President Biden’s American Jobs Plan purports to “position the United States to out-compete China;” claims that China’s ambitions are one of “the great challenges of our time;” proposes that the U.S. is “falling behind countries like China” on infrastructure; warns that “countries like China are investing aggressively in R&D;” and laments that the U.S. market share of plug-in electric vehicle (EV) sales is one-third of that in China—something President Biden “believes that must change.”
But a review of the contents of the plan, particularly the energy contents, shows that the Biden administration is coöpting public concern about China’s authoritarianism and assertiveness in order to smuggle in unrelated climate goals. If the Biden administration was intent upon beating China, it would seek to optimize U.S. natural resource advantages. Instead, as I wrote in the American Spectator, Biden seems bent on eschewing U.S. natural resource advantages and playing to China’s strengths.
The Biden plan stresses the importance of expanding domestic use of electric vehicles (EVs), calling for $174 billion of public funding for EV infrastructure. That may or may be a valid environmental goal, but claiming as the White House does that competing with China on EV adoption is a geopolitical strategy makes little sense.
Consider the respective countries’ positions in the global oil trade.
The United States: is the world’s largest producer of oil; produced 20 percent of global volumes in 2020; is now a significant exporter; shipped almost 400,000 barrels of oil per day to China in 2020.
A mandated transition away from gasoline and diesel to electric vehicles means spurning plentiful domestic fuels for the United States. It is difficult to conceive of how such a transition would strengthen the country’s geopolitical standing.
For China, of course, the same transition enhances energy security. Focusing on electric vehicles will make China’s economy more self-sufficient, in line with Xi Jinping’s dual-circulation strategy. What’s more, China, the world’s largest producer and consumer, uses coal to generate nearly two-thirds of its electricity.
President Biden’s broader vision of a net-zero economy is similarly muddled. That goal places a premium on the rare earth elements that are necessary for a zero-carbon electricity-forward energy system. China has what Germany’s University of Erlangen-Nuremberg calls “a near monopoly” in this arena. The only U.S. rare earths mine, Mountain Pass in San Bernardino County, California, sends all of its production to China for processing.
From a free market perspective, that isn’t too big of a concern. Theory would tell us that geopolitical risk is priced in as it emerges and that new sources of raw material will be tapped and new processing facilities will be built to meet rising demand. But that perspective meets its match in the American vetocracy. From my AmSpec piece:
While advocates for the free market will argue that new demand will spur domestic production, U.S. environmental laws make that a precarious assumption. “Miners say it takes so long to get federal and state environmental permits, and that the process is so unpredictable and open-ended,” Joe Deaux and and Stephen Lee wrote in February for Bloomberg Green, “that they struggle to plan new mines.” The uncomfortable fact is that more U.S. investment in Biden’s clean energy solutions means more dependence on a supply chain China controls.
President Biden’s energy infrastructure plans are expressions of his climate policy desires, not of a coherent strategy to improve U.S. geopolitical standing. As I wrote for AmSpec, while China cloaks its geopolitical strategy in environmental terms, the Biden plan does the opposite, cloaking its environmental policy with the rhetoric of geopolitics.