May 11, 2021 at 5:00 am ET
President Joe Biden’s address to Congress made an ambitious case for building America’s clean energy future. Not only did the president pledge to create “millions of good-paying jobs,” but he aimed for all of his proposed advances in electric vehicles and renewable energy to be “made in America.” Helpfully, Biden even acknowledged the complexity of America’s global trade obligations, though he explained that his “Buy American” agenda “does not violate any trade agreement.”
All of this should be great news for U.S. manufacturers. However, Biden may have shot himself in the foot when it comes to building America’s bold new electric grid: The loan program expected to jumpstart this investment may end up subsidizing overseas companies rather than U.S. manufacturers.
The problem stems from the Department of Energy’s announcement of an $8.25 billion loan program to help utilities install new transmission lines, converters and other electricity distribution equipment. The loan program doesn’t contain any mandates requiring utilities to purchase American-made components, meaning that U.S. manufacturers could be left out in the cold when it comes to actually supplying power grid components.
Redesigning the nation’s power grid will require a wide array of equipment and resources — everything from steel and aluminum to high-tech digital systems. Unfortunately, overseas firms already have a vast lead over U.S. producers when it comes to making wind turbines, solar panels and high-tech grid networks.
To qualify for the new DOE loan program, new grid projects must be located in the United States and use “significantly improved technology.” But that’s about it — which means the DOE loans come with few strings attached.
If the DOE itself were buying all of this power grid infrastructure, it would be required by the 1933 Buy American Act to purchase equipment made in America, or from one of the 47 countries in the World Trade Organization’s Government Procurement Agreement. However, since the DOE is simply guaranteeing loans for utilities, there’s no such requirement. That means the new lending program will inevitably be used by utilities to purchase transmission equipment, inverters, and grid controllers from companies in Europe and China that already lead the world in the manufacture of wind turbines and other renewable energy systems.
It’s past time to close these loopholes. Congress should insist on Buy American requirements for the grants and lending programs run by the DOE and all federal agencies. Doing so would give America’s manufacturers a fair shot to actually build the clean energy infrastructure that Biden outlined in his address to Congress.
Biden is correct that Buy American policy can be helpful when U.S. manufacturers stand ready to fulfill new projects. But it can’t launch new production in advanced technologies where China and others have already taken the lead — and squeezed production out of the U.S.
To make meaningful progress, Biden must overhaul federal procurement arrangements to ensure that tax dollars will actually be spent on American-made technologies and equipment. Step one will be to see that DOE loans aren’t used to purchase digital systems from China — particularly when they could make America’s new smart grid more vulnerable to cyber-intrusion.
Biden must not let taxpayer money subsidize companies competing with U.S. workers. To build a smart, safe future power grid in the United States, it must be made by America’s manufacturers.
Michael Stumo is CEO of the Coalition for a Prosperous America.
Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.