BlueGreen Alliance | Manufacturing

Manufacturing & Industrial Transformation

Manufacturing matters. The sector employs 11 million American workers, contributes at least $2 trillion a year to the gross domestic product, accounts for more than two-thirds of private sector research and development, and plays a central role in the balance of U.S. imports and exports. It also has the proven ability to provide pathways into the middle class for millions of workers and families by creating high-skill, high-wage jobs—although it has not always lived up to that promise.

At the base of our manufacturing economy, production of energy-intensive materials—like steel, aluminum, and cement—in particular are essential to producing the materials and components needed for clean technology and infrastructure—and, more generally, for modern life. At the same time, the industrial sector represents a large and growing share of U.S. greenhouse gas emissions. 

As the U.S. continues to promote economic recovery and mitigate climate change, two efforts must advance hand in hand: supporting domestic manufacturing and reducing emissions from the industrial sector. The BIL takes steps to address this and includes a number of important manufacturing and industrial transformation priorities. 

For example, the BIL includes $550 million to DOE to provide technical assistance and grants for energy efficiency and emissions reduction at small and medium sized industrial firms. These smaller firms often lack the funding and technical expertise necessary to improve their facilities and processes, and can struggle to keep up. The BIL provides that support and thereby helps these firms to continue to compete in an increasingly carbon constrained global economy. By prioritizing investments in modernizing our basic industries, the BIL will not only reduce greenhouse gas emissions, but also create around 289,000 good jobs, and retain even more.

U.S. manufacturers’ ability to produce clean technologies and to use cleaner processes will allow them to adapt to a global economy in which market demand is shifting to favor low-carbon products. To that end, the BIL provides the DOE with robust funding to select and manage large-scale pilot and demonstration projects necessary to build next generation industries here. This includes $500 million for project demonstrations of technologies to specifically reduce industrial emissions, as well as funding for other programs and technologies that expand beyond the industrial and manufacturing scope, such as: $3.47 billion for carbon capture, utilization, and storage (CCUS); $3.5 billion for direct air capture (DAC) hubs; and $8 billion to create regional clean hydrogen hubs that would further develop the production, processing, delivery, storage, and end-use of clean hydrogen. These funds are critical for the U.S. to invest in its industrial and manufacturing future. 

Additionally, the BIL includes an expansion of the Advanced Technology Vehicles Manufacturing  (ATVM) Loan program to cover medium- and heavy-duty vehicles. Similar to the 48C tax credit for clean technology manufacturing and industrial emissions reduction investment targeted to coal communities,  the expansion includes a $750 million grant program and a significant investment in battery and battery component research and development, manufacturing, and recycling. These investments are an excellent step to retool U.S. automotive manufacturing to build the EV technology of the future in today’s plants and communities.

Transforming energy intensive industries to produce essential materials with far lower emissions can ensure that action on climate change doesn’t drive jobs or pollution overseas. Done right, industrial transformation can also help roll back economic inequality and reverse the slide in wages, benefits, and workers’ rights that has undermined workers and their communities for decades.

Industrial Transformation

Category Program Name and Description Funding Level Administering Agency or Office Funding mechanism Timeline Standards Eligible Entities
Industrial Regional Clean Hydrogen Hubs – Funding to create four regional clean hydrogen hubs, localized networks of “clean hydrogen” producers and end-users as well as facilities to transport and store hydrogen. $8 Billion DOE – Office of Clean Energy Demonstration New – Project Grants FY 22-26 Davis Bacon ”Clean hydrogen” producers and end-users with connective infrastructure located in close proximity.
Industrial Emissions Demonstration Projects – Funding for demonstration of industrial emissions reduction technologies that increase U.S. industrial competitiveness, increase viability of industrial technology exports, and achieve emissions reductions in nonpower industrial sectors (steel, cement, glass, etc), as authorized by the Energy Act of 2020. $500 Million DOE – Office of Clean Energy Demonstration Existing – Cooperative Agreements FY 22-25 Davis Bacon A scientist or other individual with knowledge and expertise in emissions reduction; an institution of higher education; a nongovernmental organization; a National Laboratory; a private entity; and a partnership or consortium of two or more entities described.
Carbon Capture Demonstration Projects Program – Demonstration of novel or early-stage carbon capture technologies that will significantly improve efficiency, effectiveness, costs, emissions reductions, and environmental performance of manufacturing and industrial facilities, among others. $2.537 Billion DOE – Office of Clean Energy Demonstration Existing – Cooperative Agreements FY 22-25 Davis Bacon Industry stakeholders, including any industry stakeholder operating in partnership with the National Laboratories, institutions of higher education, multi institutional collaborations, and other appropriate entities.
Industrial Research and Assessment Centers – Technical assistance and implementation grants for industrial energy efficiency and emissions reduction at Small and Medium-Sized Enterprises (SMsE). $550 Million DOE – Office of Energy Efficiency and Renewable Energy Existing – Project Grants, 50% federal cost share FY 22-26 Davis Bacon, apprenticeship utilization A small- or medium-sized manufacturer that has had an energy assessment completed by an industrial research and assessment center, a Department of Energy Combined Heat and Power Technical Assistance Partnership jointly with an industrial research and assessment center; or an equivalent a third-party assessor.
DAC Regional Direct Air Capture Hubs – Funding to create four direct air capture (facility, technology, or system that uses carbon capture equipment to capture CO2 directly from the air) hubs – networks of DAC facilities, CO2 storage facilities, and CO2 users. $3.5 Billion DOE – Office of Fossil Energy and Carbon Management Existing – Project Grants, Cooperative Agreements, Contracts FY 22-26 Davis Bacon Direct air capture project or a component project of a regional direct air capture hub that meets criteria set by DOE and approved by the Energy Secretary.
Direct air capture technologies prize competitions – Funding for DOE research and development DAC prize competitions. $115 Million DOE – Office of Fossil Energy and Carbon Management Existing – prize/competitive grants FY 22 – expended Davis Bacon Precommercial air capture projects that meet certain criteria and minimum performance standards.

Manufacturing

Category Program Name and Description Funding Level Administering Agency or Office Funding mechanism Timeline Standards Eligible Entities
Clean Tech MFG Advanced Energy Manufacturing and Recycling Grants – Grants for establishing or retooling a factory to produce a wide range of clean technologies (including renewable energy and EV components) or to reduce emissions manufacturing facilities in “energy communities”; also see Table 8. $750 Million DOE – Office of Energy Efficiency and Renewable Energy New – Project Grants, Technical Assistance FY 22-26 Davis Bacon; Priority for job creation in low-income and dislocated worker communities and minority-owned facilities. Manufacturing firms with annual sales of less than $100 million, fewer than 500 employees, and with annual energy bills of $100,000-$2.5 million. Priority to minority-owned businesses.
Clean vehicle, components, and materials manufacturing grants and loans – see Table 6: Vehicles and Auto Supply Chain Manufacturing. See Table 6 See Table 6 See Table 6 See Table 6 See Table 6 See Table 6

Vehicles and Auto Supply Chain Manufacturing

Category Program Name and Description Funding Level Administering Agency or Office Funding mechanism Timeline Standards Eligible Entities
Auto Supply Chain Manufacturing Grants and Loans Battery Processing and Manufacturing – Funds two grant programs to establish a robust domestic supply chain for batteries: one to fund the demonstration, construction, and retooling of battery material processing techniques and facilities, and one targeting battery manufacturing and recycling. $6 Billion DOE – Office of Energy Efficiency and Renewable Energy, Office of Fossil Energy New Program: Competitive Grants FY22-FY26 Davis Bacon, Additional consideration for projects in Low- to Moderate-Income (LMI) or deindustrialized communities. Institutions of higher education, National Labs, nonprofit and for-profit private entities, state and local governments
Advanced Technology Vehicle Manufacturing Loan Program – Expands the eligibility of the ATVM loan program to incentivize the onshoring and reshoring of supply chains for a broader range of vehicles and technologies, including medium- and heavy-duty vehicles, maritime vessels, rail, and hyperloop. Expanded Eligibility (No additional funding) DOE – Loan Programs Office Existing Program: Loans FY22-FY28 Davis Bacon Original equipment manufacturers (OEMs), advanced technology manufacturers, component suppliers
Clean HDV Deployment Clean School Bus Program – To support the deployment of electric and alternative fuel powered school buses; Also see Table 1. Up to $5 Billion EPA – State and Tribal Assistance Grants New Program: Competitive Grants FY22-FY26 Davis Bacon, Priority for high-need school districts and rural and low income areas. School districts, non-profit transportation associations, tribes, contractors

Rounding Out the Build Back Better Agenda: Manufacturing and Industrial Transformation

The BIL includes a number of important manufacturing and industrial transformation priorities, but significant funding and programmatic gaps remain. For example, while the BIL includes funding for technical assistance and grants for energy efficiency and emissions reduction, and robust funding for CCUS and industrial emissions demonstration projects and for hydrogen hubs—these latter programs are not targeted specifically at energy intensive industries and the proposals targeted at deployment of emissions reduction technology for industrial firms are far smaller than the billions in investment necessary to meet the widespread need. Major additional investments are needed to enable strategic energy intensive facilities to deploy technology that deeply cuts carbon and conventional pollution, and safeguards critical industries and jobs in the United States.

The BIL does include a number of programs that will support our nation’s manufacturing sector, However, it does not fill a critical funding gap in the ATVM, come close to the necessary funding for the 48C tax credit, or provide the funding needed to fill clean technology supply chain gaps, nor for urgently needed manufacturing conversion grants to reopen, retool, and expand existing facilities to build the clean vehicle technology of the future.