʼs why weʼve seen manufacturing investment for clean vehicles, batteries, and critical minerals double since enactment. American workers across the country are witnessing firsthand the new economic opportunities. Since the passage of the IRA, weʼve seen $157 billion in private sector investment announced for EVs and batteries.6 Investments related to clean energy are being made disproportionately in communities with historically lower wages, lower college graduation rates, and higher poverty.7 An important distinction between our strategy and Chinaʼs is that we are not undertaking this transition alone. While our investments benefit American manufacturers, workers, and consumers, we recognize that for this project to be successful, we need our allies to help build resilient supply chains that improve our energy security. Thatʼs why our early e orts to build critical mineral agreements have centered on allies with whom we share values and national security interests. We know too well the impact that Russiaʼs weaponization of natural gas had on Europeʼs economy, but we also saw the impact that Russiaʼs further invasion of Ukraine had on crude oil markets and the price at the pump here in the United States. While gas prices have fallen 35 percent since their peak in 2022, over the long term, itʼs clear that we need to improve our energy security with clean energy. And we cannot a ord for our allies to go from being overly reliant on Russia for natural gas to being reliant on China for batteries. In both instances, we are le vulnerable to the weaponization of trade as a geopolitical tool. Thatʼs why building our EV supply chain is critical for our energy security. It wonʼt happen overnight, but the investments that have been made in recent months and years will pay dividends for decades to come. In time, these investments will transform into the domestic supply chain that will power numerous new electric vehicle models expected over the next decade.8 A main beneficiary of these investments is the American worker. Manufacturers have announced nearly 200,000 direct EV-related jobs in the United States over the past eight years. The recently announced EV and EV battery manufacturing investments are expected to create more than 800,000 additional jobs in the broader economy.9 We expect growth in manufacturing and construction, engineering and electrical work, and more. These well-paying https://home.treasury.gov/news/press-releases/jy2020 2/3 1/11/2024 Testimony of Deputy Secretary of the Treasury Wally Adeyemo Before the Energy and Natural Resources Committee, … jobs will bring new economic opportunity to communities across the country, and as such, the clean energy transition will benefit American consumers, workers, and communities. In the year ahead, Treasury plans to continue its work, to support building out the EV supply chain in a way that benefits American companies, workers, and consumers, while also collaborating with our allies. I look forward to discussing the details on how weʼll do that with you here today, and I look forward to continuing to work together with you in the weeks and months to come. ### 1 https://www.scientificamerican.com/article/china-invests-546-billion-in-clean-energy-far-surpassing-the-u-s/ 2 https://www.bruegel.org /newsletter/following-boom-chinas-electric-vehicle-industry-now-faces-weak-domestic- demand-and 3 https://pubs.usgs.gov/periodicals/mcs2023/mcs2023.pdf 4 https://www.instituteforenergyresearch.org /international-issues/china-expected-to-increase-control-over-global-lithium-and- cobalt-supply/ 5 https://www.cfr.org/blog /ford-catl-partnership-illustrates-challenge-decoupling-ev-supply-chains 6 https://www.whitehouse.gov/invest/ 7 https://home.treasury.gov/news/featured-stories/the-inflation-reduction-act-and-us-business-investment 8 Charging into the future: the transition to electric vehicles available at https://www.bls.gov/opub/btn/volume- 12/charging-into- the-future-the-transition-to-electric-vehicles.htm 9 One Year A er IRA Passage, New Report Finds U.S. Electric Vehicle Investments, Jobs Continue to Soar available at https://www.edf.org /media/one-year-a er-ira-passage-new-report-finds-us-electric-vehicle-investments- jobs-continue https://home.treasury.gov/news/press-releases/jy2020 3/3
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