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Inflation Reduction Act Cuts EV Tax Credits, Boosts Mining

Pumpkin Empty Copper Mine in Nevada, USA

Pumpkin Empty Copper Mine in Nevada, USA
image: Nevada copper

The Inflation Reduction Act contains more than strict sourcing and domestic production rules. It also contains a number of subsidies and incentives to promote US battery metal mining, which most people are ignoring because of the threat to EV . tax credit.

The impending loss of tax credit conditions is important, but it overshadows the rest of the subsidies in the proposal, which cost a lot of its $370 billion budget to make. climate changebased on Vox.

Even groups opposing the proposal outlined what subsidies are, like Automotive Innovation Alliance. AAI has brought together supply chain, purchasing and infrastructure regulations in a single statement. We already know the terms of purchase, but here are some supply chain terms under AAI:

Advanced Manufacturing Credit: Provide an outline of available credits for those that produce materials used to produce clean energy. Eligible materials for the credits include the manufacture of active electrode materials, battery cells, battery modules, and applicable critical minerals. Credit periods do not apply to the production of important minerals.

Advanced technology vehicle production: Set aside $3 billion to the Secretary of Energy to directly finance the cost of setting up or expanding U.S. manufacturing facilities that produce low greenhouse gas-emissions advanced technology vehicles or components or zero.

Financing the transformation of domestic production: Spending $2 billion to fund hybrid electric vehicles, plug-in hybrids, plug-in electric drives and hydrogen fuel cell electric vehicles.

Funding for the Defense Production Act: Includes $500 million (available until September 2024) in additional incentives to promote the development of key minerals.

There’s more in the full proposal, but here are some of the big issues. Especially the last issue, which AAI only briefly covered. In that clauseThe United States is noting the national security importance of battery metals in the country.

That includes lithium, nickel, cobalt, graphite and manganese. Given how important these metals are to EV production, the provision argues that the US should subsidize domestic mining and processing. It might seem like a strong taxonomy of mining to show how important it is to defense, but in terms of tariffs and the trade conflict the US has had with China and the invasion of Russia enters Ukraine, it’s not too complicated.

Drilling at a geothermal and lithium plant in the Salton Sea in Calipatria, California

Drilling at a geothermal and lithium plant in the Salton Sea in Calipatria, California
Photo: Gina Ferazzi (Getty Images)

Basically, the clause is meant to funnel money into U.S. EV metals mining, but even mining companies are upset about it. They say expanding U.S. projects quickly will be difficult, as Reuters report. But whether it’s ten years or twenty, it seems like industries have always resisted change.

Who can say that even with a longer timeline, miners or car brand won’t just drag their legs much longer? Meanwhile, the US can still get minerals from free-trade partners like Canada, Chile and Australia, and by recycling – although that’s in its infancy as there aren’t many EVs at the end of their life. them to take the battery from .

Tha AAI speak what is really needed is “emergency licensing for important mineral extraction and related processing” in the US, and some speed will help. Of course, we shouldn’t cut corners, that’s what climate activists insist. But it says the industry is happy to let others mine and progress metal. It’s only a matter of when someone says we should do it in America – under better regulations and working conditions and pay.

Lithium mining in Salar de Atacama

Lithium mining in Salar de Atacama
image: Oliver Llaneza Hesse (beautiful pictures)

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