There’s no arguing that the newly proposed Inflation Reduction Act, negotiated by Senators Chuck Schumer (D-NY) and Joe Manchin (D-WV), is the most ambitious climate bill in U.S. history. Should it become law, it’s projected to drive U.S. emissions 40% below 2005 levels by 2030. But the energy components of the package do far more than just tackle emissions. This is policy that at its core aims to use the energy transition to rebuild the nation’s industrial base and ensure that the energy and transportation jobs of tomorrow are American jobs. Of particular importance, it also aims to address emerging energy security vulnerabilities before they are intractable crises.

The sourcing requirements for the minerals used in electric vehicles (EVs) are cases in point. As Chairman of the Senate Energy and Natural Resources Committee, Senator Manchin has zeroed in on the threat Chinese dominance of mineral supply chains poses to the nation’s energy security. In months of often public negotiations, he made it clear he was unwilling to support incentives to accelerate EV deployment if the U.S. did not address its emerging energy  “ Achilles’  Heel” and fix the nation’s staggering import overreliance on minerals and materials dominated by geopolitical rivals.

In Manchin’s view, trading the ugly geopolitics of petro-dictators only to sleepwalk into complete dependence on a battery supply chain dominated by China is a mistake the country cannot make. And, to his credit, he’s absolutely right.

Consumer-focused EV incentives have made it into the newly negotiated reconciliation package but they come with important stipulations. The bill requires EVs by 2024 to have batteries made with at least 40% minerals extracted, processed or recycled in the U.S. or by a free trade partner. The critical minerals content requirement for batteries increases to 80% by 2027. A similar requirement applies to battery components, requiring 100% of battery components in qualifying EVs be made in North America by 2029.

In other words, the sourcing requirements create an enormous incentive to get auto and battery manufacturers to work with mining companies to invest in and build responsible and secure EV supply chains outside the grasp of China. American consumers, American workers and American energy security are all potential winners.

Yet, there’s already a strong push by some auto companies to either water down the sourcing requirements or scrap them altogether. Some shortsighted climate hawks also suggest these sourcing requirements will slow EV uptake. However, relaxing the sourcing requirements would be a colossal mistake.

To understand the urgency to reshore – or near-shore – these mineral supply chains it’s critical to recognize just how important minerals are to our energy future. The average EV uses six times the minerals as a conventional gas-powered car. As EV demand accelerates, demand for the minerals that make EV batteries possible – like lithium, cobalt, nickel, manganese, graphite and copper – is poised to explode. For some of these irreplaceable metals, like lithium, demand is poised to jump as much as 50-fold by 2040.

Despite vast mineral resources, the U.S. is currently far behind in developing the mineral supply chains needed to underpin this future. America’s mineral import-reliance has nearly doubled in just two decades. We’re now import-reliant on  47 minerals — and 100% reliant on imports for 17 of them. 

And where we have dragged our feet, China has surged ahead. For example, China controls 70% of the world’s lithium supplies and 85% of rare earth metals. Beijing’s dominance of mineral production and processing has enabled it to corner the market on advanced energy manufacturing. China not only produces the vast majority of the world’s solar modules and wind turbines but lithium-ion batteries as well. As of 2020, China possessed 75% of the world’s lithium-ion battery manufacturing capacity.

China has worked diligently to turn mineral supply chains into an economic leg up but also an enormous source of geopolitical leverage — not unlike how Russia has leveraged its energy trade with Europe. What Senator Manchin recognizes is that our energy future is on a collision course with our mineral insecurity and China’s mineral dominance. The mineral sourcing requirements in the reconciliation bill – coupled with other incentives to encourage domestic mining, mineral processing and recycling– are precisely the bold measures needed to address this alarming vulnerability. This legislation is a critically important leap forward to build the secure, responsible industrial base our economy and national security needs.

John Adams, U.S. Army brigadier general (retired), is president of Guardian Six Consulting and a former deputy U.S. military representative to NATO’s Military Committee.