1、Building a Robust and Resilient U.S.Lithium Battery Supply ChainFebruary 2023ContentsKey Takeaways .3I.The Problem .4II.The Need for Action.5III.The LiBridge Initiative.5The History and Purpose of LiBridge.5The Composition of LiBridge.6The LiBridge Process.6IV.LiBridges Goals for the U.S.Lithium Bat

2、tery Industry.7FCABs vision.7LiBridges 2030 Goal .7LiBridges 2050 Goal .8V.Key Challenges Holding Back U.S.Industry Today.9The Top 3 Challenges .9Other Industry Challenges.11VI.Guiding Principles.13VII.LiBridge Objectives and Specific Recommendations .14VII.Immediate Next Steps for Key Stakeholders.

3、19IX.Final Word.20Appendix.21A.1.Expansion of“Other notable industry challenges”.22A.2.Parallel objectives .28A.3.Recent developments(additional details).31A.4.Definition of key terms.32Li-Bridge does not provide legal,regulatory,accounting,or tax advice.Li-Bridge is not licensed to practice law and

4、 therefore nothing herein should be construed as legal or regulatory advice.All statements herein regarding laws and regulations are for discussion purposes only and must be confirmed by a legal subject matter expert.AuthorsAakash Arora,Boston Consulting GroupDr.William Acker,New York Battery and En

5、ergy Storage Technology ConsortiumBrian Collie,Boston Consulting GroupDanny Kennedy,New Energy Nexus David Roberts,NAATBatt International/Indiana EDCIan Roddy,Boston Consulting GroupJames Greenberger,NAATBatt InternationalJohn Cerveny,New York Battery and Energy Storage Technology ConsortiumDr.Natha

6、n Niese,Boston Consulting GroupDr.Venkat Srinivasan,Argonne National LaboratoryVijay Dhar,New Energy NexusCommitteesChairsBernie Kotlier,NECA-IBEW of California and NevadaCelina Mikolajczak,Lyten/QuantumscapeDr.Christina LampeOnnerud,Cadenza InnovationDr.James Trevey,Forge NanoJoern Tinnemeyer,Eners

7、ysTim Grewe,General MotorsViceChairsCraig Rigby,ClariosDavid Klanecky,Cirba SolutionsNathan Nye,Tesla IncPhil Cozad,HondaCommittee MembersAna Kiricova,AlkegenDr.Anna Stefanopoulou,University of MichiganAustin Devaney,Piedmont LithiumBen Wrightsman,Battery Innovation CenterBob Galyen,Galyen EnergyBob

8、 Sutherland,GlencoreBrian Engle,AmphenolChris Larson,Lithium AmericasDavid Gelinas,Lilac SolutionsDenise Gray,LG Energy SolutionDirk Spiers,Spiers New TechnologiesDon Holmstrom,Chemical Safety BoardEdwin Shadeo,Teck ResourcesEmily Smith,American Electric PowerDr.Eric Dufek,Idaho National LaboratoryD

9、r.Eric Gratz,Ascend ElementsDr.Esther Takeuchi,Brookhaven National Laboratory Dr.Ilias Belharouak,Oak Ridge National LaboratoryJeff Collins,NextEraJeff Dormo,HoneywellJim Cushing,Applied MaterialsDr.Job Rijssenbeek,AlbemarleJonathan Weisgall,Berkshire Hathaway EnergyJulie Blunden,New Energy Nexus Dr

10、.Jun Liu,Pacific Northwest National LaboratoryKunal Phalpher,Li-CycleKurt Kelty,Sila NanoLandon Mossburg,Einride/NorthvoltLindsay Battenberg,ProterraMark Caffarey,UmicoreDr.Mark Willey,Pacific Northwest National LaboratoryDr.Nol Bakhtian,Lawrence Berkeley National LaboratoryPierre Guyot,John DeereRo

11、hit Makharia,SESDr.Sanjiv Malhotra,SparkZSelin Tur,CNH IndustrialSeo Seungil,SK OnDr.Stan Whittingham,SUNY BinghamtonDr.Sue Babinec,Argonne National LaboratoryTed Miller,Ford Dr.Tony Burrell,National Renewable Energy LaboratoryDr.Willy Shih,Harvard UniversityBuilding a Robust and Resilient U.S.Lithi

12、um Battery Supply ChainAdditional contributors to this report include:Eva Almiana,JT Clark,Rod Colwell,Dr.Michael Glotter,Jim Guiheen,Ziyan Sears,Vivan Song,and Dr.Richard Wang2 3 Building a Robust and Resilient U.S.Lithium Battery Supply ChainLi-BridgeKey Takeaways In early 2022,the U.S.Department

13、of Energy identified and brought together the leading experts in lithium battery technology from across the U.S.industry in a project called LiBridge.The purpose of LiBridge is to develop a strategy for establishing a robust and sustainable supply chain for lithium battery technology in North Americ

14、a.Following ten months of consultation and study,Li-Bridge calls attention to the following facts:1 BCG analysis Lithium-based energy storage will be one of the key technologies of the 21st century.Lithium batteries will power the majority of vehicles manufactured over the next 50 years and will be

15、essential to military systems,power grids(which are increasingly reliant on variable,renewable energy),and all manner of consumer,medical,and industrial electronics.Certain economic competitors of the United States recognized the importance of lithium battery technology nearly 20 years ago.Those com

16、petitors have invested heavily in it ever since.Although U.S.scientists originally invented lithium battery technology,the United States and U.S.companies today find themselves at least a decade behind in this critically important industrial sector.Key deficiencies are in manufacturing knowhow and a

17、ccess to both raw and refined energy materials.U.S.companies today play only a minor role in the domestic and international markets for lithium battery production.The market for lithium battery cells in the U.S.is growing rapidly and expected to reach$55 billion per year by 2030.1 Yet it is estimate

18、d that under current conditions U.S.companies and U.S.workers will capture less than 30%of the value of cells consumed domestically.The lack of a substantial lithium battery supply chain in the United States and the lack of secure access to energy materials pose serious threats to U.S.national and e

19、conomic security.These threats will not only inhibit the manufacture of lithium batteries in the United States but will stymie the development and growth of the many downstream industries that design,manufacture,and operate products powered by lithium batteries.Those downstream industries collective

20、ly contribute more than 20 x the gross domestic product and jobs contributions of the battery industry alone.Building a robust and sustainable lithium battery manufacturing base in the United States will require addressing a number of challenges that have depressed investment in the domestic lithium

21、 battery supply chain to date.It will also need to respond to the aggressive actions of competing nations that recognized the importance of lithium battery technology early on.Objective 1:Improve investment attractiveness of U.S.-based lithium battery technology and material production through expan

22、ded and better designed supply-and demand-side incentivesObjective 2:Support research,enable product and business model innovation,and accelerate pathways to commercialization through investments in R&D and validation&scaling capabilitiesObjective 3:Help U.S.companies secure access to critical miner

23、als,energy material supplies(virgin and recycled,domestic-and foreign-sourced)and low-carbon infrastructure Objective 4:Address know-how gaps by investing in workforce trainingObjective 5:Establish an enduring U.S.public-private partnership to support the development of a robust and sustainable lith

24、ium battery supply chain in North AmericaLiBridge recommends 26 specific actions to address the U.S.deficiency in lithium battery technology development and manufacture.These actions fall within five broad objectives:Li-Bridge4 5 Building a Robust and Resilient U.S.Lithium Battery Supply ChainI.The

25、Problem Demand for lithium batteries is set to grow rapidly,driven primarily by the increased adoption of electric vehicles(EVs)and energy storage systems(ESSs)on the electrical grid.Global demand is expected to increase by more than 5x and U.S.demand by nearly 6x by 2030.2 Despite this massive grow

26、th in lithium battery demand,the United States is projected to remain highly importdependent.2 BCG analysis.Based on 2030 U.S.cell demand representing$52 billion and 165,000 jobs3 International Energy Agency.(2022).“Global Supply Chains of EV Batteries.”The U.S.continues to be an innovation powerhou

27、se for advanced battery materials,as partially credited by the U.S.Department of Energy(DOE)investments in research.However,without a comprehensive industrial strategy,today,the U.S.industry captures less than 30%of the economic value of each battery cell on the U.S.market,equating to approximately$

28、3 billion valueadded and 16,000 jobs.By 2030,if the“business as usual”case continues,the U.S.industry will capture slightly more of the U.S.market:about 30%domestic value-added,representing$16 billion value added and 60,000 jobs.2 The remaining 70%valueadded will come from imported materials,compone

29、nts,and cells.By comparison,China-based companies capture 90%of the economic value of each lithium battery cell consumed in China.The United States relies(and,without intervention,will continue to rely)on a global lithium battery supply chain that is highly vulnerable to disruption,as seen in Figure

30、 1.Two issues account for this vulnerability.First,global manufacturing capacity for batteries and battery materials is highly concentrated.China controls the largest global capacity share:75%of cell production,70%of processed energy material production,and 60%of energy materials purification and re

31、finement.3 Second,several raw minerals essential to batteries(particularly lithium,nickel,and copper)are forecasted to be in short supply globally over the next decade as demand grows faster than extraction capacity.Global competitors have spent the last decade buying up much of this limited supply.

32、70%of the mining sector in the Democratic Republic of Congo(DRC).The DRC is the worlds largest producer of cobalt,a material critical to the manufacture of most lithium batteries.4 This combination of geographic concentration of battery manufacturing capacity and tight global supply of raw energy ma

33、terials poses a significant risk to U.S.national and economic security.4 ReutersRecent U.S.federal policy actionsi.e.,the Infrastructure Investment and Jobs Act(IIJA)and the Inflation Reduction Act(IRA)should meaningfully accelerate U.S.demand for lithium battery components and materials and spur th

34、e build-out of new North American production capacity.But these actions alone will not be sufficient to overcome the significant know-how,critical minerals,and energy materials access advantages that other countries have accrued.II.The Need for ActionAbsent government intervention,the U.S.s high dep

35、endence on vulnerable global supply chains for lithium battery materials and components threatens U.S.economic power,national security,and climate goals:Economic power:Risk to the U.S.economy goes well beyond the battery market itself.Lithium battery technology will be a key component and likely dri

36、ver of a variety of products,devices and technologies that will shape the global economy of the 21st Century.These include light and heavy vehicles,renewable energy storage,consumer electronics,medical devices,weapons systems,electric drones,airplanes and ships,and almost certainly a large number of

37、 advanced products and devices that have yet to be developed.The manufacture,sale and servicing of those products and dev-ices will likely account for more than 20 x the lithium battery industrys gross domestic product and jobs.National security:U.S.national security will remain endangered if the U.

38、S.military continues to be significantly reliant on foreign sources of advanced batteries.The U.S.military today does not have direct,domestic access to the most advanced lithium batteries and chemistries to power its troops,vehicles,bases,and weapons systems.Foreign countries,including some that ar

39、e potential adversaries,also control the upstream and midstream supply chain for those batteries.Climate goals:Without reliable access to lithium battery technology,the U.S.simply has no chance of meeting the goals of reducing greenhouse gas emissions by 40%by 2030 or achieving net zero emissions by

40、 2050.The U.S.endangers its position on the global stage if its climate targets are missed or if it is overshadowed by other countries.To protect U.S.security and critical interests on several fronts,the U.S.government must act immediately to support the timely development of a North American lithiu

41、m battery supply chain based on U.S.know-how and free from the threat of foreign supply constraints.III.The Li-Bridge InitiativeThe History and Purpose of Li-BridgeIn June 2021,the White House released its 100-day Supply Chain Review Report under Executive Order 14017,detailing the need for a nation

42、al strategy for a robust and sustainable U.S.lithium battery supply chain.That same month,the Federal Consortium for Advanced Batteries(FCAB),a coll aboration of several federal agencies with a stake in lithium batteries,published its National Blueprint for Lithium Batteries,outlining a national str

43、ategy for developing a robust and sustainable lithium battery supply chain.Recognizing the important role that industry must play to execute the strategy,the DOE asked Argonne National Laboratory(ANL)and three U.S.trade associationsNAATBatt International(NAATBatt),New York Battery and Energy Storage

44、 Technology Consortium(NYBEST),and New Energy Nexus(NEX)to convene leading experts in lithium battery technology from throughout the North American industry in order to provide their advice to the U.S.government.The project to convene industry experts and synthesize their recommendations is called t

45、he Li-Bridge initiative.Figure 1 Lithium battery supply chain:Gaps in upstream and midstream activities threaten U.S.economic securityLi-Bridge6 7 Building a Robust and Resilient U.S.Lithium Battery Supply ChainIV.Li-Bridges Goals for the U.S.Lithium Battery Industry5 Figures include supply chain se

46、gments from mining to cell manufacturing without even including pack manufacturingFCABs visionThe National Blueprint for Lithium Batteries,produced by the FCAB in 2021,outlined a vision for the U.S.lithium battery supply chain.It states:By 2030,the United States and its partners will establish a sec

47、ure battery materials and technology supply chain that supports long-term U.S.economic competitiveness and equitable job creation,enables decarbonization,advances social justice,and meets national security requirements.The LiBridge organizations fully support this vision.But Li-Bridge notes that sat

48、isfying this vision by 2030 will be challenging,given the industrys present state.LiBridge participants outlined a pathway for industry to achieve this vision by defining two goals:interim(by 2030)and long term(by 2050).Li-Bridges 2030 Goal Majority domestic value-addedLi-Bridge believes that by 203

49、0 the United States can capture 60%of the economic value consumed by U.S.domestic demand for lithium batteries($33 billion valueadded;100,000 direct jobs5),up from the 30%domestic value-added most likely to result from doing business as usual.This 60%domestic valueadded is LiBridges 2030 goal,as see

50、n in Figure 2.The LiBridge 2030 domestic value-added goal would add approximately$17 billion in direct economic benefits and 40,000 direct jobs to what would otherwise result from a businessasusual scenario,without adoption of LiBridges recommendations.Li-Bridge does not believe the U.S.can achieve

51、complete lithium battery supply chain independence by 2030.But Li-Bridge does believe that U.S.industry can capture a majority of the value of lithium battery cells consumed domestically.Figure 2 U.S.industrys 2030 target state(60%value add)is double BAU case Annual incremental$17B valueadd contribu

52、tion implied in potential state requires overcoming key barriers to industryThe Composition of Li-BridgePursuant to the DOEs request,ANL,NAATBatt,NYBEST,and NEX reached out through their extensive networks and identified leading experts in the business and technology of lithium battery manufacturing

53、 in North America.The organizations convened as part of Li-Bridge comprise companies representing more than 1 million employees and greater than$900 billion in annual revenue globally and include a diverse cross-section of the lithium battery supply chain,including:Upstream participants,including mi

54、ners and refiners of critical minerals and energy materials Midstream participants,including cathode,anode and electrolyte materials producers,cell,and cell component manufacturers Downstream and end-of-life participants,including pack manufacturers,end product manufacturers(including major automobi

55、le manufacturers),electric utilities,and battery repair and recycling companies A wide range of company sizes,from large multinationals to startupsIndustry participants included a variety of professions and job functions including engineers,scientists,executives,and labor management.The industry par

56、ticipants were supported by representatives from academia(including one Nobel Prize laureate),six national laboratories and Boston Consulting Group(BCG),one of the leading management consulting firms in the world.The Li-Bridge ProcessGathering participants inputs and formulating the recommendations

57、took place over a series of all-day forums conducted over a 6-month period.Each forum focused on a distinct set of topics and built upon prior work.Forums consisted of group discussions,breakouts,and polls facilitated by BCG.Leading up to each forum,participants worked as part of a committee tasked

58、with a specific focus area.The major activities performed by participants through the committees and forums included:Analyzing future U.S.supply and demand for cells,materials,and workforce Defining ambitious but achievable goals for the U.S.industry Identifying challenges holding back investment in

59、 the U.S.lithium battery ecosystem Drawing lessons learned from other countries to inform and inspire U.S.adoption of best practices Developing recommended actions for how to achieve the stated goalsThis report synthesizes the findings and recommendations of the Li-Bridge initiative based on the fou

60、r forums and associated committees work to date.Li-Bridge8 9 Building a Robust and Resilient U.S.Lithium Battery Supply ChainAchieving the Li-Bridge 60%domestic value-added goal for 2030 assumes the following domestic value-added share in each step of the supply chain:Cell Manufacturing.Approximatel

61、y 90%of lithium battery cells consumed in the U.S.are manufacturing in the U.S.Active Material and Inactive Component Production.Approximately 50%of the active materials(including electrodes and electrolyte salts,and electrolyte solvents),and inactive components(e.g.,separators)used in lithium batte

62、ry cells consumed in the U.S.in 2030 are manufactured in the U.S.Material Refining and Processing.Approximately 50%of the chemical precursor materials used in lithium battery cells consumed in the U.S.are manufactured in the U.S.Raw Material Production.Approximately 50%of the raw lithium supply used

63、 in lithium battery cells consumed in the U.S.is produced from North American sources,virgin or recycled.Due to long development timelines of raw material projects,LiBridge recognizes that the fourth goal listed above currently has the lowest probability of being achieved by 2030.Recent new governme

64、nt support for lithium battery supply chain projects announced since the start of the LiBridge 6 DoE BIL Battery FOA2678 Selectee Fact Sheets(energy.gov)7 BCG analysis of FOA selectees,DOE BIL Battery FOA2678 Selectee Fact Sheets(energy.gov)initiative have made the Li-Bridge 2030 goal even more atta

65、inable than Li-Bridge participants had assumed at the inception of the initiative.The 21 projects across the battery supply chain announced October 20226 as having been awarded$2.8B in grants under the IIJA are estimated to increase domestic value-added by 5-10%on top of the 2030“businessasusual”cas

66、e projection.7 But closing the remaining gap to the Li-Bridge 2030 goal of 60%domestic valueadded will require the IRAs incentives plus additional actions by the government and by the industry.Li-Bridges 2050 Goal Effective selfsufficiency and export opportunitiesLi-Bridge believes that by 2050,the

67、U.S.industry should be able to self-supply nearly 100%of the domestic need for lithium battery technology.By 2050,most of the energy materials needed to satisfy domestic demand should come from lithium batteries recycled in the United States.Given sufficient investments in lithium battery knowhow an

68、d battery technology innovation,Li-Bridge believes that by 2050,U.S.companies can become a global power in the lithium battery industry and a major exporter of finished batteries and battery-related technology to the world.V.Key Challenges Holding Back U.S.Industry TodayLiBridge identified eight key

69、 challenges that are preventing the development of a robust and sustainable lithium battery supply chain in the U.S.The policymakers,legislators,and industry representatives must address these challenges in order to achieve the Li-Bridge 2030 and Li-Bridge 2050 goals.8 Does not consider the impact o

70、f 2022 IRA tax credits9 A typical 40 GWh cellmanufacturing facility costs$5 billion and takes five years to progress from site selection to 80%capacity output,assuming upstream capacity already exists;a typical sedimentary lithium mine takes 10+years from exploration to production stabilization(acco

71、rding to industry experts)10 BCG analysis of the cumulative incremental capital investment required to meet industrys 2030 domestic value added goal for the U.S.market;includes mining through cell manufacturing11 DOE Funding Opportunities Exchange,DEFOA000267712 Dallas Federal Reserve,Oct 2022Li-Bri

72、dge believes that three of the eight challenges deserve special attention.The Top 3 Challenges CHALLENGE1:Insufficient Return on Investment on Long-Term Projects U.S.based projects related to the lithium battery supply chain have historically had difficulty meeting the internal rate of return(IRR)an

73、d payback period requirements of U.S.investors.8 Multiple factors contribute to the industrys unattractive IRR relative to other investments,including uncertainty regarding the scaling of production and uncertainty about the time requirements of regulatory approval.(This is in itself a priority chal

74、lenge,described in the next section.)The fundamental challenge is that projects along the battery supply chain require high initial investment in R&D,equipment,project construction,etc.followed by lengthy and expensive qualification and production scaleup periods.9 These factors make them less attra

75、ctive to investors than alternative opportunities in less capital-intensive industries.Li-Bridge participants report that while many battery-related projects can be cash flow positive,they often have difficulty providing the 15%or greater return on capital employed(ROCE)that prospective U.S.investor

76、s tend to seek.Differences in business culture across geographies also hinder U.S.investment.Korean,Japanese,and Chinese investors(home of the leaders in lithium-based battery production today)generally take a longer-term view than U.S.-based investors and are more willing to accept the lack of shor

77、t-term return.Consequently,Asian investors fund a disproportionate share of U.S.batteryrelated projects.This has historically resulted in the transfer of much U.S.-based know-how and battery-related intellectual property offshore.Boston Consulting Group estimates that more than$100 billion10 of cumu

78、lative incremental investment in the U.S.battery supply chainfrom new mines to cell-manufacturing facilitieswill be required to meet LiBridges 2030 domestic valueadded goal.For reference,the IIJA has committed to funding over$7 billion in U.S.battery supply chain projects,which,with a cost match ple

79、dged by the industry,11 represents approximately at least$14 billion in domestic capital expenditures.Separately,the Dallas Federal Reserve estimates another$40 billion in private funding12 has been committed via recently announced U.S.projects.Accordingly,nearly half of the capital investment requi

80、red to meet LiBridges 2030 domestic valueadded goal for the United States is not in placeand this missing private investment needs to be put in place soon given the long development timelines.But investment conditions must be improved and investor expectations appropriately managed to unlock this ad

81、ditional capital.CHALLENGE 2:Lengthy and uncertain timelines to secure permits and project approval,especially upstream Li-Bridge participants report highly unpredictable timelines for securing permits and approvals in the United States relative to much of the rest of the developed world.Unpredictab

82、le timelines are most pervasive for critical mineral projects.But the unpredictability of permitting and project approvals limits potential investment in projects across the lithium battery supply chain.Several Li-Bridge participants cited delays in their projects ranging from six Li-Bridge10 11 Bui

83、lding a Robust and Resilient U.S.Lithium Battery Supply Chaincompanies,such as Chinabased Tianqi Lithiums partial ownership of Chile-based SQM.Underlying each of these ventures is strong state support and a willingness to pay a premium over fair market prices to secure control over critical minerals

84、 and fulfill a publicprivate strategic vision of vertical integration.17U.S.lithium battery manufacturers and users are at a severe disadvantage in obtaining access to critical minerals and energy materials relative to companies based in certain countries.U.S.government intervention is necessary to“

85、level the playing field”,especially if U.S.based companies operating internationally are expected to adhere to stricter environmental,social and governance rules.Other Industry ChallengesCHALLENGE 4:Insufficient benefits for customers(OEMs)to“buy local”and pay more for U.S.-made intermediatesLi-Brid

86、ge participants believe that without changes to U.S.government policies,U.S.-based battery makers and original equipment manufacturers(OEMs)will largely choose to import intermediate materials from outside the United States in order to take advantage of their lower landed costs.On average,Li-Bridge

87、participants estimate that U.S.-produced battery materials and components have landed costs that are 1020%higher than similar materials imported from Asia.18 OEMs typically have no incentive to pay this premium for U.S.-made products.CHALLENGE 5:Lack of U.S.R&D-and pilot-scale line capacity for the

88、commercialization of new technologyLi-Bridge participants report a shortage of shared pre-commercial-scale production facilities for lithium batteries in the United States at both the R&D-scale(12 months in the United States versus one month in China and the European Union.Participants also report t

89、hat,currently,there are no shared pilot-scale battery manufacturing facilities in the United States.The lack of shared pilotscale facilities increases costs and extends product development and qualification timelines for producers at every step of the supply chain.This is particularly true for small

90、 and midsized companies 17 Politico18 Per Li-Bridge topic committee analysis;primarily because of lower domestic know-how,higher labor costs,and higher environmental and social standards19 Includes raw material through pack manufacturingseeking to commercialize new active materials,components,and pr

91、ocessing equipment.The lack of easy access to precommercial scale production facilities results in reduced commercial value of innovation,missed opportunities for leap-frogging technology and process innovation,slower momentum in building workforce know-how,and the leakage of intellectual property o

92、verseas.CHALLENGE 6:Lack of domestic technical know-how,especially in midstream activitiesThe U.S.lithium battery industry currently possesses limited skilled worker training in high-volume production,particularly in midstream activities,and will need to ramp up the workforce development required to

93、 meet future battery demand.Expertise in large-scale production is needed across the entire battery supply chain.But the most acute need is in midstream segments such as battery-grade material processing,active material and component production,cell manufacturing,and end-of-life battery logistics.Me

94、eting LiBridges 2030 domestic value added goal for increased U.S.self-supply will require 120,000 additional workers across the battery supply chain.19 The U.S.battery industrys limited workforce development in large-scale lithium battery and battery materials manufacturing could prove a serious obs

95、tacle to the 2030 goal.CHALLENGE 7:Limited suitable sites served by reliable clean energyAccess to reliable and clean electric power is a key requirement for building up the lithium battery supply chain in the United States.Although the U.S.has abundant,inexpensive land available for industrial deve

96、lopment,sites that are truly shovelready for projects with large electricity demands are in surprisingly short supply.Extending existing electricity infrastructure to new industrial sites is often a slow and cumbersome process.Lack of access to clean electric power is also a serious issue.U.S.manufa

97、cturers take their corporate decarbonization goals seriously and need sites that have access to large amounts of clean,reliable energy in order to meet them.This is a particularly important issue for companies based in or selling products into Europe,where corporate carbon emissions are carefully tr

98、acked and regulated.Companies are finding that they can locate their energy-intensive manufacturing facilities in Canada,for example,where clean hydropower is abundant and where companies can still maintain nearby access to U.S.markets.Participants also report challenges with transportation infrastr

99、ucture,particularly bottlenecks at ports delaying shipments of critical equipment and supplies.months(cell manufacturing and grid energy storage projects)to a full decade(mining projects).These delays arise from proceedings at all levels of government.Three factors account for lengthy and uncertain

100、permit and approval timelines:opaque bureaucratic decision-making absent firm deadlines,an inconsistent appeals process,and resistance from local community groups:Bureaucratic Process.U.S.batteryrelated projects often require multiple studies to obtain multiple permits,frequently with opaque or ever

101、-changing criteria.Permits are administered by multiple agencies and/or different stakeholders within an agency,often involving multiple handoffs among understaffed regulatory personnel.Decision parameters are often unclear:it can take monthsor typically yearsto reach a decision,and multiple agencie

102、s with potentially conflicting timelines or mandates can be involved.Securing a mining permit in the United States takes seven to ten years according to a 2015 report by SNL Metals&Mining.13 By comparison,permitting in Australia,a country with similarly complex stakeholder interests,takes,on average

103、,two years.Four major differences in Australia can account for this discrepancy:mining companies in Australia are responsible for conducting their own environmental reviews,there is a clear timeline for government to respond to the permit application,federal and state agencies are delineated,and the

104、 ownership and responsibility of each agency are clearly defined.Appeals Process.The startandstop nature of securing and maintaining a permit creates additional industry challenges.The slow nature of a court challenge to an existing permit can result in the permit expiring before the court reaches a

105、 decision.The applicant must then start from the beginning and go through the permit application process again,including the re-performance of environmental impact studies.Major permits,which require numerous technical judgments by an agency,may be voided if a judge disagrees with any aspect of the

106、permitting process.Participants also expressed frustration about their inability to“blue pencil”14 applications to address individual deficiencies rather than having to start the application and approval process from the beginning to address an objection.The broad discretion of courts to slow or rev

107、erse administrative decisions for any reason is also a source of frustration.13 National Mining Association,SNL Permitting Delay Report14 A legal concept where a portion of a contract is invalidated but the remaining contract remains valid,as opposed to the entire contract being invalidated15 Nation

108、al Mining Association,SNL Permitting Delay Report16 NYTimesCommunity Resistance.Li-Bridge participants report scrutiny and opposition from community groups for new projects,particularly mining projects.The industry acknowledges that community skepticism of new projects is often based on the mining i

109、ndustrys poor historic record within certain communities,particularly indigenous and minority populations,which typically does not reflect current best practices among resource developers in the U.S.New critical minerals and energy materials projects in the United States will need a social license t

110、o operate in those communities.At the same time,communities with jurisdiction over natural deposits will need to consider and comply with the larger issues of national security,economic prosperity,and climate change in deciding whether to support new projects in their jurisdictions.Building producti

111、ve and equitable partnerships between energy materials producers and affected communities will be essential to building out the U.S.lithium battery supply chain.The lengthy and unpredictable permitting and approval process in the United States reduces the average value of a mining project by onethir

112、d.15 Longer delays can make mining projects financially unviable,even before the costs of litigation are considered.Speeding the path to successful permits has three winning benefits for the industry:faster relief from a global supply constraint,a faster buildup of U.S.self-supply,and an enabler for

113、 the United States to commercialize more advanced and lower impact production technologies.CHALLENGE 3:Lack of Access to Critical Minerals and Raw and Processed Energy Materials Several Li-Bridge participants anticipate a worldwide shortfall in supplies of critical minerals and energy materials with

114、in a four-to-twelve-year time frame(before new foreign and domestic sources of supply can be brought online).The governments of other countries have been actively supporting efforts by their private companies to tie up available sources of supply internationally,outcompeting U.S.firms.Chinese compan

115、ies with the support of the Chinese government have secured a dominant position in several of these overseas assets.China-based mining and battery giants have invested in several international developmentstage lithium projects.China-backed companies own or have stakes in 80%of the Democratic Republi

116、c of Congos cobaltproducing mines,partly via minerals-for-infrastructure deals coordinated by government parties.16 China-based companies have also taken investment stakes in leading international mining Li-Bridge12 13 Building a Robust and Resilient U.S.Lithium Battery Supply ChainCHALLENGE 8:A lac

117、k of domestic suppliers of key manufacturing equipment and reliance on protective,overbooked foreign suppliersOne of the most important gaps in the U.S.lithium battery supply chain is the lack of domestic equipment and tooling suppliers that make machinery used in the manufacture of lithium batterie

118、s and battery materials.Manufacturing equipment makers control vital know-how in lithium battery technology.The absence of significant makers of lithium battery manufacturing equipment(such as winding,stacking,or formation and grading systems)in the United States places U.S.manufacturers of lithium

119、batteries at a serious disadvantage.Asian cell manufacturers usually work very closely with co-located machine manufacturers to improve production processes.U.S.battery manufacturers do not have that option.In addition,U.S.cell and materials manufacturers find themselves at the end of a long line in

120、 waiting for delivery of machinery or access to new,innovative equipment.Foreign machine makers tend to prioritize customers in their home marketsLi-Bridge participants report a lead time of 18 to 48 months for buying electrode coating machines from Asia.U.S.manufacturers are often unable to obtain

121、the latest generation of manufacturing equipment until several quarters after that equipment has been delivered to manufacturers in East Asia.VI.Guiding PrinciplesThe following set of principles helped guide the development of Li-Bridges recommendations:There is an urgent need to strengthen the U.S.

122、lithium battery supply chain.Decisions being made today on where to locate capacity will lock in supply chain flows and business ecosystems for the next several decades.U.S.industry is already seeing the effects of market share shifts in a resource-scarce world.It is well documented that the United

123、States is far behind other countries and must act quickly if it is to enable U.S.-based companies to become world leaders in battery technology and supply chains.Solving this challenge will require long-lasting,sustained policy interventions that transcend political administrations and congressional

124、 power dynamics.Supply chain changes take time.Downstream players cannot switch supply chains overnight.Upstream suppliers can require several years or as long as a decade to bring new capacity online.Unpredictable and ever-changing regulatory,political,and natural environments create unstable deman

125、d and supply signals,hindering investment and commercialization.Government has a key role to play in several areas,particularly in reducing regulatory complexity,forging international partnerships,and supporting innovation.Governments at the federal,state,and local levels have the unique ability to

126、streamline and harmonize regulations that add costs and limit the speed of commercialization and growth(e.g.,permits for mines or codes governing the transportation of waste batteries).At the federal level,the U.S.government is well positioned to help secure U.S.access to critical materials and equi

127、pment through international partnerships.The U.S.government is also well positioned to support innovation through continued R&D investment,which is essential for U.S.competitive advantage.The United States must lean into its strengths to build a sustained competitive position.The culture of innovati

128、on and entrepreneurship in the United States is unrivaled in the world.Where U.S.companies have fallen behind is in the manufacturing of products that have emerged from that innovation.The U.S.must reinvigorate its battery manufacturing sector and double down on investment in foundational science an

129、d use-inspired research to uphold the culture of innovation.The U.S.must also leverage the large size of its market which can support scale efficiencies in domestic producers.Li-Bridge14 15 Building a Robust and Resilient U.S.Lithium Battery Supply ChainVII.Li-Bridge Objectives and Specific Recommen

130、dations Following consultation with the leading experts in lithium battery technology in the U.S.industry,academia and the national laboratory systems,Li-Bridge has adopted a series of recommendations to the U.S.government and to the U.S.industry.Li-Bridge believes that adopting these recommendation

131、s will help the United States achieve Li-Bridges 2030 and 2050 Goals discussed earlier in this paper.The individual recommendations are organized around five recommended objectives for the U.S.lithium battery supply chain:OBJECTIVE 1:Improve investment attractiveness of U.S.-based lithium battery te

132、chnology and material production through expanded and better designed supply-and demand-side incentives The U.S.government must take actions to enhance the expected returns on financial investments in U.S.based lithium battery supply chainrelated projects(e.g.,battery materials,components,cells,or m

133、anufacturing equipment)and reduce the perception of demand uncertainty in the U.S.battery market.The IRA,particularly via tax incentives,should significantly improve the attractiveness of investments in the lithium battery supply chain.But more must be done to encourage investments that localize pro

134、duction and lithium battery manufacturing know-how in the United States.Li-Bridge believes that investment incentives should be allocated to favor the localization of production facilities,R&D and engineering staff in the United States,regardless of the ownership of the entity receiving the incentiv

135、e.OBJECTIVE 2:Support research,enable product and business model innovation,and accelerate pathways to commercialization through investments in R&D and validation and scaling capabilitiesThe United States must redouble its support for technological innovation,a key strength and competitive advantage

136、 of U.S.society.Additionally,the country must also better support the commercialization and manufacture of domestic battery innovations.The process and manufacturing equipment for producing battery cells and materials at commercial scale are ripe for innovation.Efforts to support the large-scale man

137、ufacture of battery technology should focus on manufacturing advanced and next-generation battery technologies.OBJECTIVE 3:Help U.S.companies secure access to critical raw minerals and processed energy materials(virgin and recycled,domestic-and foreign-sourced)and low-carbon infrastructureThe United

138、 States must work simultaneously to encourage the development of minerals and materials mining domestically and to secure the supply of raw products from reliable trading partners abroad.An effective raw materials strategy must also include significant support for lithium battery recycling and devel

139、oping a battery materials export control policy.LiBridge participants identified lithium and nickel as the two most pressing critical minerals on which to focus,yet there is a risk that any of the critical minerals used in lithium batteries or battery production could prove to be a bottleneck in the

140、 years ahead absent continued monitoring and investment.The country must also continue investing in the nations ports,railways,and clean energy infrastructure to support costefficient logistics and enable the export of U.S.made goods to carbonregulated markets.The manufacturing and infrastructure de

141、ployment should align with community goals and energy justice principles.OBJECTIVE 4:Address know-how gaps by investing in workforce training The education of skilled battery technicians and engineers is essential for establishing,automating,and continuously improving domestic manufacturing and for

142、bridging gaps in the U.S.s supply chains.The United States must invest in creating quality,place-based technical training programs to prepare the future workforce.Specialized battery training programs will provide the interdisciplinary skills needed by American workers to chart fulfilling careers an

143、d avoid becoming mere low-paid assemblers of imported products.Li-Bridge believes that community colleges,apprenticeships,and trade schools can play a particularly important role for staffing the processing and manufacturing industry.Collaboration among higher-education institutions and community co

144、lleges should be encouraged.OBJECTIVE 5:Establish an enduring U.S.public-private partnership to support the development of a robust and sustainable lithium battery supply chain in North America Building a robust and sustainable lithium battery supply chain across the United States and its allies wil

145、l require effort from multiple state,local and federal government agencies as well as private industry.Many of those efforts are already underway.But there is a real danger that those initiatives will be less effective than they could be because of lack of coordination,oversight,and accountability f

146、or results.A formal public-private partnership with a central program management office would do much to provide that coordination,oversight and accountability and ensure that those efforts are as efficient and effective as possible.LiBridge recommends the following specific recommendations within e

147、ach of the five objectives identified above:OBJECTIVE 1:Improve investment attractiveness to catalyze new capacity investment in the United States1.1.Capex incentives:Expand incentives to offset capex for upstream,midstream,and downstream capacity,including manufacturing equipment suppliers,with pre

148、ference given to domestic suppliers and next generation technologies1.2.Production incentives:Expand incentives to offset production-related costs(e.g.,production tax credit)1.3.R&D incentives:Conduct a fast-track study of R&D tax treatment and incentives to make investment in the intensive battery

149、industry more attractive to investors,and implement recommended actions 1.4.Demand incentives:Expand point-of-sale incentives to include medium-and heavy-duty truck EVs,buses,construction,agriculture,mining,ESS,and other electric off-road transportation such as aircraft.Attach domestic content requi

150、rements to promote the use of U.S.-based midstream and upstream production.The size,shape,and duration of expanded incentives should be calibrated to not exacerbate current supply scarcity in lithium-based battery supply chains.1.5.Government procurement:Leverage government procurement programs to s

151、upport next-generation technologies and provide advanced market commitments that reduce commercialization risk.1.6.Insurance pools:Create insurance pools for battery cell,pack and battery material producers to hedge against the risk of product recalls and make it easier for new U.S.companies without

152、 large balance sheets to enter the automotive battery market and compete with established foreign suppliers.OBJECTIVE 2:Support innovation and accelerate pathways to commercialization2.1.R&D investment:Invest heavily in both applied and use-inspired basic science research related to lithium battery

153、technology,materials,and manufacturing equipment and processes.2.2.Pre-commercial-scale production lines:Define industry needs for R&D-scale(1 MWh/year)and pilot-scale(1-500 MWh/year)shared-access battery production lines to accelerate pathways to commercialization of new battery technology.Define a

154、nd develop a sustainable business model for operating those shared-access facilities.2.3.Standards:Promote the generation and codification of industry standards related to lithium batteries and the systems they power.This initiative should include harmonizing installation requirements for ESS across

155、 jurisdictions,defining standards for costconstrained applications,such as electric micro-mobility,and new use cases such as electric vertical take-off and landing vehicles(eVTOLs),and revisiting tenyear capacity fade requirements for battery packs.Industry must also work to educate stakeholders abo

156、ut existing standards to avoid overlapping or competing regulations.2.4.Commercialization support:Provide commercialization support to early-stage U.S.companies working to develop lithium battery related products,including access to commercial and technical advisors and assistance with patent filing

157、s.OBJECTIVE 3:Help U.S.companies secure access to critical minerals,energy materials and low-carbon infrastructure3.1.Permitting reform:Improve predictability in the permitting process(e.g.,time limits,transparent criteria,lead agency),accelerate time to decisions,build community support,and harmoni

158、ze regulations for mining/extraction and materialprocessing projects.3.2.Critical minerals database:Expand and accelerate the creation of a national database of critical mineral resources(owner of mineral rights,required permits,local and state contacts)and gather data from existing mining and oilfi

159、eld operationsthen make this data strategically available through an online portal and interactive map.Similarly,develop a tracking dashboard that monitors and forecasts international supply chains.3.3.Buying consortium:Develop a consortium of companies for purchasing critical battery-related minera

160、ls and materials from domestic and foreign sourcesimproving purchasing power and reducing risk via access to a more diverse pool of material suppliers.Li-Bridge16 17 Building a Robust and Resilient U.S.Lithium Battery Supply ChainOBJECTIVE 4:Address know-how gaps4.1.Curricula development:Assess the

161、skills gap in U.S.lithium battery manufacturing and identify all existing training programs that can address that gap.Develop new educational/training curricula for degrees and certifications that will fill gaps in existing training curricula.4.2.Curricula deployment:Implement workforce training and

162、 educational curricula for schools;implement upskilling for oil and gas workers,autoworkers,and other professions impacted by the clean energy transition.4.3.Training support:Support training and educational programs to expand the talent pipeline(e.g.,scholarship,apprenticeships).4.4.Technical excha

163、nge:Implement international technical exchange program with targeted and time-limited visa expansion to promote the transfer of critical lithium battery know-how into the United States.4.5.Catalyzing Council:Stand-up a National Battery Workforce Council comprised of industry,government,community org

164、anizations,academia,and workforce/labor intermediaries to coordinate and execute national battery workforce objectives.OBJECTIVE 5:Establish an enduring U.S.public-private partnership for lithium battery supply chain in North America 5.1.Create an enduring coordinating body to execute the recommenda

165、tions:Make Li-Bridge a formal public-private entity charged with coordinating and executing on the tasks recommended in this report.Create a central program management office to monitor and coordinate execution of the recommendations and to report progress on the development of the domestic lithium

166、battery supply chain periodically to the federal government and coordinate collaboration with allies.Figure 3 captures the roadmap of activities through 2030 across the five objectives and the associated interdependencies to achieve the stated targets.Figure 3 Roadmap to strengthening U.S.battery su

167、pply chain through 20303.4.Foreign partnerships:Support prioritized access to critical mineral mines in partner countries through financial support from the U.S.International Development Finance Corporation and continue to strengthen country-level cooperation,such as through the Minerals Security Pa

168、rtnership.3.5.Circularity:Establish an industry-led waste battery end-of-life program,harmonize regulations for transporting waste batteries,and support the recovery and use of domestically recycled content.3.6.Trade control:Recalibrate trade controls,such as the Wassenaar Arrangement,to encourage U

169、.S.companies to develop high-energy-density solutions and compete for global business.Consider export controls on new and used energy materials to reduce leakage from the U.S.energy materials supply chain.3.7.Critical minerals sea mining:Conduct definitive environmental studies on critical mineral s

170、ea mining that serve to remove uncertainty regarding U.S.company participation in sea-based mineral extraction and purchasing.20 20 Politico3.8.Stockpile:Bolster the National Defense Stockpile for battery-critical minerals and materials in a manner that smooths commodity pricing cycles and does not

171、exacerbate supply shortage or inflate raw material costs for U.S.industry.Stockpiling strategy will need to consider storage conditions,expiration dates,and use in government-procured energy storage applications,among other factors.3.9.Infrastructure:Invest in more clean energy generation and upgrad

172、e port and rail systems in order to make U.S.lithium battery manufacturing more economically competitive.3.10.Industrial zones:Select and designate special industrial zones for battery production to support the efficient clustering of battery-related manufacturing operations.Steer government financi

173、al support to those zones.Implement within those zones streamlined regulatory processes recommended by industry and approved by local authorities and communities.Favor locating industrial zones in regions where existing jobs are threatened by the clean energy transition.Assess co-locating battery pr

174、oduction industrial zones with other types of advanced manufacturing,such as semiconductors or hydrogen,for increased synergies.3.11.Community engagement:Develop a handbook for community engagement best practices,tailored to different communities,and deploy community engagement teams to build suppor

175、t and accelerate project approval.Li-Bridge18 19 Building a Robust and Resilient U.S.Lithium Battery Supply ChainEvaluation of recommended initiatives against recent developments The past year has seen many policy developments with implications for the U.S.lithium battery supply chain.The most signi

176、ficant are two laws,the Infrastructure Investment and Jobs Act of 2021(IIJA)and the Inflation Reduction Act of 2022(IRA).The provisions of these two laws align with many of the recommendations made in this report.Figure 4 shows which recommendations the IIJA and IRA already address and where gaps re

177、main.21 Li-Bridge strongly recommends the U.S.Department of Treasury continue to consult with 21 See appendix for more detail22 The White Housecompanies in drafting the implementation rules for the IRAs incentives and conditions to maximize new investment in domestic lithium battery development and

178、manufacturing capacity.In addition to the IIJA and IRA,many other policy actions have been implemented or announced recently,such as the American Battery Materials Initiative.22 Li-Bridge expects these efforts to further support and implement some of the abovementioned recommendations.Figure 4 IIJA&

179、IRA provisions provide significant support for improving U.S.investment attractiveness and infrastructure,but gaps remain elsewhereVIII.Immediate Next Steps for Key StakeholdersU.S.Congress Pass permitting reform to accelerate critical mineral mining and processing projects.Appropriate funding for p

180、re-commercial battery production facilities.Work with industry to create a consistent,unified national approach to lithium battery recycling.U.S.federal agencies Collaborate with Li-Bridge to implement the recommendations made in this report.Consult with the U.S.industry to draft effective implement

181、ation rules for the Inflation Reduction Act incentives to catalyze new investment in lithium battery development and manufacturing capacity,including electrodes and electrolyte salts,and electrolyte solvents.Direct R&D toward priority areas in partnership with the existing federal agencies(e.g.,DARP

182、A,ARPA-E),national laboratories,and manufacturing institutes while continuing to expand support for demonstration and deployment.Support the establishment of a National Battery Workforce Council dedicated to rapidly advancing the training and education of battery industry workers.State/local governm

183、ents Streamline and standardize permitting processes to accelerate critical mineral mining and processing projects;develop shovel-ready industrial zones for energy materials and battery cell production.Partner with industry to build support for battery-related projects among local communities.Indust

184、ry Continue to work together to further define industry needs(including workforce training needs),step up efforts to enact battery standards,and help shape solutions that will allow the U.S.industry to participate more fully and profitably in the manufacture of lithium battery technology.Li-Bridge20

185、 21 Building a Robust and Resilient U.S.Lithium Battery Supply ChainIX.Final WordBy implementing the recommended actions outlined in this report,Li-Bridge believes,the U.S.industry can double its value-added share by 2030(capturing an additional$17 billion in direct valueadd annually and 40,000 jobs

186、 in 2030 from mining to cell manufacturing),dramatically increase U.S.national and economic security,and position itself on the path to a near-circular economy by 2050.Li-Bridge is optimistic that the U.S.industry can build sustainable competitive advantages,overcoming any comparative disadvantages

187、the United States may have in the form of higher costs or a lack of critical mineral resources and enabling the U.S.industry to thrive without perpetual government support.Li-Bridge believes the U.S.path to sustainable competitive advantage will rely heavily on continuing to build its capabilities i

188、n innovation and speed to commercialization.U.S.innovation and commercialization must occur in all forms(product,process,and business model),at all levels(breakthrough innovation and continuous improvement),and across all segments(upstream to downstream)to ensure enduring demand for U.S.produced pro

189、ducts.The United States must build upon its solid foundation in materials innovation today and develop strengths in new areas,such as manufacturing processes and equipment.LiBridges recommended initiatives support building sustainable competitive advantage in the United States in several ways:By jum

190、pstarting U.S.capacity investment to gain knowhow in high-volume manufacturing(Objective 1)By investing in R&D and shared pre-commercial production lines to develop and bring U.S.innovations to market more quickly(Objective 2)By securing access to critical minerals and materials to reduce risk to U.

191、S.producers and customers(Objective 3)By investing in workforce development to ramp up production more quickly and drive continuous improvement(Objective 4)Li-Bridge recommends that the U.S.government implement the actions recommended in this report and engage with industry through the Li-Bridge all

192、iance to ensure the effective implementation of those actions.Doing so will put the U.S.lithium battery supply chain firmly on the path to achieving LiBridges 2030 and 2050 goals and building sustainable competitive advantages.AppendixLi-Bridge22 23 Building a Robust and Resilient U.S.Lithium Batter

193、y Supply Chainare also related to an OEMs time and effort to reestablish localized supply chains.Put simply,U.S.producers cost positions must improve.OEMs are also not required to source locally to access U.S.markets.There were no domestic or North American content requirements for battery cell manu

194、facturing or their end applications(e.g.,EVs)prior to passage of the Inflation Reduction Actoutside of lithium-based battery solutions used in defense applications.So,producers of battery intermediate goods are wary of investing in U.S.-based production capacity for the sake of offering U.S.-made pr

195、oducts.Whats at stake:Intermediate materials and components contribute greater than 50%of the value add and jobs that comprise a battery cell.Announced production facilities for intermediate goods exceed 100 GWh annually and have billion-dollar construction price tags.OEMs will continue to pursue an

196、 optimized global production footprint given the importance of cost,ship-ability of products,and inherent distance between the largest markets for finished products and where battery raw materials are found.The U.S.must become more competitive to attract new projects in intermediate products,or risk

197、 having wellpositioned global(AsiaPacific)and regional(Canada)peers continue to secure the majority share of new capacity.And the U.S.must create an environment where its startup companies involved in next-generation active materials and other intermediate productspredisposed to building U.S.footpri

198、ntsdevelop the necessary know-how and cost positions to become globally competitive in the long run.CHALLENGE:A lack of U.S.R&D-and pilot-scale line capacity for the commercialization of new technology Taking new battery technology from the lab to industrialscale production is characterized by both

199、high cost and high risk.Companies seeking to commercialize new technology incur significant costs(e.g.,materials,labor,equipment)to produce a range of prototype samples for testing and validation.Yet,there is no guarantee these companies will be able to recoup these costs if the new technology fails

200、 to meet requirements or attract enough customers.This perilous journey is often referred to as the“valley of death”because many programs and startups run out of funds and“die”before reaching commercialization and generating positive cash flow.To derisk the journey from the R&D lab to industrialscal

201、e production and to manage expenditures,companies will often produce,test,and validate a new technology in several steps of incremental volume(and investment)rather than jump straight to industrialscale production.The typical steps of producing incremental volume can be organized into three broad ca

202、tegories:lab-scale,pilot-scale,and industrial-scale.Figure 6 provides details about each step.Figure 6 By 2030,workforce demand will outstrip the existing workforceA.1.Expansion of“Other notable industry challenges”1 Due to the difficulties and costs associated with shipping these finished goods(i.e

203、.,size,weight,safety regulations)2 Exception:some active materials may localize owing to short shelf life and/or difficulty transporting,e.g.,electrolytes3 Li-Bridge topic committee analysisCHALLENGE:Insufficient benefits for customers(OEMs)to“buy local”and pay higher cost for U.S.-made intermediate

204、s Industry expects a large share of cell manufacturing and pack assembly to localize in the U.S.under current economic and regulatory conditions.1 Yet,Li-Bridge participants do not expect the production of many battery intermediate goods,such as chemical precursors and certain active materials,to lo

205、calize in the U.S.without policy intervention.2Facilities in East Asia,Australia,and South America produce a majority of intermediate battery products today and serve as the benchmarks for establishing competitive U.S.-made supply.Global customers have established relatively mature supply chains to

206、access these products.Most intermediate goods are easily shippable and have sufficient shelf life to enable international trade.Finally,leading suppliers of intermediate battery products by market share are not U.S.-based companies.The value proposition of U.S.-made intermediates:On average,Li-Bridg

207、e participants estimate that U.S.-produced battery materials and components carry 1020%higher landed costs3 than equivalent materials and components produced in and imported from AsiaPacific.Several factors contribute to the U.S.s higher cost position,including:Limited know-how(largest factor):The U

208、.S.s current immature position on the learning curve(i.e.,experience with large volume production that improves production costs)translates to lower productivity,higher scrap rates,and a longer timeline to ramp up production to full capacity.Higher labor costs:Compared with China,U.S.labor costs are

209、 estimated to be 23x higher for engineers and 45x higher for semi-skilled workers.Environmental,social,and governance standards:U.S.producers face more stringent emissions and waste standards.However,this gap is expected to diminish over time as China increases its standards.These disadvantages outw

210、eigh potential savings from the U.S.s lowcost energy supply and lower cost outbound logistics to serve its domestic markets.Industry participants report OEMs are unwilling to pay 1020%more in direct pricing to have U.S.-made intermediates in their batteries.U.S.-produced intermediate goods generally

211、 do not provide meaningful other quantifiable benefits to compensate for their higher cost position such as highest quality or lowest embedded carbon.While there are operational benefits created by proximity such as closer collaboration and supply chain resiliency,switching costs Figure 5 U.S.struct

212、ural disadvantages and learning curve challengesLi-Bridge24 25 Building a Robust and Resilient U.S.Lithium Battery Supply ChainCHALLENGE:A lack of domestic technical know-how,especially in midstream activities A highly skilled workforce sits at the heart of the U.S.battery sectors ambition to be sel

213、fsufficient and globally attractive.The U.S.has a strong foundation in battery materials and cell design,research,and development thanks in part to DoE labs,world-class universities,and innovative entrepreneurs and startups.Yet,the U.S.lithium-based battery industry currently lacks the depth and bre

214、adth of expertise in large-scale production required to build and sustain a secure,globally competitive industry.Extent and quality of know-how:Today,the U.S.workforce does not have the same experience in lithium-based battery manufacturing as other countries,such as China.The atscale manufacturing

215、footprint in the U.S.is largely just starting to take root,with cell manufacturing leading the way relative to other parts of the supply chain.Still,the cell manufacturing in the U.S.today is often heavily supported by workers on visas or visiting experts from overseas.Years on plant floors,accumula

216、ted by longterm U.S.workers,are needed to develop the capabilities necessary to build cost-competitive batteries.Manufacturing know-how consists of knowledge about procedures and methods of production.Transferring knowhow is difficult for three reasons:(1)it is often tacit rather 5 Includes raw mate

217、rial through pack mfg.;157K needed for 2030 potential state vs 36K in 2022than explicit knowledge;(2)much of it is specific to the plant,equipment,suppliers,materials,and processes used;and(3)companies are highly protective of sharing it.Thus,acquiring large-scale manufacturing know-how requires dir

218、ect experience.Expertise in large-scale production is needed across the entire battery supply chain,though midstream segments face the most acute need.Within these segments,the following types of functional roles are most needed:Design and optimization of large-scale production operationse.g.,proces

219、s engineers,industrial engineers Research and development of battery materials and cell designse.g.,electrochemist,material scientist Supervision and operation of large-scale production operationse.g.,skilled workers Future workforce gap(quantity):Achieving LiBridges 2030 Goal for U.S.partial self-s

220、upply will require over 120,000 additional workers across the battery supply chain.5 Headcount must grow by more than four times todays workforcewith more needed in adjacent and supporting segments such as used battery collection,maintenance and repair,end product integration,charging infrastructure

221、,first response,and fire and rescue.Figure 7 By 2030 workforce demand will far outstrip the existing workforceOptions for small and medium sized businesses(SMEs):While large firms often have their own inhouse pilot lines,SMEs typically cannot spend their limited funds to build and operate their own

222、pilot line.Thus,SMEs secure third party-controlled pilot line capacity to meet their testing and validation needs.SMEs generally have two options for accessing an external pilot line:Partner with a large firm to gain access to the partners dedicated pilot line Use a shared pilot line facilityAlthoug

223、h using an external pilot line can help SMEs from a cost standpoint by eliminating the needed capex for an inhouse pilot line,it is not without tradeoffs.There is no guarantee that the SME can find an interested partner and reach agreeable terms.SMEs are constrained by the capabilities and flexibili

224、ty of the external pilot line,and SMEs risk exposing sensitive intellectual property whenever using shared facilities.Availability of shared R&D-scale and pilot-scale production facilities:Li-Bridge participants report a shortage of shared pre-industrial-scale production facilities in the U.S.at bot

225、h the R&D-scale(1 MWh/year)and pilot-scale(1-500 MWh/year)production capacity ranges.This shortage extends product development and qualification timelines for producers at every step of the supply chain,but especially for companies seeking to commercialize raw materials,active materials,inactive com

226、ponents,and processing equipment.At R&D-scale,numerous shared facilities exist in the U.S.,but demand exceeds supply.Industry reports wait times to access an R&D-scale line in the U.S.average 12+months(6+months to find and select a suitable R&Dscale line and 6+months before the first opening on a sh

227、ared facilitys schedule).4 In contrast,in China and the European Union,Li-Bridge participants report it takes an average of one month to select a R&D-scale line facility and secure a bookingand subsequent builds and testing can be run continuously without additional lead time.At pilot-scale,industry

228、 reports,there are currently no shared pilot-scale facilities in the U.S.In contrast,Europe has developed a robust ecosystem of shared pilot-scale production lines(LiPLANET)with capacities of up to 150 MWh per year(CustomCells).4 Estimates from Li-Bridge participantsWhats at stake:Limited capacity o

229、f shared pre-industrial-scale production lines(80%hydropower or nuclear in both Quebec and Ontario),Li-Bridge28 29 Building a Robust and Resilient U.S.Lithium Battery Supply ChainB.Sustainability(e.g.,decarbonization,environmental protection,recycling)The LiBridge alliance recognizes the importance

230、of creating an environmentally sustainable lithium battery supply chain.The recommended initiatives promote sustainability in several ways:By promoting low carbon production By supporting R&D for more environmentally benign and lower-carbon-emitting processes By supporting recycling and circularity

231、By supporting the generation of reliable clean electricityAreas of support:In addition to aligning on the above recommended initiatives,Li-Bridge participants support the following statements:Commitment:Industry is committed to(a)decarbonizing in line with the stated U.S.goal of net-zero by 2050 and

232、(b)developing,operating,and shutting down operations in an environmentally benign manner that is consistent with government regulations.Financial obligations:While meeting sustainability goals,companies must also continue to meet the financial expectations of investors and the cost expectations of c

233、ustomers.Differentiation:Companies want to compete on sustainability and emissions and view it as a competitive edge.Capital conditions:Access to government capital should be,in part,dependent upon performance against simple,clear environmental metrics(with performance assessed on a sliding scale,no

234、t a binary threshold).Electricity:Industry desires industrial zones served by electricity generated from clean energy sources,especially for mid-and downstream operations;some industry members strongly prefer to know their facilities are powered by 100%clean energy rather than purchase renewable ene

235、rgy credits on a mixed grid.Circularity:Industry supports the creation of a world-class domestic circular economy through a combination of laws,standards,and incentives.R&D:Industry supports R&D investment in clean,low-emission processes and materials.Accelerated permitting:While the industry is cle

236、ar that permitting in the U.S.must be accelerated to enable the U.S.clean energy transition,the industry does not request for lowering U.S.environmental standards.Areas of hesitancy:In contrast,Li-Bridge participants express hesitancy or mixed views on the following issues:Bans:Industry is generally

237、 unsupportive of bans,e.g.,On producing and selling ICE vehicles On importing materials from countries of concern,e.g.,DRC On sea-based mining(seabed or seawater)Recycled content:Industry generally does not support recycled content quotas given the unpredictable demand and supply cycles inherent in

238、a fast-growing sector Fossil-fuel-free mining:Industry believes it is too early to require 100%fossil-fuel-free mining and it is unclear whether decarbonization targets for the mining sector should be slower(or can be faster)than the economy-wide net-zero pathway.Carbon pricing:Industry is open to t

239、he concept of carbon pricing,such as Europes carbon border adjustment mechanism,but recognizes its implications extend far beyond the battery industry.Transparency:While the industry supports sharing certain information,such as material provenance,the industry expresses concern that incremental cost

240、 of compliance may deter customers and slow energy storage adoption.A.2.Parallel objectives Altogether,the above recommended initiatives advance several objectives in parallel:Security(supply chain robustness and resiliency)Sustainability(e.g.,decarbonization,environmental protection,recycling)Equit

241、y(place-based,environmental,social,and economic)Long-term economic competitivenessA.Security(supply chain robustness and resiliency)As the primary objective of the LiBridge project,LiBridges recommended initiatives support creating a secure U.S.lithium battery supply chain in a multitude of ways:By

242、supporting domestic production and recycling through incentives,investment,and regulatory changes By diversifying sources of supply through foreign partnerships and investments By innovating to create substitutes and reduce demand for critical materialsGoing forward,the Li-Bridge alliance must conti

243、nue to monitor the U.S.lithium battery supply chain for vulnerabilities and provide guidance to the U.S.government on how it can ensure U.S.economic and national security.Li-Bridge should also continue to seek out opportunities to leverage and cooperate with related domestic and international organi

244、zations including but not limited to:Bilateral partnerships with foreign governments and association with the private sector alliances,e.g.,Canada or European Battery Alliance(EBA)Intergovernmental organizations,e.g.,International Renewable Energy Agency(IRENA)Multi-lateral initiatives,e.g.,Minerals

245、 Security Partnership(MSP)Figure 8 Recommended initiatives advance multiple objectives Li-Bridge30 31 Building a Robust and Resilient U.S.Lithium Battery Supply ChainA.3.Recent developments(additional details)The BidenHarris administration recently published the National Security Strategy in October

246、 2022,which states“strategic public investment is the backbone of a strong industrial and innovation base in the 21st century global economy”.The recommendations in this whitepaper are grounded in the policy,regulatory,and legal frameworks outlined in the Strategy and established through recent legi

247、slative and executive actions.The past year has witnessed many developments with implications for the U.S.lithium battery supply chain.Two U.S.laws are most significant among these developments:the Infrastructure Investment and Jobs Act of 2021 and the Inflation Reduction Act of 2022.Infrastructure

248、Investment and Jobs Act of 2021(IIJA),aka Bipartisan Infrastructure Law(CRS)(DOE FOA)Signed into law in November 2021.Authorized$1.2 trillion,of which$550 billion was new spending for infrastructure improvements,e.g.,highways,power,and water.Appropriated$76 billion over five years for energy and min

249、erals-related research,demonstration,technology deployment and incentives,mostly through the U.S.Department of Energy(DOE),including$7.9 billion for battery manufacturing,recycling,and critical minerals.In February 2022,the DOE issued two funding opportunity announcements(FOA)totaling$3 billion to b

250、oost the production of advanced batteries and components in the U.S.using funds appropriated to the DOE from the IIJA.Inflation Reduction Act of 2022(IRA)Signed into law August 2022.Raises$737 billion in revenue through tax collection and deficit reduction,invests$369 billion in energy security and

251、climate change measures,and$64 billion in extending the Affordable Care Act.Included among the energy security and climate change measures are significant investments for both the supply and demand sides of the domestic lithium battery supply chain.Figure 9 summarizes the two laws key provisions aff

252、ecting the U.S.lithium battery supply chain and where they overlap with LiBridges recommendations.Together,the IIJA and IRA direct significant government funding and action toward strengthening the U.S.lithium battery supply chain.The industry is strongly encouraged by these actions.However,the IIJA

253、 and IRA do not fully address the industrys key challenges,and much work remains to be done.Figure 9 IIJA&IRA provisions provide significant support for improving U.S.investment attractiveness and infrastructure,but gaps remain elsewhere C.Equity(place-based,environmental,social,and economic)The LiB

254、ridge alliance recognizes the importance of promoting equity in its many forms.In addition to recommending initiatives that include enhanced community engagement and workforce development efforts,the Li-Bridge alliance agrees with the following statements:Companies must engage early and often with l

255、ocal communities to understand their concerns and ensure that projects benefit to the local community while minimizing negative externalities.Reskilling workers from declining fossil-fuel-based industries or identified communities should be prioritized for staffing the battery industrys workforce ne

256、eds.Hiring U.S.workers should be prioritized before extending visas to foreign nationals,where those skills exist or can be learned quickly.Perfect must not be the enemy of good.The costs and benefits of building a strong lithium battery supply chain should be shared across all groups in aggregate,t

257、hough some projects may promote equity more than others.D.Long-term economic competitivenessCultivating competitive advantage is critical for U.S.industry to compete globally and reduce future need for government subsidies and/or policy intervention.The industry believes that with sufficient scale a

258、nd time,U.S.firms can gain sufficient knowhow to narrow the landed cost gap relative to other countries.However,to build sustainable competitive advantage and overcome the USs higher costs and lack of critical mineral resources,the industry believes the U.S.must lean into innovation and speed to mar

259、ket.LiBridges recommended initiatives support building sustainable competitive advantage for the U.S.in innovation and speed to market in several ways:By jumpstarting U.S.capacity investment to gain knowhow in high volume manufacturing.By investing in R&D for innovative materials,technologies,and pr

260、ocesses.By supporting shared pre-commercial production lines and commercialization support to bring U.S.innovations to market more quickly.By investing in workforce development to ramp up production more quickly and drive continuous improvement.Innovation must occur in all forms(product,process,and

261、business model),at all levels(breakthrough innovation and continuous improvement),and across all segments(upstream to downstream)to ensure enduring demand for USproduced products.To achieve this vision of innovating in all areas,the U.S.must build upon its solid foundation in materials innovation to

262、day and develop strengths in new areas,such as manufacturing processes and equipment.In building an innovation and commercialization eco-system,the U.S.should leverage and build upon existing government efforts,such as the Department of Energy National Labs,Advanced Research Projects Agency Energy(A

263、RPAE),and Manufacturing USA.By investing in R&D,commercialization support,and workforce development,the U.S.industry can build a sustainable engine of innovation that keeps U.S.-produced batteries at the cutting edge and ensures continued demand without government support.Li-Bridge32 Two additional

264、recent U.S.federal government actions highlight other major components of modern industry strategy:the CHIPS and Science Act of 2022(CHIPS Act)and the Defense Production Act(DPA).The CHIPS Act is a clear demonstration of renewed industrial support at a sector level(in this case,semiconductors).The D

265、efense Production Act(DPA)demonstrates how existing tools at the governments disposal can be applied to go further,faster.Combined with the IRA and IIJA,there now exists a strong and timely foundation against which solutions outlined in this whitepaper can be implemented.9 U.S.Geological Survey Rele

266、ases 2022 List of Critical Minerals|U.S.Geological Survey(usgs.gov)A.4.Definition of key termsCritical minerals:Per the Energy Act of 2020,a“critical mineral”is a non-fuel mineral or mineral material essential to the economic and national security of the U.S.and which has a supply chain vulnerable t

267、o disruption.The USGS applies a rigorous methodology to identify and evaluate potential critical minerals and periodically publishes an updated list of critical minerals.The USGS published the latest critical mineral list in Feb 2022,which included 50 mineral commodities.9 Critical minerals include

268、but are not limited to aluminum,cobalt,fluorspar,graphite,lithium,manganese,and nickel.Energy materials:Used in this report to refer to any material used in the production of lithium batteries,including(a)critical minerals,(b)non-critical raw materials,(c)chemical intermediates,and(d)recycled materi

269、als/black mass.Due to the complexities of refining and processing flow sheets,numerous additional intermediate materials and reagents used in the production of lithium batteries were not explicitly evaluated as part of the LiBridge initiative.These inputs include sulfuric acid,silane gas,hydrogen fluoride,sodium carbonate,and more.However,the absence of consideration of these inputs does not indicate Li-Bridge views these items as immune from potential future supply chain challenges.www.anl.gov/Li-Bridge