The United States, for many years now, has enjoyed the best economy in the world. We have long been the most prosperous nation as measured both by total size of the economy and by income per person. We got to this enviable position because of the wise decisions and hard work of those who came before us. Some of the conditions that have allowed us to prosper have been the availability of abundant energy as well as a societal structure that allowed, encouraged and rewarded innovation. But we currently find ourselves in a precarious situation, where a similar prosperity for our children and grandchildren is by no means guaranteed.
The second largest economy (with no close third place) in the world is China, and it is clear that the outcome for the entire world economy over the next few decades is going to be shaped by how the competition between the U.S. and China plays out. In some very important ways, we are currently not in a good position with respect to China, and we need to understand clearly where things stand to be able to make good decisions for our future.
Although China has just 17% of the world’s population, they have built themselves into an energy manufacturing powerhouse. China manufactures over 80% of all the world’s batteries, over 70% of the world’s electric vehicles and over 70% of the world’s solar panels. The most advanced battery manufacturing plants in the world are not in the U.S. or Europe — they are in China. Over 70% of rare earth metals (needed to run all of the electronics and small motors in our computers, cars, dishwashers and other household appliances) are mined in China.
The situation is even worse with mineral processing. Over 90% of the processing capacity to purify the rare earth metals to a usable form is in China. With respect to computer chips, we have gone from a time when essentially all computer chips were manufactured in the U.S. to where less than 10% of total chips are manufactured here — and essentially none of the advanced chips needed for our most powerful computers are being produced here.
The recognition of these problems is not new. On a federal level, we have taken steps to move in the right direction over recent years with the passage of the CHIPS and Science Act and the Inflation Reduction Act in 2022. These made significant federal investments via tax credits to companies that invested in the production of computer chips here in the U.S. and that made investments in new clean energy production (including nuclear, solar, biodiesel, geothermal and others) and new battery technologies.
These important investments have started producing the outcomes that had been hoped for. The benefits here in Utah include billions of dollars in planned private sector investment and the catalyzing of 4,300 clean-energy related jobs that have been added since the passage of the IRA. A couple of the larger-scale projects that are underway are the Nucor solar transmission projects in Brigham City and the planned Texas Instruments Semiconductor plant in Lehi.
Unfortunately, many of these critical investments are now hanging in the balance because the House version of the budget bill that was sent to the Senate diminishes and eliminates many of these tax incentives. Already in this last year, many Utahns have seen a 13% increase in electricity rates. Many other increases will likely follow if we don’t continue to invest in energy innovation. Furthermore, these kinds of large projects take years to plan and carry out. They cannot be started and stopped on the spur of the moment. As Sen. John Curtis has aptly warned, “repealing the IRA would train businesses that they can’t trust us.” Predictability matters for business investments and economic growth.
There is a proverb that says, “The best time to plant a tree is twenty years ago, and the second best time is now.” A corollary to that true statement is this: “If you planted a tree five years ago, and it is just starting to do well, now is a very bad time to go pull it up by the roots.” Investing in new energy production and storage, computer chips, and mining and production of minerals should remain top national priorities. We are not winning this race currently, and our children and our nation will not do well if we uproot the investments we have made in these critical areas.
Sen. Curtis has been a principled and effective advocate for investment in energy innovation. It is my hope that Curtis, and all the rest of our federal delegation, will stand for the protection of these programs in the budget bill. Maintaining and expanding our ability to produce the energy, minerals and technologies we need to compete with China and provide for our country will not come without effort, and we certainly cannot afford to abandon our investments which have just begun to bear fruit.