Yellen warns of risks of over-concentration of clean energy supply chains

Yellen's speech comes days before the one-year anniversary of the Inflation Reduction Act

LAS VEGAS (Reuters) - The United States is working to build resilient, diversified clean energy supply chains to protect its economic security, while guarding against the risks posed by over-concentration in a handful of countries, U.S. Treasury Secretary Janet Yellen said in remarks prepared for an event in Las Vegas on Monday.

Yellen will touch on the challenges of transitioning away from fossil fuels in a major speech she will deliver after touring a union facility where workers are learning skills to work on clean energy projects.

Yellen's speech comes days before the one-year anniversary of the Inflation Reduction Act (IRA), which includes $500 billion in new spending and tax breaks that aim to boost clean energy, reduce healthcare costs, and increase tax revenues.

Yellen plans to laud the continuing resilience of the U.S. economy while underscoring the importance of key legislation like the IRA in helping to rebuild the U.S. manufacturing base and "reduce chokepoints, mitigate disruptions, and protect our economic security."

"As we move away from fossil fuels, we remain concerned about the risks of over-concentration in clean energy supply chains," she said in excerpts of the speech obtained by Reuters. "Today, the production of critical clean energy inputs – from batteries to solar panels to critical minerals – is concentrated in a handful of countries."

A report by the International Energy Agency earlier this year noted that China holds at least 60% of the world’s manufacturing capacity for most mass-manufactured technologies, such as solar photovoltaic and wind systems, and 40% of electrolyser manufacturing.

It said critical minerals needed for these industries were also highly concentrated, with the Democratic Republic of Congo supplying 70% of cobalt, China 60% of rare earth elements, and Indonesia 40% of nickel. Australia accounts for 55% of lithium mining and Chile for 25%, it said.

Yellen said the U.S. was investing domestically to build more resilient and diversified supply chains, while helping other countries accelerate their own energy transitions.

"The IRA is helping re-shore some of the production that is critical to our clean energy economy," she said. "Accelerating these transitions can mean greater demand for U.S. clean energy technologies produced by American workers. It can also bolster global clean energy supply chains.”

Yellen will speak at a training center operated by the International Brotherhood of Electrical Workers (IBEW) union.

The remarks in Nevada, likely to be a key battleground state in the 2024 presidential election, are part of a month-long travel blitz by President Joe Biden and his cabinet as they work to convince skeptical Americans that their policies are working to boost economic growth and fight global warming.

The U.S. economy has outrun recession warnings with record-low unemployment, strong wage gains and better-than-expected GDP growth, but many voters who backed Biden in 2020 think the economy has faired poorly, and may not vote for him in the 2024 election, a Reuters/Ipsos poll released last week showed.