Making the transition to a 100% clean, fully electrified economy will help cut emissions, lower costs, and increase reliability—but it will require more critical minerals and rare earth elements (REE). As we make this transition, the United States will become more energy secure, but will face a new landscape of commodity exposure. Today, we rely too often on tenuous supply chains, some of which are effectively monopolized by geostrategic competitors, for those resources. Despite record electric vehicle sales in 2023 and solar + storage topping all new energy deployed across the U.S., the advanced energy industry contends with highly concentrated sources for critical minerals such as lithium, nickel, cobalt, and copper, that power their technologies. Supply chain transparency, coupled with onshoring and friendshoring critical minerals production, diversified sourcing, and recycling play important roles in fortifying supply chains and reducing risk.   

That’s why Advanced Energy United is proud to support the bipartisan Critical Material Transparency and Reporting of Advanced Clean Energy (TRACE) Act. TRACE’s focus on battery supply chains, particularly the development of a voluntary digital identifier program at the U.S. Department of Energy, can help us build clean energy products more responsibly. These voluntary identifiers will also be informed by robust industry and stakeholder engagement. Product labels will create digital twins that can facilitate data-sharing and relevant supply chain information regarding locations of extraction and processing of various components, all while protecting proprietary and consumer information.  

Access to critical minerals and materials is vital to the success of America's transition to 100% clean energy. While we, and our allies, have found ourselves reliant on geostrategic competitors and concentrated supply chains, we have yet to deploy effective policies aimed at mitigating volatility. The TRACE Act is a step toward remediating these supply chains and onshoring crucial clean energy jobs. By incentivizing technology traceability, TRACE will bolster our energy security and ensure we move toward a more transparent and robust supply chain.  

But without policies like TRACE, supply chain concentration—and volatility—could become further calcified over the long-term. We’ve already experienced such volatility with recent Chinese export controls on gallium and germanium and responses manifesting in efforts to boost global price transparency. The International Energy Agency’s recent Critical Minerals Outlook 2024 highlights further risks, along with required investment and demand forecasts, and potential remediation strategies. In 2023, demand for lithium rose by 30% and demand for nickel, cobalt, graphite, and REEs increased by 8-15%. By 2040, investments in this sector will need to double to $770 billion to meet this growing demand. What’s more, mining alone won’t help us meet that demand. The IEA estimates that lithium mining projects may account for only 50% of expected demand by 2035. With such concentrated supply chains and future virgin material supply shortages, it will be difficult for the U.S. to ensure requisite critical minerals without diversified sourcing and innovations in recycling to help meet future demand.  

That’s why we need the TRACE Act. While TRACE is only one piece of the puzzle, it begins to address the need for more mineral security in a changing energy landscape. Increased transparency, onshored and friendshored production, and recycling can combine to stem existing and future risks. 

There is no silver bullet to solving supply chain volatility. As the energy transition accelerates, we’ll need to deploy this variety of remediation tactics to work in tandem to anticipate and mitigate supply gaps and, broadly speaking, diversify supply. Greater traceability and insights into sourcing origins for batteries, solar panels, and wind turbine components can help reduce these gaps by identifying the areas of greatest need. The TRACE Act can lead us toward greater supply chain transparency and its digital identifier program can avoid long-term volatility and concentration.  

The success of the energy transition will require diversified, fortified, and secure supply chains. Policies like TRACE that the private sector can leverage will put us on the right track to a more sustainable and reliable clean energy future.  

Click here to learn more about Advanced Energy United and our work advocating for advanced energy manufacturing policy, which aims to bolster the U.S. supply chain, from raw materials to finished products, for advanced energy and transportation technologies and promote effective reuse and recycling policies for our industry.