Making US Manufacturing Cleaner and More Competitive
Manufacturing built the American middle class, and in return, the middle class built America. But today, rampant inflation, supply chain bottlenecks, and unprecedented, widespread labor shortages threaten the American industrial base. Slowly chipped away over several decades, domestic manufacturers are now left in a precarious position in the new global economy.
As the world transitions to a clean energy economy, we have an opportunity to revitalize our industrial sector and build long-term economic prosperity, all of which will support our workers and families. We have the manufacturing workforce, infrastructure, and innovation ecosystem ready to develop and deploy new technologies that will bolster domestic industry while helping advance several other national priorities. However, if we want to reap these benefits, we need policies that ensure our manufacturers and workforce are equipped to meet this historic moment.
"As nations institute stricter environmental regulations, demand for cleaner, low-carbon products is on the rise, creating a vacuum for global leadership in low-carbon manufacturing that the US is poised to fill."
Climate change is one of the many factors that should motivate us to invest in US manufacturing. The industrial sector accounts for almost a quarter of our total greenhouse gas emissions (GHG). It includes industries like cement, steel, and chemical manufacturing that are difficult to decarbonize by virtue of their highly specialized and energy-intensive production processes. That means the country needs a concerted policy effort to address industrial emissions to meet its economy-wide goals.
Third Way: We Can't Cut What We Can't Count: How EPDs Help Track Emissions from Construction Materials, November 8, 2021.
The Biden-Harris Administration has been using every lever available to reduce industrial emissions. For instance, the Buy Clean Task Force will leverage the federal government’s immense procurement power to create demand for lower-carbon industrial materials. What’s more, a first-ever federal procurement standard will address concrete and asphalt embodied carbon by requiring contractors to disclose the emissions generated during a product’s lifecycle through Environmental Product Declarations (EPD). As the world’s largest buyer of materials and services every year (spending approximately $650 billion), the federal government can serve as an influential customer, giving manufacturers the confidence to invest in cleaner production and building momentum toward cleaner products.
The Administration is also prioritizing clean manufacturing and innovation in its latest budget proposal, calling for a 47% increase in the Department of Energy’s funding for advanced manufacturing. This, among other benefits, provides the Advanced Manufacturing Office (AMO) with added funding and flexibility to catalyze industrial efficiency and decarbonization innovations.
"Make no mistake, passing a climate reconciliation package bill is a crucial step towards addressing industrial emissions and ensuring American industry and workers stay competitive as global demand for cleaner energy and goods continues to grow."
The world is rapidly shifting to clean energy to meet ambitious climate goals and cut dependence on authoritarian regimes and volatile fossil fuels markets. As nations institute stricter environmental regulations, demand for cleaner, low-carbon products is on the rise, creating a vacuum for global leadership in low-carbon manufacturing that the US is poised to fill. Countries across the globe are already making investments to decarbonize their industrial processes. US companies and workers will be left behind unless they dramatically scale up sustainable manufacturing practices. But how much of this market US manufacturers win depends on how effective a partner they have in the federal government.
The recently passed bipartisan infrastructure bill included $500 million for industrial emission demonstration projects, as well a suite of other clean energy provisions that will help grow the market for emerging technologies. However, we can’t stop there. Passing an ambitious climate reconciliation bill would help expand the market for cleaner materials and provide the resources necessary to help manufacturers mitigate emissions in the production process.
The latest version of the Build Back Better Act includes $25 billion in Advanced Energy Manufacturing (48C) Tax Credits, which helps American manufacturing companies retool facilities and expand manufacturing capacity for clean energy goods and infrastructure. It also includes other tax credits for carbon capture and hydrogen technologies to reduce plant emissions and enables federal agencies to purchase lower-carbon infrastructure materials at a greater scale. Make no mistake, passing a climate reconciliation package bill is a crucial step towards addressing industrial emissions and ensuring American industry and workers stay competitive as global demand for cleaner energy and goods continues to grow.
"Through an innovation and competition bill, the federal government can expand and modernize our struggling supply chains to bolster the domestic manufacturing industry, insulating US companies, workers, and consumers from foreign trade disruptions."
In the race to decarbonize industry, the US can regain its standing in the world as a manufacturing leader by developing cleaner goods and more sustainable practices to meet the growing global demand. These investments would provide the country with a technological edge in the emerging global clean energy transition and create jobs in every region of the country, helping to fortify the American middle class. The manufacturing sector employs more than 12 million Americans, many of whom live in smaller, rural communities and opted to pursue a vocation over a four-year college degree. Investing in a cleaner industrial sector also means investing in these workers and ensuring they have a role in the decarbonized, global economy.
Congress recently passed two separate competitiveness bills: the America COMPETES Act in the House and the United States Innovation and Competition Act (USICA) in the Senate. The latter would invest in education and skills training, ensuring more students and workers have a pathway to employment in the manufacturing sector. In addition to workforce investments, COMPETES and USICA establish programs to identify and plug major gaps in vital supply chains and provide significant funding to address supply chain issues, particularly semiconductor manufacturing. A shortage in domestic semiconductor supply has single-handedly hampered growth in sectors such as electric vehicle manufacturing and renewable power development.
Through an innovation and competition bill, the federal government can expand and modernize our struggling supply chains to bolster the domestic manufacturing industry, insulating US companies, workers, and consumers from foreign trade disruptions. Reconciling the two bills’ minor differences and signing them into law will go a long way to ensuring that communities across the country have the opportunity to benefit from the clean energy transition.
WSJ: Why Global Supply Chains May Never Be the Same | A WSJ Documentary, March 23, 2022.
Cost-cutting, outsourcing, and relying on foreign nations for essential goods have made the American industrial sector vulnerable to fluctuating markets, which has been on full display this past year as economies struggle to recover from early COVID-19 closures. By reducing our reliance on unpredictable foreign supply chains, we can make more critical goods in America and accelerate the deployment of US-clean energy technologies domestically and abroad, securing energy independence for ourselves and our European allies.
But the status quo won’t get us there. It is up to the Biden-Harris Administration and leaders in Congress to enact new legislation to rebuild and modernize the manufacturing core that made America the strongest economy the world has ever known. The advanced energy manufacturing and other clean energy tax credits in the proposed reconciliation package, as well as the supply chain investments in COMPETES and USICA, would provide critical support to this effort. We must be both reactive and proactive in our policies, working to fill the gaps in our domestic supply chains and workforce now, spurring innovation and strengthening the resiliency of our industrial sector. The health and welfare of our workforce and the environment depend on it.