New Climate Bill to Supercharge Electrification, Demand for Rare Earth Magnets
New Climate Bill to Supercharge Electrification, Demand for Rare Earth Magnets
On August 16th, President Joe Biden made history by signing into law the Inflation Reduction Act — the largest clean energy investment ever made by the United States or any other country in the world. By pumping $369 billion into renewable energy, domestic manufacturing, and electric vehicle tax breaks, the U.S. has shown it is capable and willing to shift to a more sustainable and independent clean energy economy.
Key to the bill are tax breaks designed to encourage clean energy companies to deploy more solar panels, wind turbines, and batteries onto the grid. Since the 1990s, tax breaks have been used to transform wind and solar from budding, expensive technologies into the cost-efficient energy mainstays they are today. Rather than allow these tax breaks to expire after a few years, the IRA has expanded and designed them to last for at least a decade. This will give companies, manufacturers, and utilities time to plan and build new projects with a long-term focus. As a result, projections show that the bill will allow the U.S. to reduce its carbon emissions by 40% below 2005 levels by 2030. This will keep the U.S. on track to eventually transition entirely to a carbon-free electric grid.
Becoming a Leader in the Rare Earth Economy
In order to fully transition to a clean energy economy, it will be essential for the U.S. to continue to invest in supporting a secure domestic magnet supply chain. Crucially, our government must do this while also ensuring the creation of good-paying jobs, strong environmental standards, and community engagement. While the IRA will help jump-start this industry, it will take continued focus and action in order to build an independent magnet supply chain that can support our future.
Importantly, every part of our magnet production process — from the acquisition of materials to delivery of the final product — happens here in the United States. At Noveon, one of our key goals is to help end our country’s dependency on China. The IRA seeks to end China’s monopoly over REEs by providing tax breaks for wind and solar projects made with domestically-produced materials. With the IRA and our EcoFlux technology, the U.S. now has the potential to lead the world in rare earth manufacturing with resilient domestic supply chains.
The Inflation Reduction Act has ignited a fire under companies and manufacturers to kickstart the clean energy transition, but it won’t be enough to mitigate climate change entirely — it will take an industry-wide movement that focuses on sustainability, domestic production and energy efficiency. Noveon is proud to be at the forefront of that movement.
Ensuring a Sustainable Future
It will be impossible to avoid the devastating effects of climate change without REEs. Unfortunately, mining these materials comes with its own environmental problems. The process involved in producing REEs requires significant energy output, degrades the environment, and creates a high amount of material waste. The vast majority – 90% – of REEs in the supply chain are also controlled by China, putting the global supply chain at risk. These conditions indicate that one of the greatest roadblocks to America achieving its clean energy goals is finding a way to manufacture REEs sustainably, efficiently, and domestically.
With our revolutionary EcoFlux magnet, Noveon is primed to play a critical role in solving this problem. Every element of this product, from design to manufacturing, is tailored with sustainability in mind. With our patented recycling process, the EcoFlux magnet can be produced with entirely recycled end-of-life metal materials. This will foster a cycle of sustainability within the clean energy economy, where discarded metals from one clean energy technology can then be used within another. On top of this, the EcoFlux magnet is more carbon efficient, saving 11 tons of CO2 emissions for every ton of magnets produced, and more energy efficient, by achieving 90% energy savings compared to traditional manufacturing. These breakthroughs will drastically reduce demand for raw materials and the associated negative impacts of mining.
September, 2022
A Growing Demand for Magnets
Wind power will be critical to this carbon-free future. Through incentives, the IRA will supercharge the wind power industry and spark enormous growth in both on and offshore wind energy development. While current models project 55,000 wind turbines in operation by 2030, the IRA aims to ensure the operation of no less than 120,000 wind turbines by the end of the decade. This growth will create an even stronger demand for the rare earth elements (REEs) and magnets that allow wind turbines, as well as other clean energy technologies, to function.
The demand for electric vehicles (EVs) will grow even stronger under the IRA as well. By providing a $7,500 tax credit to consumers, the bill will make EVs more accessible to everyday consumers. Crucially, the bill specifies that in order for a vehicle to qualify for the full tax credit, a certain amount of the REEs in the car’s battery must be sourced and processed within the U.S. or allied countries. By 2029, this amount rises to 100%. By tethering the tax credit to domestic production, the IRA will not only encourage companies to expand EV manufacturing in the U.S., but will help unlock our nation’s supply of REEs and battery production as well.