[Senate Hearing 118-317]
[From the U.S. Government Publishing Office]
S. Hrg. 118-317
FEDERAL ELECTRIC VEHICLE INCENTIVES INCLUD-
ING THE FEDERAL GOVERNMENT'S ROLE IN
FOSTERING RELIABLE AND RESILIENT ELECTRIC
VEHICLE SUPPLY CHAINS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 11, 2024
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
55-845 WASHINGTON : 2025
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JOE MANCHIN III, West Virginia, Chairman
RON WYDEN, Oregon JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
MARTIN HEINRICH, New Mexico STEVE DAINES, Montana
MAZIE K. HIRONO, Hawaii LISA MURKOWSKI, Alaska
ANGUS S. KING, JR., Maine JOHN HOEVEN, North Dakota
CATHERINE CORTEZ MASTO, Nevada BILL CASSIDY, Louisiana
JOHN W. HICKENLOOPER, Colorado CINDY HYDE-SMITH, Mississippi
ALEX PADILLA, California JOSH HAWLEY, Missouri
Renae Black, Staff Director
Sam E. Fowler, Chief Counsel
Zahava Urecki, Professional Staff Member
Richard M. Russell, Republican Staff Director
Justin J. Memmott, Republican Chief Counsel
Valerie Manak, Republican Professional Staff Member
C O N T E N T S
----------
OPENING STATEMENTS
Page
Manchin III, Hon. Joe, Chairman and a U.S. Senator from West
Virginia....................................................... 1
Barrasso, Hon. John, Ranking Member and a U.S. Senator from
Wyoming........................................................ 8
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 13
WITNESSES
Turk, Hon. David M., Deputy Secretary, U.S. Department of Energy. 15
Adeyemo, Hon. Adewale O., Deputy Secretary, U.S. Department of
the Treasury................................................... 28
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Adeyemo, Hon. Adewale O.:
Opening Statement............................................ 28
Written Testimony............................................ 30
Responses to Questions for the Record........................ 96
Barrasso, Hon. John:
Opening Statement............................................ 8
Bloomberg article entitled ``Hertz to Sell 20,000 EVs in
Shift Back to Gas-Powered Cars'' by David Welch and Richard
Clough, published January 11, 2024......................... 10
Better Business Bureau profile of Sunnova Energy Corporation. 37
Bryce, Robert:
Statement for the Record..................................... 110
Cortez Masto, Hon. Catherine:
Chart entitled ``Building America's Clean Energy Future''.... 74
GreenMet:
Statement for the Record..................................... 123
Heinrich, Hon. Martin:
Forbes article entitled ``In 2023, The United States Started
Building Big Again, Thanks to Biden's Inflation Reduction
Act'' by Jack Conness, published December 26, 2023......... 40
Axios article entitled ``A Manufacturing Investment
Supercycle Is Starting'' by Neil Irwin, published June 16,
2023....................................................... 47
Chart entitled ``211,350 Clean Energy Jobs Since Passage of
the Bipartisan Infrastructure Law and Inflation Reduction
Act''...................................................... 52
Chart entitled ``Building America's Clean Energy Future''.... 53
Hoekstra, Peter and Joseph J. Cella:
Statement for the Record..................................... 125
Institute for Energy Research:
Statement for the Record..................................... 130
Report entitled ``The Economic and Strategic Importance of
Domestic Mineral Production: Unlocking the Value of
America's Homegrown Mineral Resources''.................... 134
King, Jr., Hon. Angus S.:
Chart comparing cost of ownership of electric vehicles versus
gas-powered vehicles....................................... 62
Chart entitled ``The Inflation Reduction Act Is Accelerating
U.S. Battery Manufacturing''............................... 64
Manchin III, Hon. Joe:
Opening Statement............................................ 1
Chart depicting Inflation Reduction Act critical mineral
sourcing percentage requirements........................... 4
Chart depicting Inflation Reduction Act deadlines for
removing China from vehicle supply chains.................. 6
National Mining Association:
Statement for the Record..................................... 171
Nunes, Ashley:
Letter for the Record........................................ 107
Turk, Hon. David M.:
Opening Statement............................................ 15
Written Testimony............................................ 17
Responses to Questions for the Record........................ 82
Wyden, Hon. Ron:
Opening Statement............................................ 13
Zero Emission Transportation Association:
Statement for the Record..................................... 185
FEDERAL ELECTRIC VEHICLE INCENTIVES INCLUDING THE FEDERAL GOVERNMENT'S
ROLE IN FOSTERING RELIABLE AND RESILIENT ELECTRIC VEHICLE SUPPLY CHAINS
----------
THURSDAY, JANUARY 11, 2024
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:00 a.m., in
Room SD-366, Dirksen Senate Office Building, Hon. Joe Manchin
III, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOE MANCHIN III,
U.S. SENATOR FROM WEST VIRGINIA
The Chairman. The Committee will come to order.
First, we want to thank all of you for being here. We want
to thank David for coming, David Turk, from DOE, and we have
Adewale Adeyemo, he will be with us virtually. Unfortunately,
he has COVID, but he is still able to participate and we really
appreciate his efforts of doing that. It is going to be very
helpful for all of us.
We are here to talk about a familiar subject to members on
this Committee--the electric vehicle supply chain. Before we
begin, I want to start, again, by thanking all of those who are
participating, all of those who made this possible. I
appreciate--Adewale, again, I hope you are feeling better and
that you are back in operation soon. I know you and David Turk
have important responsibilities implementing the laws passed by
Congress to secure the EV supply chain.
We should all be concerned when an Administration tries to
implement a law that Congress did not pass. And when it comes
to EVs, this Administration is implementing the Build Back
Better approach they wanted, not the Inflation Reduction Act
that we passed. The Inflation Reduction Act had three
purposes--reduce our debt, secure our energy and produce it
cleaner in America than anywhere else, and bring back
manufacturing of the building blocks that run our country and
made us the superpower of the world. Some may believe I just
have a vendetta, which I don't, against EVs. I don't own an EV.
I don't intend on buying an EV. But I think they are a
wonderful vehicle. I just think that we got way ahead of our
skis on this.
The transportation sector is responsible for 29 percent of
the greenhouse gas emissions in the country, more than any
other sector, with light duty vehicles making up 58 percent of
those emissions. Globally, transportation makes up about 15
percent of total greenhouse gas emissions. Alternative-fueled
vehicle technologies, like EVs, hydrogen vehicles, and hybrids,
can play an important role in lowering these emissions while
providing an opportunity for the United States to maintain our
status as an automotive powerhouse, which we have always been;
re-shore our manufacturing base, which we have let go; and
create good-paying jobs, which we all need. My problem is not
with EVs. My problem is with the Administration's crusade to
convert everyone over to an EV regardless of where the battery
came from or what the law actually says. The United States is
the birthplace of Henry Ford, and the revolutionary Model T.
Vehicle manufacturing is a building block of our great nation.
There has never been a time when we couldn't produce the
engines, transmissions, axles, and every other essential
component of a car. I remember waiting in line for gas in the
1970s to go to work because of OPEC. And I will be damned if I
am going to have to wait for a battery from China.
Just like how Putin weaponized Russia's oil and gas
resources to try to scare off Europe from supporting Ukraine,
Xi Jinping and the Chinese Communist Party are more than
willing to use EV batteries and the critical minerals inside
them as leverage to put Americans and the free world at risk.
China has already started to do so with recently announced
export controls of certain critical minerals. China has truly
cornered the market on EVs and is responsible for 74 percent of
the world's cathode production, 92 percent of the anode
production--that's the positive and negative of a battery--and
76 percent of the lithium-ion battery production. They control
anywhere from 60 to 100 percent of minerals processing,
depending on the mineral. But it doesn't have to be that way.
America and free trade agreement partners have the capacity to
produce this for ourselves. For example, our free trade
agreement partners, combined, are mining more lithium, nickel,
and cobalt than China, and 20 to 40 percent of the global
processing capacity for these minerals belong to either a U.S.
ally, one of our FTA partners, or exist in our own country, and
that is before we develop the mining and processing facilities
in the queue. Figures like these show why correct
implementation of the Inflation Reduction Act and the
Bipartisan Infrastructure Law is so vital coupled with
comprehensive and common-sense permitting reform. These bills
were carefully designed to help us win back our vehicle supply
chains, and create new domestic jobs. Unfortunately, it seems
that the Administration is so hell-bent on implementing their
radical climate agenda--quicker than needed--for political gain
that they are willing to bend and break the law and watch our
manufacturing base continue to fall behind.
What I'm saying here is nothing I haven't said to the
President. I think we have a respectful disagreement on how it
is being implemented. We should all be proud of the bill that
we have, it is most transformative. The IRA is the most
transformative bill that we have ever done in my lifetime. Let
me give you some examples: First, in proposed guidance, the
Administration has cut the IRA critical mineral sourcing
percentage requirements in half, which is a blatant violation
of the numbers Congress wrote directly into the law. These were
written into the law. That is in the bill. This is what they
are operating on, half of that. They are operating on half of
it, but we should be expediting all of our efforts in trying to
make sure that we hit these numbers versus receding back to
their numbers and depending on foreign supply chains.
[Displayed chart follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The Chairman. They are also pretending the battery
component manufacturing is the same as critical mineral
processing. Extraction and processing is different than
manufacturing, and it is stated in the bill--manufacturing has
to be done in North America to get the $3,750. They are
proposing fake ``critical minerals free trade agreements,''
such as with Indonesia. Indonesia is controlled by China. You
can't make that up. You can't think that Indonesia is going to
be a free trade agreement country. They don't have control of
it. These are the things that we are talking about. And we are
hoping that we will all come back to our senses, Democrats and
Republicans, working together on this to get back to what the
bill was intended to do.
And, most recently, with their proposed rules on Foreign
Entities of Concern, the Administration is delaying the
deadlines we wrote into the IRA to remove China completely from
the battery supply chain. If we don't do it sooner than later,
it's going to be something we will be dependent on for a long
time. As shown in the chart behind me, under the weakened
Foreign Entity of Concern rules, vehicles that contain battery
minerals and components from China and other adversaries can
qualify for years longer than allowed in the bill.
[The chart referred to follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The Chairman. This is in the bill: 2024, deadline from the
Inflation Reduction Act--no extraction or processing of
critical minerals by Chinese entities or other foreign entities
of concern, December 31, 2024. They now have written into their
proposed rules, December 31, 2026, or later. This says no
battery manufacturing by Chinese entities or foreign entities
of concern. That was supposed to be December 31, 2023, which
gave them a year. Now they are 2026 or later for certain anode
and cathode components. Who knows? That's all temporary rules.
You cannot operate that long on temporary rules because they
weren't designed for that.
The Biden Administration did not write the bill, and quite
frankly, it seems like some of the people implementing the law
have not really read it or don't understand what our intentions
were. The tax code Congress writes is not a set of voluntary
guidelines, but that happens to be how some in the
Administration are treating it, and the EV credit is just one
of several concerning examples. If the Administration does not
correct course and implement the IRA programs the way that we
wrote them, their unlawful rules are bound to get struck down
in court, which will create tremendous uncertainty for both
automakers and consumers, and for all the investments that are
coming to all of our states. Every one of us are benefiting
from this bill. I will support any entity that goes to court to
correct the illegal liberalization of this law with an amicus
brief to set the record straight on the bill Congress actually
wrote. It won't be hard to support it because it is just as
plain as you can read it, it's in the bill. I am willing to go
and do whatever it takes to make sure that we get back on
track.
Now, let me be clear, just because the Administration has
broken a lot of the laws implementing certain aspects of the
IRA, it does not change how proud that we all should be of the
law that we actually passed. There is no question the IRA is
doing what we hoped it would do in many respects. And it will
do so much more if this Administration follows the law of the
land. The IRA raised $687 billion in revenue, invested $384
billion in energy security while also improving our
environment, invested another $64 billion in health care, and
with the balance, we paid down $239 billion of debt. These are
things that you never hear anybody talk about. Today, we are
producing more energy than ever before in America. You don't
hear anybody bragging about that. We have been more independent
today than we ever have been in the history of the United
States. Thirty-seven trillion cubic feet of natural gas, 4.7
billion barrels of oil, record amounts of solar power and
battery storage, and we are continuing to innovate to make our
energy even cleaner. We are transitioning the proper way by not
giving up anything of our energy dominance. That is what makes
us the superpower of the world.
The IRA is bringing more investments to this country than
ever before and it is happening in states all across the
nation--red and blue states. I don't understand red and blue
states, I just understand American states, but we are all
benefiting from it, no matter what your political preference
is, and DOE will play a critical role in supporting all of this
with programs that provide financial assistance for battery
materials, processing, manufacturing, and recycling projects in
the United States, and loans and loan guarantees for every part
of the EV supply, from mining to manufacturing, through the
Loan Programs Office. In fact, electric vehicles and battery
makers announced $52 billion in investments in North American
supply chains before the Administration started loosening these
rules. That was before, based on how the bill was written, but
if they keep bending the rules, we are going to lose the
momentum and we cannot afford to let happen.
Mr. Turk and Mr. Adeyemo, let me just end by thanking you
both, again, for appearing here today to correct and help us
through this. You have always taken the time to hear me out on
these issues, and while we have different perspectives, I have
the utmost respect for both of you. I look forward to a
constructive conversation today about how we can achieve a more
reliable supply chain for American EVs.
And with that, I will turn to the Ranking Member, Senator
Barrasso, for his comments.
OPENING STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Well, thanks, Mr. Chairman. Thank you for
holding this hearing on federal subsidies for electric cars.
These government handouts are the centerpiece of the disastrous
so-called Inflation Reduction Act. Just about everything that
President Joe Biden claimed about the IRA is false. And Mr.
Chairman, I am happy that you showed those signs, which point
out the lawlessness of the Biden Administration when it comes
to the law. What the IRA really stands for to me is
``irresponsible, reckless, and alarming.''
So let's start with the cost. According to a Goldman Sachs
analysis, the electric car subsidies in the IRA will cost an
estimated $393 billion. That analysis is 28 times more than
what the Congressional Budget Office estimated. Our national
debt is now $34 trillion, and thanks to the IRA, we are about
to spend hundreds of billions of dollars that we don't have to
subsidize electric cars that the great majority of Americans do
not want. This is especially true in Wyoming, where electric
cars simply cannot compete with conventional vehicles. The fact
is, electric car subsidies go primarily to the State of
California, where nearly 40 percent of all electric cars in
America are being sold. So hardworking families in my home
State of Wyoming and the Chairman's home State of West Virginia
and other states represented significantly by members of this
Committee, really, are getting stuck subsidizing wealthy people
from California. The IRA is a shakedown.
It is also becoming very clear that President Biden hasn't
thought through the consequences of his so-called energy
transition. His efforts to force-feed Americans electric cars
is going to cause greater instability--greater instability--in
our nation's electric system. There is a group we refer to as
NERC. It is the North American Electric Reliability
Corporation. It has warned of increased risks from the
premature closure of coal and natural gas power plants. The
Biden Administration does not seem to care. The Biden
Administration is working to shut down even more of these power
plants while promoting a huge new source of demand on the grid,
which is, of course, electric cars. Just consider that fully
charging a single electric car consumes the same amount of
electricity needed to power an entire house during times of
peak demand. Does the President have any clue that his math is
not working?
No one really believes that two-thirds of the new cars sold
in America in 2032 are going to be electric. The Biden
Administration's fixation on these electric cars amounts to
wishful thinking on his part. But despite generous subsidies,
the demand for electric cars is stagnating. Car dealers are
opting out of selling them and opting out of servicing them.
Compared to owners of conventional cars, owners of electric
cars are paying higher repair costs, higher insurance rates,
and by the way, they are getting less resale value. The
headline today, Mr. Chairman, and I ask unanimous consent to
put this in the record, is from Bloomberg. We talked about
resale values. Hertz reports today they are going to sell
20,000 EVs in its shift back to gas-powered cars. So much for
the Biden economy.
The Chairman. Without objection.
[The article referred to follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. So the first paragraph of this, ``Hertz
Global Holdings plans to sell a third of its U.S. electric
vehicle fleet and reinvest in gas-powered cars due to weak
demand and high repair costs for its battery-powered options.''
The American public is seeing exactly the same thing, and they
are getting hit with similar bills.
The damage that the IRA will do to America's automotive
sector is potentially catastrophic. In the first nine months of
2023, Ford Motor Company alone lost $3.1 billion on electric
cars. Losses like that cannot go on for long. Perhaps worst of
all, the IRA plays right into the hands of the Chinese and
other foreign companies. You have heard the expression ``follow
the money.'' Well, if you want to follow the IRA money, the so-
called Inflation Reduction Act, you are going to need a
passport, because the money is going all over the world. Mr.
Chairman, as you have repeatedly pointed out, the Biden
Administration has allowed electric car subsidies to flow to
foreign companies in countries that are hostile to American
interests. Recently, the Chinese car maker BYD topped Tesla as
the world's largest electric car manufacturer. In Europe, that
company outsold Tesla in the last quarter of 2023. BYD's goal
is to be the biggest electric car manufacturer in Europe by the
year 2030. The Administration has said it welcomes Chinese
companies as big players in renewable and electric car markets.
This is a terrible mistake. The IRA will push us away from the
fuels and technologies where America has the lead and push us
toward the minerals and technologies that are currently
controlled by China.
We need to change course. President Biden wants to
subsidize and regulate our way to greater energy security and
lower emissions. He wants to force the nation to adopt a single
technology that only works in certain zip codes. This is a
recipe for failure. We need to return to a pro-America, all-of-
the-above energy strategy. We also need a comparable all-of-
the-above vehicle strategy, a strategy that includes more
efficient internal combustion engines, hydrogen fuel cells,
compressed natural gas, and hybrid vehicles. These are
technologies that can increase consumer choice while also
reducing emissions.
Thank you, Mr. Chairman.
The Chairman. Thank you.
One note: the bill prevented all Chinese cars from getting
any credits in the United States. We did that.
Senator Barrasso. Our enemies are getting the money.
The Chairman. Senator Wyden
OPENING STATEMENT OF HON. RON WYDEN,
U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman, and as
Chair of the Senate Finance Committee, which has jurisdiction
over the climate tax credits, like the new clean vehicle
credit, I am glad that we are continuing what we began in early
summer 2021. You and I remember the history--you invited me and
Senator Murkowski to come to West Virginia and we began the
efforts to get it right. And I want to make sure that some key
points really get out that address the heart of what we did.
Our colleague from Wyoming, my friend and neighbor, Senator
Barrasso, said something about all-of-the-above. Well, starting
in 2012, Senator Manchin and I began the effort to build the
foundation of our energy policy on what Senator Manchin and I
called technological neutrality, which was one better,
colleagues, because it ensured the competitiveness of our
energy system, while at the same time, giving everybody a
chance to be inventive and creative, because nobody knew what
the big energy sources would be 20 years down the road. And
then Senator Manchin and I, because I remember the expression
on his face when I asked him about technological neutrality
because we hadn't really gotten into that early in 2012--I said
the other thing we need to do is to say the more you reduce
carbon, the bigger your tax savings. And Senator Manchin
swallowed hard and said, yeah, does that include carbon capture
and nuclear and the like? I said, you're darn right it does. So
I want it understood that that was the foundation of what
actually became law--market oriented, no mandates, private
sector, and we were still focused on climate.
Now, let me just make a couple of quick points on EVs. The
issue with respect to EVs, Senator Manchin and I realized back
then it was going to be an issue of climate, jobs, and matters
like supply chains. And what we have sought to do with
Secretary Adeyemo, and we worked, I think, in a very
constructive kind of way, and we have been able to show that
climate, jobs, and secure supply chains, they are not mutually
exclusive. Smart policies can get you progress in all three
areas. And working with Mr. Adeyemo, I think we have achieved
that. Now, we understand--and the Chairman is talking about
this--we have continued work to do to make sure of the
relationship between the Department of Energy and Treasury so
that we continue to make progress. We are committed to doing
that, but the fact is, we are making progress. The automakers
already are making changes in the supply chains, making sure
that we are getting real improvement. We are seeing buildout of
charging stations and progress there.
So we are going to continue in the spirit of what we did in
2012, when we said technological neutrality, folks. It is an
improvement on even all-of-the-above because it's more science-
oriented, creates incentives for everybody to see in a federal
system. So this is an exciting bit of progress that we are
discussing. Senator Manchin made mention of some of the
announcements--over $150 billion of investment in electric
vehicles and batteries, big economic win. We have more to do,
and I look forward to working with my colleagues. And I also
note that Senator Barrasso is a valuable member of the Finance
Committee, and we will be able to continue those discussions.
The Chairman. Senator Barrasso.
Senator Barrasso. Yes, Mr. Chairman, the comment that you
made about the IRA not allowing tax credits for Chinese
electric vehicle purchases, but the IRA, and this will be part
of my questioning today, does allow leased Chinese electric
vehicles to qualify, and to me this is a massive loophole.
The Chairman. I agree with you a thousand percent, and
that's what we are trying to stop.
So with that, we turn to our witnesses now for their
opening remarks. We have the Honorable David Turk, Deputy
Secretary of Energy, and we have the Honorable Wally Adeyemo, a
friend to all of us who we know very well and work very close
to, from the Department of the Treasury.
So we will start with David Turk.
STATEMENT OF HON. DAVID M. TURK,
DEPUTY SECRETARY, U.S. DEPARTMENT OF ENERGY
Mr. Turk. Chairman Manchin, Ranking Member Barrasso,
Chairman Wyden, and other members of the Committee, thank you
for the opportunity to be with you all today.
For decades, the United States has sat idle while our
global competitors have taken control of critical supply
chains. Chairman, you raised some numbers. I will share a few
other numbers here as we begin the discussions. China currently
processes--and I really want to underscore processing, the
processing stranglehold that China has right now--65 percent of
the world's lithium and cobalt. It is 100 percent when you look
at graphite that China processes right now. Now, thanks to
President Biden and the landmark Bipartisan Infrastructure Law
and the Inflation Reduction Act--and I want to give a
particular thanks to this Committee, the Chairman, in
particular, but this whole Committee for your leadership on
those historic pieces of legislation--we are fighting back.
Chairman, you mentioned that the IRA is the most transformative
bill. I would say the BIL and the IRA together are the most
transformative bills we have ever had in our country when it
comes to supply chains, diversifying, and increasing the
reliability and the resilience of those supply chains.
Already we have made multi-billion-dollar grant cost-share
investments in battery manufacturing all across our country,
$16 billion of conditional commitments through our loan program
at the Department of Energy, and powerful tax incentives are
just starting to kick in. And these tools that you have given
us are working. Since President Biden took office, we have
leveraged over $157 billion in private investments in the EV
supply chain--$157 billion of private investment so far, over
340 new or expanded facilities, again, all across our country,
and 136,000 estimated new direct jobs. And that is just the
direct jobs from this investment. There are an additional
hundreds of thousands of indirect jobs because of this
investment in this strategy. Domestic EV sales have quadrupled
since President Biden took office. If you look at the 2022
numbers and compare that to 2023, we have had a 50 percent
increase in our electric vehicle sales in our country.
Ranking Member Barrasso, you spoke about affordability. We
now have models, including the Chevy Bolt that's under $20,000,
and a full EV version. I asked the team to take a look at
existing gas prices and electricity prices and what is the
difference in terms of how you fuel up, whether you fuel up an
internal combustion or an EV. Right now, the average across our
country is $46 to fuel up if you have an internal combustion
engine. That number is $15--$15--if you charge up at home, the
average across our country. And thanks just to the investments
we have been able to make so far with these historic pieces of
legislation, domestic lithium production in our country is
expected to increase 13-fold by 2030. Domestic graphite
production will increase 25-fold. And those are the results for
the investments we have only made so far. There is so much more
to come.
Let me spend a few minutes sharing what this targeted
strategic industrial strategy means for three specific
communities, all of which are receiving DOE support. First, St.
Gabriel, Louisiana. Koura is a company that opened a
fluorochemical plant in St. Gabriel in 1991. In October 2022,
they announced expansion to produce lithium
hexafluorophosphate. Every EV battery needs this. China
currently dominates the market. The U.S. produces zero right
now. Koura will be the first U.S./American manufacturer. They
received $100 million in a grant from DOE, again, a cost-share
that is leveraging twice, three times, the amount on the
private-sector side. And St. Gabriel will have 80 new jobs
because of this strategy, because of this investment.
Second, St. Louis, Missouri. St. Louis has been a leader in
phosphates for nearly 150 years. In August last year, ICL broke
ground on a $400 million battery manufacturing plant, producing
enough cathode active materials for 1.3 million EVs, $197
million in DOE investments, leading to 150 new jobs in the St.
Louis community.
And third, Weirton, West Virginia. As our Chairman knows, a
former steel town that was once the fifth largest steel
producer in our country. Unfortunately, that plant closed down
20 years ago and a third of the population moved away. Thanks
to this historic legislation, thanks to the Chairman's
leadership with these historic pieces of legislation, in
November, Boston Metal was selected for $50 million in a grant
to manufacture critical materials for fuel cells, translating
to 200 new jobs in Weirton. And Form Energy broke ground last
year on a $760 million iron air battery manufacturing plant
that will create an additional 700 jobs for that community.
And we are only getting started. Let me conclude by again
thanking this Committee for your leadership in giving us these
historic tools. And thank you for your continued partnership as
we use all these tools to improve the resilience and
reliability of our supply chains to accelerate our clean energy
progress, to support hundreds of thousands of family-supporting
jobs all across our country, and for revitalizing our
communities. We look forward to seizing all these opportunities
together. Thank you, Chairman.
[The prepared statement of Mr. Turk follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. And now we will turn to Secretary Adeyemo.
STATEMENT OF HON. ADEWALE O. ADEYEMO,
DEPUTY SECRETARY, U.S. DEPARTMENT OF THE TREASURY
Mr. Adeyemo. Thank you, Mr. Chairman.
Chairmen Manchin and Wyden, I should say and Ranking Member
and members of the Committee, thank you for having me today. I
look forward to discussing Treasury's efforts to implement
recently passed legislation in ways that help American
companies build an effective supply chain to support our
transition to a clean energy economy and improving our energy
security.
The Inflation Reduction Act and the Infrastructure
Investment and Jobs Act jump-started the United States' ability
to compete in the global market for electric vehicles. As you
know, the People's Republic of China has, for over a decade,
pursued non-market policies and practices to further state-led
industries targeting, and has channeled enormous amounts of
financial support into the development of an EV sector, seeking
to help Chinese firms establish a dominant position in the
global EV marketplace. China's targeted government intervention
and investment 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 investment
combined. Today, China produces over half the world's EVs and
even a larger share of EV batteries. Critical minerals, as you
all know, have been central to China's EV sector development
strategy.
While China is ahead of us on EVs today, by enacting the
IRA and the Bipartisan Infrastructure package, you have given
the United States the ability to not only compete, but to lead
an effort to build an alternative global supply chain. Of
course, because our domestic system is different than China's,
our path to building a resilient domestic EV production base is
also going to be different. Instead of directing industries,
the IRA and Bipartisan Infrastructure Law provide incentives to
support the private sector in building the EV ecosystem from
manufacturing and procurement to adoption and charging.
Importantly, these incentives foster competition in our
economy. Because of the IRA and Bipartisan Infrastructure Law,
America's manufacturers are responding. It is why we have seen
manufacturing investment for clean vehicles, batteries, and
critical minerals double since enactment of these packages.
American workers across the country are witnessing
firsthand the new economic opportunities. Since the passage of
the IRA, we have seen $157 billion in private-sector investment
announcements around EVs and batteries here in the United
States, investments in communities all over the country, not
just on the West Coast or the East Coast, the middle of the
country, and in the South. Across America, we have seen these
investments. Investments related to clean energy are being made
disproportionately in communities with historically lower
wages, lower college graduation rates, and higher rates of
poverty. An important distinction between our strategy and
China's 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. That's why our early
efforts 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 Russia's
weaponization of natural gas has had on Ukraine and on crude
oil markets and the price at the pump here in the United
States. While gas prices have fallen 35 percent since the peak
in 2022, over the long term, it is clear that we need to
improve our energy security with clean energy, and we cannot
afford 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 left vulnerable to weaponization of
trade as a geopolitical tool.
That is why building our EV supply chain is critical to our
energy security. It will not happen overnight, as you all know,
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 electric vehicle models expected over the
next decades. A main beneficiary of these investments is the
American worker. Manufacturers have already announced nearly
200,000 direct EV-related jobs in the United States over the
past eight years. The recently announced EV and electric
vehicle battery manufacturing investments are expected to
create more than 800,000 additional jobs in the broader
economy. We expect growth in manufacturing, instruction,
engineering and electrical work, and more. These well-paying
jobs will bring new economic opportunities 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 we will do this today with you, and look forward
to continuing our partnership with the Department of Energy and
our partners in the interagency.
Thank you.
[The prepared statement of Mr. Adeyemo follows:]
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The Chairman. Thank you, Mr. Adeyemo.
And now, we are going to start our questioning, and I will
begin.
Do you have a quick question?
Senator Wyden. If that would be all right. I know that
you----
The Chairman. I know you have to go to the committee,
right?
Senator Wyden. We are working on this tax agreement.
The Chairman. Go ahead. Ask your question.
Senator Wyden. Thanks so much. I have just one, and I want
to thank the Chairman and Senator Heinrich on this.
Mr. Secretary, it has been a pleasure to work with you and
Mr. Turk. We have seen the major automakers already making
changes in their supply chains to ensure vehicles qualify for
the new Clean Vehicle Tax Credit. And this, in our view, is in
response to the supply chain requirements that were in the IRA.
My one question to you is, can you tell us how Treasury's rules
help to implement the statute's provision here so that we can
make sure that the new Clean Vehicle Tax Credit helps us with
supply chains, helps us with climate, helps us with jobs? How
do the rules you are working on help to implement the statute
that we wrote?
Secretary Adeyemo.
Mr. Adeyemo. Yes, Senator, thank you for the question and
thank you for your leadership in drafting the IRA. What we have
seen in our conversations with automakers is that they feel as
if the standards set in the IRA in terms of clean vehicles and
the 30D standards are tough. And that's why we have seen, as we
introduce the Foreign Entity of Concern Rule, that it went from
over 40 cars being eligible to only 13. What the automakers
have also said is that they are achievable standards that we
can use to make sure that they are domesticating the supply
chain. And by making sure that any car that receives the 30D
credit has to be built here in North America, it means that it
is going to be built within our economy, we are building supply
chain here.
And in addition to 30D, 45X and a number of the other
credits will mean that not only are the cars built here, but
the batteries will also be built here in America using American
innovation and ingenuity--American workers. American
manufacturing has led the world for decades, and because of the
way that you designed the IRA, it has put us in a position
where we create incentives, both for American consumers who
want to buy EVs, but also for American manufacturers, including
auto manufacturers to be able to compete with China by lowering
the cost of the supply chain that they will need to do so. Over
the last year alone, the automakers have talked about the work
that they are doing to bring that supply chain back to America
and to our FTA partners. And because of the work that we are
doing alongside our colleagues, the Department of Energy, we
are making that easier every day.
Senator Wyden. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you.
We will get back to our regular schedule here.
Mr. Adeyemo, I am deeply concerned that Treasury is
allowing taxpayers to claim Inflation Reduction Act credits in
the current tax year based on proposed rules and not final
rules. I cannot think of any other federal agency that operates
this way. And here is my comparison: if FERC proposes a policy
change or EPA proposes a regulation or DOE proposes a grant
program, only once the proposal is final does it actually come
into effect. So do you agree it is abnormal to rely on proposed
rules for programs that are already in effect, like the IRA tax
credits, and is Treasury using proposed rules to avoid legal
challenges?
Mr. Adeyemo. Senator, thank you for the question.
And no, it is normal for us to that when it comes to the
tax code. You are sitting next to Chairman Wyden, who works
with us on a regular basis on tax issues that are similar to
this one, and outside of the IRA context, whenever you have a
tax policy, we often will propose rules and allow taxpayers to
rely on those proposed rules while we collect comments and
finalize those rules----
The Chairman. I hate to interrupt you, sir. If you can
just--what period of time do you consider proposed rules before
acting on permanent rules? Right now, you are proposing until
2027 and beyond. We have never seen anything like this.
Mr. Adeyemo. Senator, we have a proposed rule out there for
comment. And what we have asked for is that stakeholders like
you provide us with comments that will then put us in a
position to revise and provide a final rule as soon as
possible. Our goal is to try and finalize these rules as
quickly as possible to give taxpayers as much certainty as
possible.
The Chairman. You can understand our concerns on this
because you filed for 2026-2027. Taking two or three years to
get input before you make a final rule is going to put an awful
lot of people who are making investments in our country in
jeopardy if they base it off the way the bill was written. That
is my concern, sir. And we have talked about this. We can go
into more detail.
I want to go to Mr. Turk right now. Some U.S. automakers
and producers have said there is just no way that we can make
these EV batteries without China. And it makes no sense to me
at all, since most of this technology started here in America,
and then was taken to China and other foreign countries of
concern. So do you agree with some automakers that it's okay
for U.S. tax credits to benefit these countries of concern,
such as China, whether it be Russia, whether it be North Korea,
whether it be Iran or another such as that we share no values
with?
Mr. Turk. So I think we can absolutely do it without China.
Just to give you a few numbers, we talked about the fact that
graphite, right now, the processing, is 100 percent in China.
Just from the investments, the tools that you have given us so
far that we have used, right now our projection is that 16
percent of the graphite that will be used in passenger vehicles
in the U.S. by 2027 will be U.S. That goes from basically zero
to 16 percent just with the investments we have made so far.
The Chairman. Yes.
Mr. Turk. And we have got a lot more grant funding. We have
got a lot more loan----
The Chairman. Why do you think that the numbers were cut in
half, that these numbers were cut in half then? Why do you
think they defied the law? Are you trying to accelerate because
you think we can't do it quickly enough, so you have to
decelerate this to 20 percent or half?
Mr. Turk. Well, I think the way we look at it, and we work
incredibly closely with our Treasury colleagues and other
colleagues across the interagency, it is the tax incentives,
but it is also the grant funding through the Bipartisan
Infrastructure legislation. It's our loan program. The Defense
Department has some funding as well to help on critical
minerals that they are using for a graphite mine in Alaska
right now. So it's all of these tools together trying to get
our percentages up as quickly as we can, understanding, as you
mentioned in your opening and I mentioned in my opening, we
have not had an active policy----
The Chairman. Right.
Mr. Turk [continuing]. Or tools in our tool belt to do
anything about this----
The Chairman. Let me say one more thing on this if I can.
My problem is this: The people that are making the investments
think this is what they have to hit, knowing now where foreign
competition can come in unfairly and undercut them. That's
where I think the lawsuits are going to come in and it's going
to be horrendous for us to be able to fight this and the
uncertainty.
Let me switch to something else. I have spoken to you both
numerous times about the concerns about misclassification of
certain battery component production as critical minerals
processing rather than manufacturing. The difference between
sourcing and processing versus manufacturing is very clear. We
wrote it very clear in the bill, so my question would be, why
is there a discrepancy between the two definitions?
Whoever wants to speak up----
Mr. Adeyemo. I will start. I think what we did was we
worked very closely with our partners at DOE to develop the
definition, and we borrowed, in large part, from the definition
that was in the Bipartisan Infrastructure Law for several
reasons, one being that we wanted to provide as much certainty
as possible.
The Chairman. We wrote in--I am so sorry, Mr. Adeyemo--we
wrote specifically what the definition was in the bill, not the
Bipartisan Infrastructure bill, but in the IRA. And you all
went back and used the language to solidify what you wanted to
do, how you wanted to do it, or how you wanted to let them
morph together. Sourcing and processing are completely
different than manufacturing. Okay? And manufacturing is
supposed to be in North America--$3,750 for one, $3,750 for the
other. That's the problem.
Mr. Adeyemo. Well, Senator, as I mentioned earlier, what we
have done is, we put out a proposed rule. Our goal is to take
feedback from you and other stakeholders on that proposed rule.
What I am trying to explain is why we went with the proposal
that we did, and our goal was to provide certainty to the
marketplace by trying to make sure that we provided them with
one definition of processing and manufacturing that was
similar. We worked closely with our partners at DOE to develop
that. We look forward to taking your feedback and feedback from
other stakeholders as we move from a proposed rule to a final
rule.
The Chairman. Well, we are going to continue to work
together to try to get back to the definition written into the
bill and it not having it being interpreted differently.
With that, we will turn to Senator Barrasso.
Senator Barrasso. Thanks, Mr. Chairman.
Mr. Adeyemo, let me just continue. You know, I understand
that under the IRA, leased electric cars--and the Chairman
agreed with me when I mentioned this earlier--are not subject
to foreign source content requirements, to consumer income
limits, or to vehicle price limits--leased cars, is that
correct?
Mr. Adeyemo. So leased vehicles are treated differently
than purchased vehicles, Senator.
Senator Barrasso. So I am correct. All right. So that means
that somebody making over a million dollars a year, under this
Administration, in your plan, could lease a $100,000 electric
car that contains lots of minerals from China and still benefit
from a $7,500 tax credit. Do you believe that is a good use of
taxpayer money?
Mr. Adeyemo. Senator, that's not true over time. The way
that the provision works for 45W is that it will come down as
the cost of the vehicle comes down making it----
Senator Barrasso. But it's true today. I don't want to hear
that it's not true over time. Today it's true, is that right?
$100,000 car, somebody making a million dollars a year still
gets the tax credit?
Mr. Adeyemo. Today, the leased vehicle credit is the same
as the 30D credit. But Senator, what I was trying to explain
was that the way that the bill was designed was to make the
purchase credit more valuable in order to incentivize the
domestication of the supply chain. That's why we are seeing the
movement of the supply chain back to the United States and our
allies, because over time our car companies, like Ford and GM,
know that they are going to be----
Senator Barrasso. Well, the Chairman of the Committee has
made clear that the way the bill is designed and the way that
it is being implemented are very different right now, and this
is one of these abusive areas that I think the American people
say, hey, we are subsidizing very rich people, who are liberal,
who have these elitist views on the West Coast, they are
getting big payoffs because they are into this kind of thing,
when these cars don't work other places.
Mr. Turk, you testified before the Committee in February
2023. At the time, the Chairman and I both raised concerns
about the Department's grant negotiations with Microvast, a
China-based battery company. In response, the Department did
its homework and canceled its award negotiations with
Microvast. It appears that the Department has again failed to
do its homework, or even a quick Google search, for that
matter, when last September the Department finalized a $3
billion loan guarantee with Sunnova, a solar company. At the
time, Sunnova had an F rating--an F rating. Mr. Turk, this is
the F rating, Better Business Bureau, Sunnova, $3 billion grant
from the Department. The Better Business Bureau actually has
stripped Sunnova of its accreditation. They are still not
accredited. In 2019, Sunnova was found to be operating
illegally after not fulfilling its duties to customers under
Puerto Rican law.
[Poster documenting Sunnova's Better Business Bureau rating
follows:]
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Senator Barrasso. According to media reports, a Sunnova
salesman sold an elderly man a $60,000 solar system after the
man told the salesman that he was in hospice and dying. That's
how you get an F rating. The elderly man died soon after.
Sunnova then, what did they do? Well, they placed a lien on his
mobile home, which prevented his family from selling the
property. A Texas woman said that her 80-year-old mother was
blind, bed-bound, partially deaf, on dialysis, with congestive
heart failure. So what did Sunnova do? Oh, they sold that
elderly woman a 25-year, $86,000 contract. That's how you get
an F rating. The mother died three months later. These are but
a small fraction of the deeply troubling complaints against
this company, Sunnova. A company that the Department of Energy
has granted a $3 billion loan guarantee to.
Can I have your commitment that the Department will go
back, do its homework, and reconsider this flawed decision to
award Sunnova a $3 billion loan guarantee?
Mr. Turk. Well, thank you, Senator, for the question. Let
me just say, we are continuing to do our homework and make sure
that we have improvements throughout our processes. You
mentioned Microvast. We have put in place and we are improving
and strengthening what we call our RTES, our Research,
Technology and Economic Security effort, to take advantage of
public information, intelligence information, and expertise
that we have at our Department and in our labs, to make sure
that we are doing the scrutiny that the public, the taxpayers,
deserve and demand. So we are continuing to improve that
process.
This is a program under our loan program. This is a
conditional commitment right now. And so, we are continuing to
do our due diligence, continuing to do our homework. We are
looking for ways to make sure that solar PV technology is
accessible to everyone, including low-income folks, and that's
what this loan is about. And we are using the leverage of this
loan, all our due diligence, to make improvements to make sure
that we have the highest standards going forward. So that is
the process we are in right now with Sunnova, with these
discussions and the conditional commitment.
Senator Barrasso. Well, it has been a finalized $3 billion
loan guarantee already. I think you did the right thing with
Microvast, pulling back. It should have been done beforehand.
You shouldn't need a Committee here, and a Chairman and a
Ranking Member pointing out how bad this company is before the
Administration goes back and says, well, maybe we shouldn't
give them the $3 billion.
Thank you, Mr. Chairman. I have additional questions for a
later time.
The Chairman. Absolutely, Senator.
Senator Heinrich.
Senator Heinrich. Thank you, Chairman.
Secretary Adeyemo, as Congress intended, the Inflation
Reduction Act incentives are dramatically accelerating the
ongoing clean energy industrial revolution, I will call it, and
really supercharging manufacturing in a way that we haven't
seen in 60 years. You shouldn't take my word for that, but I
would ask unanimous consent to put a couple of articles in the
record today. One from Forbes that says in 2023, and this is
the headline, ``The United States Started Building Big Again,
Thanks to Biden's Inflation Reduction Act.'' And another from
Axios, where the headline is, ``A Manufacturing Investment
Supercycle is Starting.''
[The articles referred to follow:]
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Senator Heinrich. We have seen this in New Mexico with
three different factory announcements in solar, in wind, and in
electric vehicle supply chains. And so we have already seen
hundreds of thousands of jobs created in making batteries,
solar panels, heat pumps, and other clean energy technologies
here in the United States. So how would you characterize the
manufacturing investment landscape both before and after the
passage of the Inflation Reduction Act?
Mr. Adeyemo. Well, Senator, thank you for the question.
Thank you for your leadership with regard to the Inflation
Reduction Act. And I think that you have done a good job of
characterizing the sea change that we have seen in America due
to what I would say are the three historic pieces of
legislation that Congress has passed--the CHIPS and Science
Act, the Bipartisan Infrastructure Law, and most importantly,
the Inflation Reduction Act. And what it has done is, it has
led to investment in America that is unlocking a manufacturing
boom that spreads throughout the country, not only in your
state, but throughout the country in a way that is, in lots of
ways, giving people access to jobs that are well-paying jobs to
build the economy of the future and not just an economy that is
going to matter here in America, but one that will allow
America to be a leader around the world. Because ultimately,
what we have learned over the last few years is the importance
of supply chains. And the investments we are making and
building the supply chain that goes through America will both
supply key goods and clean energy to America, improving our
energy security, but it will also mean that America is at the
center of the alternative supply chain to China that our allies
and partners can rely on. These investments will unlock our
ability to make sure that America's economy doesn't just grow
next year, but over the next decades, and that is because of
the passage of legislation like the Inflation Reduction Act.
Senator Heinrich. So when I was growing up, my mother
worked in auto manufacturing. She worked at a wheel
manufacturing plant. And I saw for years how policies and lack
of policies really created enormous disinvestment in the United
States. Auto manufacturing declined. And now we are seeing this
incredible resurgence. The numbers are absolutely remarkable.
The amount of investment here in the United States is
remarkable.
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Senator Heinrich. When you just look at the State of New
Mexico, I can think of a 1,500 person announcement of a new
solar manufacturing plant that is coming, a wind tower
manufacturing plant that is getting up off the ground that is
roughly 300 jobs, roughly the same size jobs at an auto
manufacturing supplier for EVs. What happens to those
factories, and more importantly, the people who are going to
work in those factories, if we do what House Republicans have
suggested and we repeal the Inflation Reduction Act?
Mr. Adeyemo. So Senator, what happens is, those jobs go
away. America's manufacturing boom goes away. The investments
that are being made in America would go away if we were to
repeal the Inflation Reduction Act. Not only does that happen,
but it sets us back in not only meeting our climate goals, but
improving our energy security. One of the most important things
that was done in the Inflation Reduction Act was the passage of
the prevailing wage and apprenticeship provision, which means
that not only are we seeing a manufacturing boom in America,
but the people who are helping to build those manufacturing
plants are being paid a living wage because of the legislation
that you have passed. So it is not only creating new jobs, it
is creating well-paying jobs all over the country, which are
going to be critical to making sure that Americans in
communities all over the country have the ability to build
opportunities for their family. And if you were to repeal the
Inflation Reduction Act, it would have a significant impact on
those communities, on those individuals, and on our long-term
economic success.
Senator Heinrich. Secretary Turk, so if those jobs go away,
does that make us more or less competitive with China?
Mr. Turk. Absolutely less competitive. We are competing,
and I would say we are winning. I know in meetings I have with
international counterparts, they are incredibly jealous----
Senator Heinrich. Yes.
Mr. Turk [continuing]. Of the tools we have in the tool
belt, the private sector investment, in particular.
We are not doing industrial strategy like other countries,
we are doing it in a uniquely U.S. way with entrepreneurs and
companies leading the way. What we are able to do with these
tools that you have given us--the tax tools, the grant tools,
the loan tools--is accelerate that and have this all across our
country in a very intentional way.
Senator Heinrich. Mr. Chairman, I like winning. Let's do
more.
The Chairman. Let me just say for clarity--the bill that we
put together, and the reason I have so many problems with it,
and it looks like I am working with both sides, but the bottom
line is that we put a bill together with Republican input for
over five years that I have been talking and working with them.
Because of reconciliation, they weren't able to vote for it.
But we don't have to divide us any further by implementing
something that we didn't pass, whether they voted for it or
not. And our Republican colleagues are benefiting too, but they
are as upset as I am that we are not following it.
This is a great bill, absolutely, make no bones about it.
And we are all going to benefit from it. All we are asking for,
Deputy Secretary Adeyemo, and to you, Deputy Secretary Turk, is
to make sure we stay within the confines of how the bill was
written, and don't bust the budget to where we are spending
twice as much than we appropriated. The CBO score was $680
billion, $690 billion, okay? That should stop when we hit that,
and we have done some good things. Let's go back and
reappropriate. That is the way it should have been done. And
that is what we are concerned about.
With that, we will go to Senator Lee.
Senator Lee. Thanks, Mr. Chairman, and thanks to our
witnesses.
Mr. Turk, I would like to start with you. Last spring, we,
as a Committee, heard from the CEO of North American Electric
Reliability Corporation. This, of course, is the grid
reliability watchdog. And we heard testimony that the U.S.
faces a looming reliability crisis because of the premature
retirement of coal-fired power plants. That message was pretty
loud and clear, as I heard it. And we heard the exact same
message from the FERC Commissioners. And as my time is somewhat
limited, I would appreciate here if you could give me a yes or
no answer on this. Is our current grid infrastructure capable
of supporting a massive increase in EV usage?
Mr. Turk. So that's why we are making investments in our
grid to improve it and make sure we have got the grid that we
Americans deserve.
Senator Lee. So it's not, and we need to get there.
Mr. Turk. So I am quite confident with the tools that we
have and building out, we are talking about EVs at this
hearing. The fact that we are going to have a whole bunch more
batteries out there----
Senator Lee. Right.
Mr. Turk [continuing]. That we can determine when those
batteries are charged, and especially if we get to
bidirectional charge, that is actually going to be a more
resilient grid if we incorporate that.
Senator Lee. Now, California has a new regulation carrying
the force of law in that state that by 2035 it is going to
require 100 percent of new vehicles sold to be electric--all of
them--every single one of them. So under that rule, electricity
demand is obviously going to skyrocket. One of Utah's largest
coal plants, the IPP plant in Delta, currently sends about 80
percent of its generated power to California utilities. Sadly,
that plant will soon be retired due to California's zero-coal
agenda. It seems that aside from coal and gas, there are
currently no affordable, dispatchable, reliable alternatives to
support the increased power demand from EVs at scale. Would you
agree with that?
Mr. Turk. So I would not. We are making investments,
including through the incentives of the Bipartisan
Infrastructure legislation, the Inflation Reduction Act, on
battery storage and other storage options. We are focusing and
doing an awful lot of research and development, demonstration,
and deployment on long-term storage. And I think an area that
has not gotten as much attention is virtual power plants and
smart demand response. We put out what we call a liftoff
report, looking at how we get to balance the grids in an
efficient, cost-effective way and a reliable way going forward.
And a lot of that comes from balancing supply and demand,
taking advantage of technologies, including all these new
mobile batteries that are out there that will be out there in
even greater scale as we get more EVs. That could be a grid
enhancement opportunity if we do it right. And that's what we
are working on.
Senator Lee. Well, you don't disagree that we are losing
reliable sources of affordable baseload power. We are not
adding to the supply of reliable, consistent baseload power at
the same rate, even as we are putting a lot more demands on the
grid as we provide these incentives, and in some cases--most
acutely in the case of California--the mandate about 100
percent electric vehicles by 2035.
Mr. Turk. There is no doubt our electricity sector is
changing. We are investing in a whole range of technologies,
including in geothermal. If we can get enhanced geothermal at
scale and at cost, that can be a huge part of our solution on
generation. Small modular reactors on the nuclear side can be a
part of it. Balancing the grid with supply and demand using
these technologies, it is all part of the work that we are
doing at the Department of Energy to make sure that all
Americans have reliable electricity and affordable electricity.
Senator Lee. Look, I love the idea of small modular
reactors. Love to see it. We have heard about them for years.
Haven't seen deployment of them, but that's going to have to
change if we keep heading in this direction. It seems like one
of the only new sources that we can rely on as more and more
other sources of reliable, affordable baseload power are taken
off the grid. But you know, we have got to be concerned about
it.
Now, the Biden Administration makes the case for widespread
EV adoption, and this is an important function to have if we
are going to go in that direction. Now, fossil fuels like coal,
gas, and so forth power the mining and transportation of raw
materials for electric vehicles, for the manufacturing of the
components for electric vehicles, for the transportation of the
assembled electric vehicles, for the charging of the battery
throughout the life of the electric vehicles, and for the
eventual disposal of the electric vehicles. It would be
reckless and irresponsible to force Americans to purchase these
vehicles--which are significantly more expensive, on average,
than their internal combustion engine counterparts--and then
leave them without a way of charging them. It would be reckless
to do all of that and not take into account the environmental
impacts of all of those things.
Do you have data that you track on the total environmental
impact of these requirements and of the electric vehicles they
produce? I mean, are we actually doing the environment a net
favor?
Mr. Turk. So we are a very data-driven, science-oriented
department with our national laboratories. And I completely
agree with you, we should do a very rigorous environmental
assessment of all the technologies. And I think one of the
exciting parts of the tools that you all in Congress have given
us is that we have got incentives for hydro, we have got
incentives for nuclear, including small modular reactors, we
have got incentives for carbon capture utilization and storage
to clean up existing assets. Transportation right now is our
biggest source of greenhouse gas emissions, so we have to have
solutions. We have to take that head-on. And you mentioned the
affordability--I think what's going on right now, and it is
underappreciated by many, is EVs right now are becoming more
and more affordable. Right now, we have got a Chevy Bolt model
out there that is under $20,000. That is incredible. J.D.
Power, actually, when you compare internal combustion and EVs,
models for models, apples to apples, EVs are actually cheaper
when you take into account the fueling and the reduction in
maintenance costs.
Senator Lee. Right. Look, I am out of time, but these are
things we have got to look for. I would love to see an analysis
from you of the total environmental impact and of efforts you
are taking to make sure that we don't have a significant lag
between the added demand on the grid that we are creating and
our actual supply of functioning affordable baseload power
sources.
Thank you.
The Chairman. Thank you, Senator.
Senator Padilla.
Senator Padilla. Thank you, Mr. Chair.
I have great news for everybody this morning, particularly
my colleagues on the other side of the aisle who have expressed
their concerns regarding our reliance on foreign critical
minerals, specifically lithium, not just in today's hearing,
but in recent years. Last month, DOE announced the results of
the most comprehensive analysis to date quantifying the
domestic lithium resources in California's Salton Sea region.
This analysis, conducted by Lawrence Berkeley National
Laboratory, found that with expected technology advances, the
Salton Sea's regional total resources could produce more than
3,400 kilotons of lithium, enough to support over 375 million
batteries for electric vehicles. The announcement confirms what
we have long known in California--the Salton Sea region has
significant potential as a domestic source of the critical
minerals needed for these batteries.
Question number one, for Mr. Turk. What is DOE doing to
support responsible development at the Salton Sea so that we
can begin increasing our domestic supply of lithium?
Mr. Turk. Well, thank you, Senator, for mentioning this
phenomenal asset that we have in our country in California, the
Salton Sea. The analysis that you mentioned is really
groundbreaking. Just to put it in perspective, the 375 million
batteries for electric vehicles, the Salton Sea, itself, if we
can get the costs to where they need to and make sure that we
are doing this right from an environmental justice perspective,
that is more than the total number of vehicles currently on
U.S. roads, just to give you a sense of scale of this one
asset, this one resource that we have.
So we are working across the board throughout the
Department of Energy--everything from reducing the cost of the
technology to get this brined and make sure it is done in the
right way and to make sure that this is available for our
domestic processors, our manufacturers, and the whole supply
chain going forward. We are using our loan program, where we
are using all the tools that we have got in the tool belt, and
really appreciate the partnership with you, Senator, to make
sure that we are connecting all those dots as quickly as we
possibly can for economic benefit but also decarbonization
benefit as well.
Senator Padilla. Let me also ask you, how important is it
for this Committee to support and incentivize geothermal energy
research and development to not only provide a reliable source
of power generation, but also to shore up our domestic supply
of lithium and other critical minerals like zinc?
Mr. Turk. So I think geothermal is one of the most exciting
technologies and opportunities that we have out there. Most
people think of geothermal in the traditional sense of
geothermal--if you have got a hot spring nearby, you take
advantage of that and you get some benefit from that. What is
particularly exciting is something called enhanced geothermal,
where you use drilling technology. And we have done an awful
lot of drilling in our country and perfected a lot of
technologies and reduced those costs. If we can train that
drilling technology, and there are companies, and we are doing
some things through the Department of Energy focused exactly on
this. You drill deeper, you do it cheaply, and then you have
electricity production because it is higher temperature coming
up.
So if we can get that technology at a cost level, that is
24/7 baseload power in a very environmentally responsible way
without the carbon emissions. Incredibly exciting. We have got
work to do. That's what we are doing, including through our
FORGE facility that is testing some of these technologies in
the western part of the United States.
Senator Padilla. Yes, but if we could pull this off, this
would be massive.
Mr. Turk. Huge.
Senator Padilla. We already have a significant amount of
quality geothermal energy, which we refer to in the renewable
energy space as ``renewable gold.'' Right?
Mr. Turk. Absolutely.
Senator Padilla. In my time remaining, I wanted to bring up
another topic for the Deputy Secretary. The Administration has
laid out a goal of deploying 500,000 chargers by 2030.
Effective implementation of Section 30C is critical to
realizing this and broader climate goals. While more than half
of all Americans say they are at least thinking about buying an
EV, the lack of reliable charging infrastructure, particularly
in rural areas, remains the number one limitation to the
widespread adoption of electric vehicles. If we are able to
meet our climate goals, Treasury must provide certainty around
Section 30C requirements.
Deputy Secretary Adeyemo, Senator Cortez Masto and I
recently wrote a letter to Treasury on this issue. How does
Treasury intend to leverage 30C to scale up investment in the
decarbonization of the transportation sector?
Mr. Adeyemo. Senator, getting this right is critical to
building out the type of charging stations that will be
necessary to support the electric vehicles that are becoming
abundant throughout the country. We are committed to getting
out guidance to states and local governments in the coming
weeks, not months, in order to make sure that people have the
information they need to make these investments because we know
they are critical to your communities.
To pick up on your question to Deputy Secretary Turk, I
recently visited the Torres Martinez Tribe and saw the Salton
Sea. And I think one of the things that your question reminds
us all of is that some of the investments that could be made
through the Inflation Reduction Act can transform communities
that have often been left behind and left out for too long.
That's why we are encouraged to see that the more than $200
billion of investments that have been made because of the
Inflation Reduction Act have been made in communities that tend
to be above the national average in terms of poverty and below
the national average in terms of college education. But we know
that in order for all of this to work, we need to build out an
infrastructure, and 30C is critical to that, and we are
committed to getting out guidance very soon so your
constituents, and constituents all over the country can take
advantage of this tax credit.
Senator Padilla. Thank you very much.
Yes, Salton Sea, Mr. Chair, is probably exhibit A on multi-
benefit, whether it is critical materials, water resilience and
reliability, public health improvements, and the area of
quality job creation. I invite you to come visit. Thank you.
The Chairman. I would love to do it. I will be there.
Senator Hawley has graciously given up his spot for Senator
Cassidy.
Senator Cassidy. And I thank Senator Hawley. And I want all
my colleagues to hear this: Senator Padilla, I will bet you,
and I will offer you turtle soup from Commander's Palace, if
you get that facility in Salton Sea permitted within two years.
I am going to win that bet because part of the problem is we
can't get permitting for this sort of activity, and the idea
that Californians are going to kill a bunch of desert turtles--
if they do, ship them to Commander's and I will make your soup
for you. Okay?
[Laughter.]
Senator Cassidy. But I am going to win that bet, brother.
Senator Padilla. We will see about that.
Senator Cassidy. Let us work together on improving that.
And Mr. Turk, I always feel like you are straightforward
with us. I appreciate that. You look a little older since you
were first sworn in, but that is part of being on the dark
side. Listen, since we are talking about the Salton Sea, what
about doing a DOE analysis of the Smackover Formation in
Louisiana for lithium? It's in Arkansas. Louisiana actually has
experience and embraces extraction. And that would be economic
development for the same group that Senator Padilla spoke of as
well as the Secretary, for those who, frankly, could have some
economic development. So I think we have some money in the
Bipartisan Infrastructure bill for that. If you all could
explore that, that would be fantastic.
Mr. Turk. Happy to talk to you and happy to explore that. I
think there are a lot of exciting opportunities out there. One
of the things I am most excited about, and thanks for the nice
words as well, I do feel older, as my kids remind me of on a
daily basis.
[Laughter.]
Mr. Turk. We have got an effort in our Fossil Energy and
Carbon Management Office to work on some analysis, do some real
research with our labs on the mine of the future. How can we
take all the technology that we have learned over many, many
years, apply it to extract responsibly--responsibly in an
environmental way and responsibly for the communities in which
those mines are located and do it with a smaller footprint? I
think it is incredibly exciting, but happy to look into the
particular project that you mentioned.
Senator Cassidy. That's great.
Now, related, not to this Committee, but to what you just
said, there is a DOE--and by the way, this will be a little bit
off topic, but it is related to what you just said. There is, I
am told, a DOE review of LNG export facilities, a decision to
unilaterally revise the climate criteria in terms of their
approval, looking at life cycle emissions within the U.S., but
ignoring the fact that if U.S. LNG replaces coal being burned
in China or in Germany, the positive benefits for global
emissions are incredible--incredible. Whatever increased life
cycle emissions you find here in the U.S. by scrutinizing
closely, it is overwhelmingly overwhelmed by replacing coal
burning in other countries. Now, you just mentioned being
driven by science. Would you agree with the statement I just
made?
Mr. Turk. So as you know, Senator, and I know it's off
topic, but happy to talk about this and happy to have a further
conversation with you on our authorities for liquefied natural
gas. It is a public interest determination. And so, we are
required by Congress to take into account national security,
take into account economic implications, take into account
environmental and climate change implications, and we should
take into account the full life cycle--the emissions at the
front end and the emissions on the back end--and do a really
thorough analysis. And that is what we do every time we have an
application come in.
Senator Cassidy. But if the fact that the Department of
Energy is unilaterally seeking to revise this, and when
arguably it is in favor of our national security to help Europe
wean off of Russian gas, it is improving the world's climate
condition when we replace coal with natural gas. Natural gas
has 50 percent more energy content relative to CO2
positions without the SOX and NOX and
particulate matter, and it helps our economy by creating jobs
for the American people as well as an overall larger GDP for us
all. I am not sure where the impetus comes for this unilateral
revision, except that the Administration has had a pattern of
doing whatever they can to slow-walk LNG export facilities.
Mr. Turk. So let me say two things. One, we take
applications as they come and review them thoroughly, as
diligently and quickly as we possibly can. Each application is
different. Some are easier. Some are more challenging along
those lines.
Senator Cassidy. Now, that's different than what I am
describing. I am describing----
Mr. Turk. Secondly----
Senator Cassidy. Yes.
Mr. Turk. And then secondly, I think we feel the
responsibility for the public interest determination in
everything we do to continuously update and improve our
analysis to make sure we are taking into account all the
factors that you mentioned to make sure we are looking----
Senator Cassidy. I am about out of time, but I will just
say that there is a paralysis by analysis when, quite
intuitively, everything I said, and quite demonstratively,
everything I just said is absolutely true. The fact that DOE is
going to go through a multi-year process of redoing it once
more suggests that the paralysis actually is the desired result
of the analysis. I actually think you are a very reasonable
person. I think this is being driven by the political arm. And
that political arm is going to sacrifice U.S. national
security, U.S. economic interests for the family and for the
country, and climate reductions worldwide.
With that, I yield.
The Chairman. Senator King.
Senator King. Thank you, Mr. Chairman.
I think it's important to sort of set the context of this
hearing. We are talking about all these various details of
these programs, but why are we here? We are here because the
overarching crisis is the climate. Just in the last ten days,
two massive storms on the East Coast made an enormous impact
and an enormous cost. I have seen it. And it's happening in my
state, all along the coast, all along the Eastern Seaboard.
This is--there is just no question that this is the most
significant problem that we face, and history will not judge us
well if we don't confront it. And I believe the Inflation
Reduction Act did confront it in very significant ways.
Can we fix it? Can we improve it? Absolutely. Can we work
on how it is being implemented? Absolutely, but what worries me
is when we are talking about trying to undermine these various
programs--I just wrote down--we are fiddling while the planet
burns. We are fiddling while the planet burns, and people are
going to look back and say, yes, you addressed it, but you
didn't really address it with a sufficient sense of urgency.
And I think we have to talk about the impact of the climate
crisis on us. And if you don't want to talk about saving the
environment, talk about saving taxpayer dollars to deal with
these Stafford Act responses that we are going to have to be
undertaking in the next few weeks.
The other point I wanted to make is that batteries plus
renewables is baseload power. Batteries plus renewables is
baseload power. So this idea that you can only have baseload
power from a plant that is running all the time--no, if you
have renewables and if you have sufficient batteries, which the
Department is doing huge amounts of research on, and in fact,
it is being deployed. I think that is a very important point.
The other point is about--we have talked about electric
vehicles--clearly, we are talking about new products to the
market in the last few years. The price will come down and has
come down substantially. And I think this chart is very
informative because what it shows is, this is cost of ownership
of EVs versus gas vehicles--whole bunch of different, you know,
everything from a Ford F150, Hyundai, Kia, Volvo, Nissan, Chevy
Malibu, and a Bolt.
[The chart referred to follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Senator King. And what it shows is, and this includes the
cost of buying the vehicle. So that is in this calculation, the
financing cost. So what it shows is that half of these vehicles
already are cheaper per month. For more than half of these
vehicles, the EV is cheaper per month, including the capital
costs. So I think that is really significant. And this is an
early snapshot. I would venture to say that five years from
now, it is going to be 90 percent of the EV vehicles are
cheaper to operate. I have a plug-in hybrid. Yesterday, I put
in my fifth tank of gas in three years. Just yesterday, my
fifth tank of gas in three years. My total maintenance cost on
that vehicle in three years has been $26 for one oil change.
The advantage to the consumer of these vehicles is
enormous, and if what these incentives do is increase the
uptake of the vehicles, which in turn increases the scale of
their production, which in turn will lower the cost of these
vehicles to the public, so----
The Chairman. Senator, can I ask one question?
Senator King. Yes.
The Chairman. Does that include the $7,500 credit? In that
base price? So without the credits, because the credits are
going to go away eventually.
Senator King. Yes. And I would say the credits are going to
go away, and what is going happen is that the scale of
production, mass production, is going to lower the price.
The Chairman. Got you.
Senator King. And in fact, that is already starting to
happen. My plug-in hybrid Toyota Prius Prime is about the same
price as a Toyota Camry today. And the cost of operation is
significantly lower.
The other piece about this that I think we need to
emphasize is what is happening as a result of the Inflation
Reduction Act. This is amazing. This is the expansion of
battery manufacturing in the United States, largely as a result
of the Inflation Reduction Act and the work of the Department,
in terms of research, but what it shows is that this is EV
demand. This is the projected growth of both announced, under
construction, and fully commissioned that shows that this is
the sort of dollars and sense impact of the Inflation Reduction
Act that is really making a great difference in U.S.
manufacturing, in jobs, and in bringing the supply chain home.
[The chart referred to follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Senator King. I have got eight seconds left, Mr. Turk, if
you could find a question in there somewhere, you are welcome
to it.
[Laughter.]
Mr. Turk. So I will maybe make a few points. On the cost
perspective, and where we expect cost to go into the future, we
have seen the battery cost that goes into an EV--and that's a
huge part of the cost going into an EV--decrease 90 percent
since 2008. And when we look at where that's going in the
future, we continue to see dramatic cost reductions. Again,
that's a huge part of the EV cost, 48 percent additional
reductions on top of that 90 percent reduction already going
out to 2030. So that's another data point in terms of the
trajectory of where we are headed going forward.
The other nugget I would throw out there is, for those who
are an EV owner, the average savings you have every year
because of the lower cost of fueling and the less maintenance,
is a thousand dollars per year, every year that you save
because you have an EV.
Senator King. Thank you, Chairman.
The Chairman. Thank you, Senator.
Finally, Senator Hawley.
Senator Hawley. Thank you, Mr. Chairman.
Secretary Turk, thank you for being here. Nice to see you
again. Thanks to both of the witnesses for being here.
I want to just talk a little bit about who is really
benefiting from this Administration's climate agenda and from
these draconian electric vehicle mandates. So Mr. Turk, you
have already alluded to this. I know you know the answer to
these questions. Currently, one nation accounts for 60 percent
of the world's electric vehicle production. That nation is?
Mr. Turk. China.
Senator Hawley. Yeah. One nation accounts for 76 percent of
the world's lithium-ion battery production. That nation is?
Mr. Turk. China.
Senator Hawley. Yet, your Administration, this President's
Administration, the mandates that you have put in place require
that two-thirds of our new vehicle sales in just the next eight
years--two-thirds of them--be electric vehicles. Your policies
are driving us and our supply chains into the hands of our
greatest geo-strategic enemy, enriching them, enriching their
government, while forcing Americans to pay for electric
vehicles that, on average, cost $7,000 more--on average--than a
traditional vehicle, are more expensive to repair and insure,
and require more frequent replacements of everything from tires
to component parts. So Mr. Turk, why is it good for the
American worker that we force our supply chains to a country
that is our greatest rival and adversary? And why is it good
for the American consumer?
Mr. Turk. So this is exactly why we are using all the tools
that Congress gave us to diversify our supply chains, from the
mining piece and especially the processing piece of just where
China really has the stranglehold. So we are making significant
progress on lithium, on graphite. You name it, the tools that
you all have given us to diversify those supply chains and make
sure that we are getting the benefits of that, our U.S. workers
are getting the benefits of that. Citizens in St. Louis, I
mentioned in my opening statement some exciting investments
that are going on in St. Louis. We want U.S. workers to benefit
from this supply chain and this revolution, and China is
absolutely competing. China is going whole hog on EVs and the
full supply chain of it and they are going to compete and
outcompete unless we are playing and pushing back and competing
with them, which is what we are doing.
Senator Hawley. Okay, here is what I don't understand,
then. Why is it, if that is the case, why is it that you are
interpreting the Administration's climate law, the so-called
Inflation Reduction Act--which I think, frankly, is bad enough
on its own--but you are reinterpreting it now to allow the tax
credits to flow to Chinese entities. So now, U.S. tax dollars
are literally subsidizing Chinese battery makers. Why would we
want to do that? Why would we want to not only give our
adversary our supply chains and our jobs, but pay them to take
them from us? Why does that make any sense?
Mr. Turk. So I would argue, and certainly want to turn to
my Deputy Secretary at Treasury, that we are not doing that.
Senator Hawley. How are you not?
Mr. Turk. The fact that with the 30D tax credit only 13
models qualify at this point--now, we hope more diversification
happens and more models qualify for that tax credit--is a good
data point that we take this very seriously and we want to have
these jobs in the U.S. But let me----
Senator Hawley. Wait, wait, wait, I just want to stay with
you, Mr. Turk, just because my time is so limited. This is an
important part, and the Chairman has brought this up, and I am
glad that he has. This is really, really important. The
Inflation Reduction Act, which I did not vote for, but
nevertheless, the Inflation Reduction Act said clearly that
China--if you are a foreign entity of concern, which includes
China--you don't get the taxpayer subsidy. You don't get the
30D subsidy. You don't get the tax break. And yet, your rule
allows Chinese companies to get the tax break. It loosens up
the restrictions. So now we are subsidizing our rivals. I just
don't understand.
The Chairman has asked you about this repeatedly. I don't
understand why we would pay Chinese companies to outcompete us.
Mr. Turk. So I would strongly disagree with that. I spent a
lot of time working with the team and we worked hand-in-hand
with our Treasury colleagues on the FEOC--the Foreign Entity of
Concern--the FEOC standards, and happy to go through the three
prongs of that, in particular, in terms of what our proposal is
on the table.
Senator Hawley. Well, that's the problem, right, is that
the law, which, again, I didn't support, but the law says just
no. It says no. And then you come back and say--it's what we
lawyers like to call a multi-factor balancing test, which is
usually what courts do when they want to get their way. So they
will say well, it's complicated. We have got all of these
different things and the effect of it is--it has been widely
reported, this is not my opinion--everybody understands that
what it does is, it allows Chinese companies, so long as they
are not set up within mainland China, but owned and controlled
by China, they can now get the tax credit. I just do not
understand why we would use our tax money to pay the Chinese to
make these vehicles.
Mr. Turk. So we are not. Only 13 models, again, have
qualified for that 30D tax credit. A lot of companies right
now--automakers are scrambling and they are working urgently to
make sure that they don't have that----
Senator Hawley. If your rule had no effect, why would you
change it? Why wouldn't you just leave the text of the IRA in
place? The flat bar.
Mr. Turk. All of this is implementing the legislation that
has been passed. And happy, again, to get into the details.
Certainly if----
Senator Hawley. Last thing I have got because my time is
expired. I know other Senators are waiting to ask questions,
but this is important, just about the effect on American
workers. Just looking at the news reporting on this. The Ford
CEO says that EVs are going to require 40 percent less labor to
produce than traditional cars. As production is shifting to the
United States, this labor on, for instance, batteries, EV
batteries, is increasingly being done in factories that are
owned, co-owned at least, by foreign entities, and the wages
for workers, who are usually not unionized, are substantially
less than the wages for workers in traditional cars. Now, you
mentioned my state. In Wentzville, Missouri, for example, we
have almost 4,000 workers in a GM plant there. That's just one
plant in just one area of my state. I want--believe me, I will
take all the jobs you can give me, but I don't want those 3,000
workers to lose their jobs and to have another couple hundred
created in some other state in a factory co-owned by a foreign
company making half the wages. And that seems to be the trade-
off that you are offering to American workers. That does not
seem like a good trade-off to me.
With that, I yield, Mr. Chairman.
If you want to respond, Mr. Turk, go ahead, but I yield,
Mr. Chairman.
Mr. Turk. I would just reiterate the number of jobs--
136,000 jobs thanks to these tools that you have given us,
thanks to this President, all across the country, including in
St. Louis, but all across the country. That is an incredible
record, and there are incentives, as the Chairman well knows,
to make sure these are good-paying jobs that we have all across
the country.
The Chairman. Senator Hickenlooper.
Senator Hickenlooper. Thank you, Mr. Chair. And I thank
both of you for being here and answering these questions.
Let me start with Mr. Turk. As electric vehicle adoption
rises, it clearly is going to save costs and reduce local
pollution. It is going to help address climate change. Electric
vehicles also create new opportunities to strengthen our
electric grid, as you mentioned before, including vehicle-to-
grid applications and the virtual power plants. How is the
Department of Energy considering the role of electric vehicles
in enhancing the reliability and resilience of the electric
grid? And I know you have touched on this, but a little more
specificity.
Mr. Turk. Well, thanks for your focus on this, Senator. I
wish more people were focused on this. It is going to be a
challenge, but there is a huge opportunity here if we do this
right. First of all, transportation, as you know, is our
largest source of greenhouse gas emissions. So if we are not
going to take transportation emissions head-on, we don't have a
plan, and we do have a plan with this Administration, thanks to
the tools you and other Senators have provided us on this. The
fact that we are going to have so many new batteries out there
as part of electric vehicles increasing--we are now at ten
percent--quadrupled during the course of this President's
Administration in terms of the number of vehicles, electric
vehicles sold in our country. And that number will only
increase. We are going to have all these batteries out there.
That offers up an opportunity. It offers up an opportunity of
when you time those batteries being recharged and time that
when we have additional electricity coming in. So balance
supply and demand.
What is particularly exciting, and we explored this in what
we call the liftoff report on virtual power plants, is if you
can have the two-way charging, that is, you can actually, in
times of need, take electricity from those millions of
batteries out there across the U.S. when we need it the most to
balance the grids, that is an incredibly cost-efficient,
effective way to do things, again, if we do this right. A lot
of work we are doing at the Department is exactly on that.
Senator Hickenlooper. Right, and I appreciate the
complexity, the challenge, but I also recognize and embrace the
ultimate benefits. It does take me back to the '80s and the
'90s, when the Federal Government incentivized directional
drilling, eventually hydraulic fracturing, and the ways that we
were able to enhance the recovery of natural gas in a cost-
effective and highly efficient way. That was the Federal
Government really investing to try and accelerate a transition,
a transformation, which, I think, is what you guys are doing at
this point.
Mr. Adeyemo, I wanted to talk a little bit about the IRA,
the successful implementation and the provisions such as the
45X, the Advanced Manufacturing Production Tax Credit.
Obviously, you have to prioritize access to these credits. The
recent guidance--the definition of costs incurred would exclude
direct and indirect material costs. That means the companies
working to build a domestic supply chain of critical minerals
will not be able to access this crucial tax credit. I worry. I
mean, with the race toward energy security against global
competitors, you know, how are we, and what is Treasury doing
to help support a domestic supply chain of these critical
minerals, and is there an opportunity to support companies
trying to build a domestic supply chain of critical minerals--
think of the Salton Sea--via the IRA tax credits?
Mr. Adeyemo. Senator, thank you for the question.
I think the 45X tax credit is probably one of the most
successful pieces of the IRA because what it is doing is
driving a manufacturing revolution here in the United States.
You are right that ultimately, we want to create incentives for
not only the manufacturing, but also the mining. What we have
done with 45X is, we set out a rule, but also asked a series of
questions as to how we can do that. Ultimately, what we are
trying to get at is making sure that people only get the 45X
credit if they actually have value-add that is being created.
The thing we are trying to protect against is that the
people who buy minerals potentially from abroad would then get
access to the credit, and that money would flow to companies
that are outside the United States. So we have asked a series
of questions within the proposed rule that will hopefully help
stakeholders who are looking to mine and produce here in the
United States, who are adding value, to be able to help us
think about how we can design the rule in its final form to
make sure that we are creating the right incentives.
Ultimately, despite what Senator Hawley said, our goal here and
what we have done is, we have designed these rules in a way
that is incentivizing American companies. For example, 30D. 30D
is helping Ford and GM be able to be in a position to not only
compete with Chinese automakers, but to win, not only here in
the United States, but around the world. No Chinese automaker
is taking advantage of 30D. What we have seen to date is that
the companies that are taking advantage of it are American
companies who are using it to make the investments that they
need to be able to build out the cars of the future, which are
electric vehicles. And we hope that 45X will help reduce the
cost of those batteries over time. But to your point, we want
to make sure that they have access to the minerals that will go
into those car batteries.
Senator Hickenlooper. Right, and I appreciate that, and I
think you are certainly working in the right direction and
establishing those supply chains and making sure that, well, we
know that the most efficient and the most environmentally
friendly ways of getting minerals are--that happens in the
United States, and not as much in other parts of the world at
this point. So there is a double benefit there.
Anyway, thank you so much.
Senator Barrasso. It is magnificent, Mr. Chairman. We are
sitting here and we have an administrator here, Honorable Mr.
Adeyemo, what does it say up there? Your battery is running
low.
That's the problem, Mr. Chairman.
The Chairman. Wally, we don't know if it is your battery or
our battery. That's the problem.
Senator Barrasso. Your battery is running low, and----
Senator Hickenlooper. I haven't yielded back to you guys
yet.
[Laughter.]
Senator Barrasso. I wanted to alert him to the situation.
The Chairman. Can someone--do we have a technician here
that can help us?
Senator Barrasso. Mr. Turk, this is the issue. Batteries
running low. Because you and Senator Lee talked about
bidirectional charging. And I want you to clarify that, because
do you mean utilities would be able to draw down a homeowner's
electric car battery from their garage and drain it to help the
grid someplace else? Because I am a doctor, I have gone to a
lot of emergencies. What happens when an owner of an electric
car has an emergency at three a.m., goes to their garage, and
they find out their electric car is out of juice because this
gobbledygook word of bidirectional charging has drawn them
down?
Mr. Turk. So first of all, it has to be consumer-driven,
and consumers should be the ones to take advantage of their
asset, if they would like to take advantage of their asset
right now. What is being contemplated right now, and what is
actually being utilized right now is, when the battery gets
charged, right, if you can time when your battery gets charged
to when you have lower electricity, or higher electricity
generation, that helps balance the supply and demand and helps
save you money and do things in an efficient perspective. If
consumers want to, and if we have the technology worked out to
have the bidirectional charging, just as you suggest, consumers
can make money off of the fact that they own a battery. Now,
they would need to take into account exactly your situation,
right? You'd need to do it in a smart way so that you don't
have batteries too low that you can take advantage of it if you
need to in emergency circumstances. And this is what we need to
work through using the smart folks at our national labs and
others who are the true experts in this area.
The Chairman. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
Interesting hearing. You know, I think we all recognize
that there is great value in electric vehicles, but I hope what
you are taking away, Mr. Turk, is this recognition that you
have got an Administration that is approaching how we deal with
this with one hand deliberately tied behind our back, and we
are talking about the critical minerals that go into this. You
know, I think the Administration is saying the right thing
about minerals. We like minerals. We recognize that they are
necessary, but they are not so keen on the issue when it comes
to domestic mining.
And you know, I appreciate what you have shared, the
exchange there with Senator Padilla about the great benefits,
and you identified this source of lithium, but it's about
access, because we can identify it, but if we don't permit it,
if we don't allow for that access, if we don't help support it,
and we are helping to support access elsewhere, and that is
where I want to talk a little bit about what we are seeing
going on right now. It seems like--the Department of Defense is
really working with us on this, and I appreciate that--but it
seems like the Administration is taking this approach that it's
anywhere but China, because we all know, China, we have got to
move away, got to move away for all the right reasons there.
But then, when it comes to a country like Mozambique, that does
not exactly have good labor standards and does not exactly have
good environmental standards, then, it's all okay.
So I want to talk to you about that. You have got the
background when it comes to critical minerals. You demonstrated
that with your work at IEA. It's great. We get that. Secretary
Adeyemo, I do not have a question for you this morning. I do
have one that you are going to get as a QFR. But I want to just
take one brief second to thank you for closing the loophole
that was allowing Russia to evade sanctions on our seafoods
that are such an important part of our market. So thank you.
You are making a difference there. You always have to remember
to thank people when they are doing good things.
So let's talk about my issue with what is going on with a
fixation to get the resource from somewhere else, somewhere
else other than here, because we don't really like the fact
that when you mine, you have to dig a hole. And you look at
what we are seeing going on with graphite. And you have
mentioned a couple times in your testimony here today that we
are going to see domestic graphite production increase 25-fold
here. Projections show 16 percent of graphite in EVs will be
produced in the U.S. That's great. I am curious about what that
timeline is on those assumptions because, again, what we are
seeing right now doesn't match up. The example that I want to
share with the Committee is, right now, DOE has awarded more
than $320 million to a processing plant in Louisiana. My friend
Bill appreciates that. But they are getting their graphite from
Mozambique. DOE is now, I don't know that you have actually
done this, but I understand that you are considering another
$300 million loan guarantee for that project, which means more
graphite from Mozambique. USDFC has announced $150 million in
financing to help expand this Balama mine, and it's this mine
in a super-unstable region in Mozambique. Unrest is
significant. ISIS is active. Workers are paid so little that
they went on an extended strike last year. There is all kinds
of bad news coming out of there.
But you have got all that that DOE is supporting from a
mine in Mozambique to get the graphite to help Louisiana out
here, so we can process it here, so we can put that stamp that
says ``Made in America,'' but it is sourced somewhere else. In
the meantime, what we have seen to help the largest graphite
find in North America, coming out of Alaska--Graphite One--DOD
is the only part of this Administration that has made an award.
We got $37.5 million to help Graphite One move along. So here
is my dilemma: we are helping to support a foreign mine,
ultimately benefiting 10 to 20 times more, using U.S. taxpayer
dollars, than we are providing support to our largest-known
domestic source of graphite. So we know graphite is big. We
know we have got a source. We have identified it. But we are
not helping to facilitate that access. Instead, we are setting
up support after support after support for Mozambique. I don't
think that is right. I don't think that balance is right.
So how can you tell me that the Administration is really
committed to domestic sourcing when we are not putting our
resources there?
Mr. Turk. Well, thanks for the question, Senator. It is
always good to see you.
Let me start just with the scale of the challenge, as you
suggest. Right now, China absolutely dominates the graphite
processing market, 100 percent. I mentioned the numbers
earlier, and those are 2027 numbers, with the investments we
have made so far, and we need to do a lot more. And I will get
to that in a minute.
Senator Murkowski. So by 2027, you really think that we
are----
Mr. Turk. By 2027, with the investments we have made so
far----
Senator Murkowski. A 25 percent increase?
Mr. Turk [continuing]. It's 16 percent of what we need for
graphite for passenger vehicles we will be able to take care of
ourselves in the U.S.
Senator Murkowski. Natural graphite?
Mr. Turk. Sixteen percent is not--that is the process piece
of it with the inputs that come from it.
Senator Murkowski. Right, right.
Mr. Turk. But 16 percent is not enough, right? We should do
more than that. And I completely agree with you----
Senator Murkowski. Well, and you would agree that it's not
just about where we process it, it's where we get the stuff?
Mr. Turk. Completely agree. I was getting to that.
Senator Murkowski. Okay.
Mr. Turk. The most secure place of any that we can get is
here in the United States, right, assuming you do look at the
environmental standards, you do it in the way that works for
the communities, the state in which it is located.
I had a chance to get up to Alaska last year and met with
the Graphite One leadership.
Senator Murkowski. And we appreciate that, yes.
Mr. Turk. I had a chance to actually see the actual site in
which they are proposing to work. I came away quite impressed
at what they are doing. I have had conversations with my
counterparts over at the Defense Department. They are putting
in money. I think it's about $37.5 million right now of Defense
Production Act----
Senator Murkowski. Right.
Mr. Turk [continuing]. That was given by Congress to help
get that going. We are particularly excited, and we are trying
to connect the dots with our loan program. We have got a second
round of funding coming through our battery manufacturing grant
program----
Senator Murkowski. Can I ask on that----
Mr. Turk. I would absolutely love----
Senator Murkowski [continuing]. Because we are told, Mr.
Turk, that what we are seeing, or what we are hearing, is that
your mine project--the mine project itself is not eligible for
DOE's loan program. They are only going to consider non-mine
infrastructure, not the mine itself, and then they talk about,
well, if a pilot project has been completed. So how does this
help an operation like Graphite One?
Mr. Turk. Exactly, and happy to talk in depth with you and
your staff on this and to work through it.
Senator Murkowski. Okay.
Mr. Turk. We are trying to be as creative as possible with
the tools and the authorities that we have.
There is one of our loan program efforts right now in
conditional commitment--$700 million for Rhyolite Ridge in
Nevada with a domestic supply of lithium carbonate. Love to
work forward. I have had conversations with the CEO of Graphite
One. I know our loan program is having conversations. Again,
the loan program takes applications as they come in. So we are
more than happy to have conversations and try to figure out
which of the tools that we have currently will work to
develop----
Senator Murkowski. So if I can just ask for one
clarification, and I know that we have another colleague here
who is waiting, but is it--can you confirm to me that the mine
itself, the project itself, is actually eligible for DOE loan
guarantees or DOE loans?
Mr. Turk. So happy to have a detailed conversation. We are
trying to be creative. A lot of times it is the mining and the
processing piece. Rhyolite Ridge is an example of what we are
able to do using our authorities. If there is any change in
authorities we need, we would be eager to work with you and the
Chairman to try to make sure that we have the tools that we can
to be maximally helpful.
Senator Murkowski. Well, and I think----
Mr. Turk. We are going to need a lot of stuff at scale.
Senator Murkowski [continuing]. That we need to do that
because when Chairman Manchin and I were working on those Title
17 loan guarantees, I think we knew what we wrote in. I think
we knew that we explicitly wrote in provisions in this
infrastructure law to include mining. And we didn't think that
there was any wiggle room there.
Mr. Turk. The most secure source of these critical minerals
is here in the U.S., and we should absolutely, responsibly, and
in an environmental way, with the community's support--and to
speed up permitting. You mentioned permitting. The Chairman has
been working on permitting. You both have been working on
permitting for years and years. Eager to work on that too so we
can play our part to try to accelerate.
Senator Murkowski. Well, we have to do more with this, and
what I am taking away from this exchange is that you can't
assure me that, in fact, the mine projects are actually
eligible for the DOE loan.
Mr. Turk. So----
Senator Murkowski. So if we do have to get creative, even
though we think that we were pretty clear in the law itself,
allow me to work with you, work with the Chairman, to get
creative to do so, because we cannot--you can't pass the red
face test when you are putting 10 to 20 times more U.S.
taxpayer dollars into mining projects in a place like
Mozambique and telling places like Nevada, Alaska, West
Virginia, that you might have the resource, but you are not
eligible for that loan.
Mr. Turk. Happy to have further conversations. I have had
great conversations with the CEO of Graphite One. I exchanged
an email just earlier this week. Happy to follow up with real
urgency here.
Senator Murkowski. Good. I appreciate that.
Thank you, Mr. Chairman.
The Chairman. Senator Cortez Masto.
Senator Cortez Masto. Really?
Let me just say, first of all, thank you both for being
here. This is--I am a big fan of both pieces of legislation,
the Bipartisan Infrastructure package, as well as the Inflation
Reduction Act. It has been a benefit to Nevada and I know you
both know that.
This chart shows, literally, not only to Nevada with the
batteries and EVs and hybrid, and let me just say, hybrid
vehicles are part of this.
[The chart referred to follows:]
[GRAPHIC] [TIFF OMITTED] T5845.036
Senator Cortez Masto. It's all across the country. It's not
just blue states. It's red states. It's everywhere where we are
creating jobs. We are bringing opportunities. We are bringing
that supply chain back to the United States. I am hoping, and
let me just follow up, and I echo what my colleague from Alaska
said, Senator Murkowski--we are starting at the extraction, the
mining. That's the key part of all of this--the processing, the
manufacturing, but this is the perfect example of--we're not
putting the genie back in the bottle. This is not it. Not
unless we, the way we implement the legislation and write the
regs or the way that we get in our own way and either refuse to
implement new legislation or undo what we have done already.
But here is why. This is so essential that we have to lead
in this area. We have to develop our domestic manufacturing. We
have to make sure that we are doing everything we can so that
we don't repeat the mistakes of other critical technologies. We
don't want to cede ground on the global stage. We don't want to
end up reliant on hostile nations. This is important for
national security. This is important for jobs. This is
important to bring that supply chain back here. And by the way,
the demand is out there. The demand is not going to change. So
we might as well be flexible and create the new jobs that are
going to come because of everything that we are doing here.
Now, with that said, I do have some concerns about how the
Administration, at times--our intent is put out in this
legislation. I appreciate that you are trying to figure out how
to do the guidance. But sometimes the left foot is not walking
with the right foot. And it is hindering what we are trying to
do here. One of the areas that we talked about was 45X. And so,
Deputy Secretary Adeyemo, let me talk to you about that because
I understood what you said to Senator Hickenlooper. I
understand what your intent is and what you said, which sounded
really good, but I know what I am reading in the guidance. Let
me just give you an example. The Nevada Battery Coalition noted
that the guidance on 45X from Treasury states this: ``Direct
material costs as defined in the statute or indirect material
costs as defined by statute and any costs related to the
extraction or acquisition of raw materials would not be taken
into account as production costs.'' And it goes on to say,
``the cost of acquiring the raw material used to produce the
electrode active material, the cost of materials used for
conversion, purification, or recycling of the raw material, and
other material costs related to the production of the electrode
active material would not be taken into account.''
That signifies to us that critical mineral processing is
not being taken into account for this particular credit. And
that is the concern we are all having. And so, I guess I am
asking you, what you just said is not what this reads. And so
as we look at implementation, and as attorneys look at this and
everybody looks at implementing it, it is a little different.
So how do we fix this or address this?
Mr. Adeyemo. Senator, thank you for the question and thank
you for the support. I know we have had conversations about the
IRA that have been helpful in helping us think through the next
steps we take. As you know, we have put out for 45X a notice of
proposed rulemaking. What that means is that ultimately, we
have put out the guidance in order to get feedback from
stakeholders and industry in terms of how we improve and make
changes as we move toward finalization. As I said previously,
our goal is to make sure that we are giving the credit for
value-added activities within the process. One of the
challenges we want to stay away from is making sure that both
the credit doesn't go to, for example, minerals or things that
are processed abroad and brought into the United States or that
they are given to companies that aren't actually adding value.
Ultimately, if stakeholders feel that we have gotten this wrong
in terms of the way that we have defined value in terms of 45X,
we look forward to that feedback. We actually encourage it. We
ask a number of questions within the rule to help us better
refine this in order to make sure that----
Senator Cortez Masto. So can I, and I don't mean to
interrupt you but I only have so much time here. Let me ask you
this--based on what you are telling me, there is going to be
more bureaucracy. When somebody goes to apply for this, they
are going to have to ask--you are going to ask them several
questions, including how this production, and the raw material,
where it came from, and if you guys aren't satisfied that it
came from a certain company or within the United States, they
are not going to get it. Is that correct?
Mr. Adeyemo. No, Senator, I apologize. What I was saying
was that within the guidance that we put out, which was a
proposed rule, we asked a number of questions that will help
inform the final rule that we will put out. We are attempting
to provide as much clarity for industry as possible, and our
goal is to put out a final rule that addresses the types of
questions that you have raised here. So I look forward to
following up with you and talking to stakeholders in your state
about this issue so it can inform the final rule that we put
out that will provide more clarity to stakeholders.
Senator Cortez Masto. Thank you. I appreciate that.
I know my time is up. I have to thank both of you. It's not
an easy task. The pieces of legislation that we have passed are
game changers for our future. It's not just two years, five
years, it is ten years down the road. It's changing our energy
infrastructure moving forward. It is bringing jobs back. Nevada
is proof of it. It is creating, and it is a positive for our
economy and revenues in our states. And yes, it addresses our
national security. We do not want to be reliant on other
countries. So this is key, and it requires us all to work
together to make sure we are--at the end of the day, the
Administration and how we implement it is having a positive
impact. And I will go back to what Senator Angus King said,
with the ultimate goal of addressing the climate crisis that we
are dealing with.
So thank you. I appreciate you being here.
The Chairman. Thank you, Senator.
I have one quick question. I think Senator Hawley has a
second question also. So I will go with mine and Wally, this is
for you, okay?
When the Congressional Budget Office scored the Inflation
Reduction Act in August 2022, they said the total cost of the
consumer EV credit would be about $7.5 billion. Yet, in Fiscal
Year 2024, we would spend roughly $451 million on the credit.
Recently, your agency announced that so far, 272,000 vehicles
have been produced and could be eligible for the consumer EV
credit in 2024 by itself. If they get the full credit of
$7,500, if they would qualify, that would be two billion
dollars just in one year. If they only got half of it, they
would get one billion. You are going to run out of money in
three and a half to four years, based on the CBO scoring.
So blowing past the score that was demonstrated, I don't
know if it's intended that you should amend your proposals to
match the letter of the law, basically staying within the
confines of the money that we allotted for the entire bill,
especially the way the CBO was scored. I don't know what your
thoughts would be on that, how you have looked at that.
Mr. Adeyemo. Senator, thank you for that question. While we
have not talked about it, I do think that one of the most
important things we did in the Inflation Reduction Act was
raise additional revenue. And the biggest source of that
additional revenue was, of course, the IRS, where you provided
$80 billion of resources. And my view is that we are actually
going to raise more revenues through the Inflation Reduction
Act than CBO scored, largely because they undervalued the
technology investments that we are making at the IRS that are
leading to additional revenue. We have seen already revenue
come in from millionaires and billionaires who have previously
not paid taxes. The IRS has already made these investments and
we think that will lead to additional deficit reduction over
time.
With regard to the EV tax credit, ultimately the way that I
think about this is, people only get the tax credit if they
want to buy an electric vehicle. Ultimately, what this is going
to mean is that there is going to be more demand for electric
vehicles. That means that it is going to create more jobs
producing those electric vehicles, which will lead to
additional revenues for taxpayers as well. I can't tell you
exactly how much money is going to be spent here in terms of
the electric vehicle tax credit. That is going to be a factor
of what happens with regard to demand from American consumers,
and also to a degree what happens in terms of cost over time.
And I think the 45X credit is going to bring down cost
dramatically because of what it does to batteries.
But what I can tell you we are committed to doing is
working with you and other Senators as we move from proposed
rules to final rules to take into account your feedback and in
making sure that we do what our shared goal is, which is to
make sure that we build a supply chain in the United States
that supports electric vehicles and energy security here and
for our allies and partners going forward.
The Chairman. My only comment would be that our intention
was to stay within the CBO scoring of how we paid for it so it
would not add to our deficit. As you know, we are over $34
trillion and continue to grow in deficit. And in saying that,
that I believe I would recommend to every one of my colleagues,
Republicans, Democrats, that if you want to stop the deficit
spending that we are doing, then every piece of legislation
should be based around CBO scoring and the ability to have
spending authority. So I will give you an example. A bill
that's basically on ten years of pay-fors and has ten-year
spending authority, the spending authority should stop
immediately when the CBO score is hit. If it's hit at three
years and we thought it should be ten, then we should stop it
there. That would stop all deficit spending. That's the biggest
problem that Democrats and Republicans have had for the last
decade or more. So if you want to know how it has grown the
debt as quickly as we have--we underestimated, we
overestimated, we never corrected. We allow you to spend for
ten years, even though you run out of money in three. That
means it's deficit spending. We borrow. That has to stop.
That is my recommendation, as my final year is wrapping up
here in the Senate, that if you want to get us back on track
financially, that would help us because something that is so
popular, we have had this discussion before. When it's this
popular, and people are demanding it, I will guarantee you, and
we are all benefiting, Democrats and Republicans, we will come
back and find additional ways to extend through appropriations
and different bills. But you can't continue to do what we are
doing playing a shell game. That's my input, and Secretary, and
I appreciate, and you and I have had some good frank
discussions. I would hope that you really look into this as
seriously as possible and follow the guidelines of the bill.
That is our intent.
With that, Senator Hawley.
Senator Hawley. Thank you, Mr. Chairman.
Mr. Turk, I just want to come back quickly to this question
about workers, because I just think it's so important, you
know, my friends on the other side of the aisle said that they
believe that the overriding crisis is the climate. I just
respectfully disagree with that. I think the overriding crisis
we are facing is the wages and jobs of American workers. And it
truly is a crisis for many, many American families, who, you
know, both spouses have to work, even when they both work--I
will just tell you a story about in Wentzville, Missouri,
recently, the UAW strike, I was out on the picket line, and I
was listening to one of the workers there who is my age. I am
44. He is my age. So he is not a young man anymore. And he was
telling me that he has to, even working full time and working
overtime, he can hardly afford--in fact, he said it takes him
two paychecks to be able to pay for his rent in Wentzville,
Missouri. You know, this isn't Manhattan. This isn't New York
City. You know, this is Wentzville, Missouri. This is an
affordable place. That is the crisis we are facing.
So in light of that, tell me why this is a good thing. This
is from an article in Axios. I just want to quote: ``Even as
battery cell production shifts to the United States, that labor
will likely be done by non-union workers at factories co-owned
by foreign companies, and they,'' meaning the workers, ``will
make less money than workers at traditional power train
factories.'' The article goes on: ``For example, battery cell
factories under construction in Kentucky and Tennessee are co-
owned by Ford and a Korean company. They are starting their
workers at, on average, $14 an hour less''--$14 an hour less--
``than workers who are making engines and transmissions for
traditional vehicles.'' How is that good for American workers?
Mr. Turk. So let me start with a thanks for focusing on
this issue. One of the reasons I got into the government and
took this job is, I grew up in Illinois, right next to
Missouri, although in the northwest corner of the state. I was
just back visiting with my folks over the holidays. Rock Falls
is the name of the hometown. And it is a steel mill community.
We have had those in West Virginia and other parts of the
country as well. And when I was growing up the steel mill was
basically shutting down. My entire childhood. So I got to see
very directly what that means to a community. Right? The
dysfunction that that causes in families, the fact that parents
can't provide for their kids, et cetera, et cetera, et cetera.
So this is near and dear to my heart.
I am honored to work for Secretary Granholm, who was
Governor of Michigan, who has real-life experience in terms of
the changes happening in the auto industry and how we can be
smart, working together, and proactive to make sure we have got
jobs for folks, high-quality, high-paying jobs. I also think we
are smart enough in the U.S. I think we are exceptional and we
can have those high-quality jobs. We can make sure we have got
affordability for our consumers and we can make sure we tackle
climate change as well. Transportation is the largest source of
our emissions in our country, and we need to take that head-on.
Senator Hawley. I appreciate that answer, Mr. Turk, but you
haven't really answered my question. I mean, let me read to you
from another article. This is the Associated Press. And this
says in quoting someone, this is just a statement of fact. And
I quote, ``If electric vehicles replace gas-powered ones, most
UAW workers, for example, at engine and transmission plants
will lose their jobs, and if lower-paying battery plants aren't
union, workers won't have anywhere near the same wages and
benefits.''
So here, my nightmare scenario is that we repeat--because
of this Administration's climate agenda--climate fixation, I
would argue--we repeat and hypercharge the loss of industry we
saw in the '70s and the '80s and the '90s, and we do it all
over again. And so the remaining few things that we actually
produce in this country, like automobiles, we won't produce
anymore. And we may produce a few things, but even those will
be co-owned with foreign companies. I mean, you mentioned
steel. U.S. steel, an iconic American company, backbone of our
steel production in this country, is apparently about to sell
to a foreign company. I hope your Administration is going to
block that sale. I urge the President to block it. He should
absolutely block it, but for heaven's sake, let's not see what
remains of our proud and strong auto industry be completely co-
opted by foreign governments, foreign entities, and U.S.
workers are left with very little. I mean, that's just a
nightmare scenario. Wouldn't you agree?
Mr. Turk. So I am a firm believer in playing offense. And I
think we are playing offense right now. I think we are being
intentional. We are being aggressive. We are being purposeful.
The fact that we have 136,000 new jobs across the country----
Senator Hawley. I don't think giving tax subsidies to
Chinese companies is playing offense, Mr. Turk.
Mr. Turk [continuing]. Including 250 new jobs in Missouri
because of these investments, because of these targeted,
directed investments, planning for the future and making sure
we are winning and competing against China. China is working
incredibly aggressively to dominate----
Senator Hawley. And your Administration is helping them now
by giving them these tax subsidies. And we are losing thousands
of jobs because of your climate mandates that are forcing our
production overseas and gutting our workforce. I just, I don't
understand it.
Mr. Turk. Everything we are doing in this space, and I am
happy to go chapter and verse on all the provisions that we are
working on, is to re-shore, to make sure that these jobs, to
make sure this economic opportunity is U.S. and our allies
across the world. We have got a huge economic opportunity here.
And the last thing we need to do is sit by idly, like what we
have done in our country for too long. We are stepping up. We
are playing offense. We are winning right now. My biggest fear
is that someone puts a brake on it and we are not able to
compete. Right now, we are competing and we are starting to
win.
Senator Hawley. My biggest fear is that the Wall Street
banks, they make a bunch of money on it because they have all
invested in these foreign companies, and the foreign companies
make a bunch of money on it, and we lose thousands of American
jobs and American workers get their pay cut in half.
Thank you, Mr. Chairman. Thanks for indulging me.
The Chairman. Thank you, all.
Let me just first of all thank both of you. Secretary
Adeyemo, thank you. I know that you are not up to par right now
with the COVID, but we look forward to seeing you back in good
health soon. And David, it is always good to have you here. It
was very helpful. I think you know our concerns and our
frustrations to a certain extent. But we all do--I mean, I say
most of us--recognize that the Inflation Reduction Act has
tremendous impact on the economy of the United States of
America and it has taken us through a situation that could have
been dire with inflation and recessions and unemployment that
we prevented from happening.
If we can just get to more of the agreements and get the
proposed rules versus permanent rules would be very helpful, I
think it would bring a lot of clarity for investments that are
being made and people want to make. So I am asking you all to
work with us on that as closely as you possibly can.
Members are going to have until the close of business
tomorrow to submit additional questions. And with that, the
meeting is adjourned. Thank you both.
[Whereupon, at 12:03 p.m., the hearing was adjourned.]
APPENDIX MATERIAL SUBMITTED
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