ANNOUNCEMENT 06 Jun 2022

The U.S. Administration determined that electric heat pumps are eligible for certain subsidies and public procurement advantages under DPA Title III Section 303.

NUMBER OF INTERVENTIONS

3

  • 3 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

U.S. White House, Briefing Room, “Memorandum on Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended, on Electric Heat Pumps”. Available at: https://www.whitehouse.gov/briefing-room/presidential-actions/2022/06/06/memorandum-on-presidential-determination-pursuant-to-section-303-of-the-defense-production-act-of-1950-as-amended-on-electric-heat-pumps/

U.S. Department of Energy, Press Release, “President Biden Invokes Defense Production Act to Accelerate Domestic Manufacturing of Clean Energy”. Available at: https://www.energy.gov/articles/president-biden-invokes-defense-production-act-accelerate-domestic-manufacturing-clean

Inception date: 06 Jun 2022 | Removal date: open ended

Public procurement, nes

On 6 June 2022, the U.S. Administration activated certain incentives for electric heat pumps following designating the subject product under the Defense Production Act (DPA) Title-III Section 303. Government incentives include direct purchases and purchase commitments as well as other subsidies, see related interventions.

This follows the government’s determinations that electric heat pumps are industrial resources, materials, or critical technology items essential to the national defense; and without a Presidential action under section 303 of the DPA Title-III, the industry cannot supply these materials in a timely manner without delay.

According to the memorandum for the secretary of Energy, “[A]ction to expand the domestic production capability for electric heat pumps is necessary to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.”

The purpose of the DPA Title III – Expansion of Productive Capacity and Supply – is to ensure that the U.S. has an adequate supply of essential materials and goods deemed critical for the national defense. DPA Title III allows the President to provide incentives for domestic private industry to produce and supply these critical materials and goods.

According to an announcement from the Department of Energy, “Our nation’s buildings, homes, offices, schools, hospitals, military bases, and other critical facilities drive more than 40% of all U.S. energy consumption. To reduce the amount of energy needed in our buildings, leading to less reliance by the U.S. and allies on adversaries such as Russia for oil and gas, heat pumps are an important solution. Their use by the U.S. and allies can shrink Russian revenue for war and reduce climate instability. However, currently, U.S. HVAC manufacturers are not producing heat pumps at the rate needed. The Biden-Harris Administration can help American manufacturing expand and expedite the installation of heat pumps in homes and residential buildings by qualified building professionals.”

In this context, U.S. Secretary of Energy Jennifer M. Granholm said: “President Biden has invoked the Defense Production Act so that the U.S. can take ownership of its clean energy independence. For too long the nation’s clean energy supply chain has been over-reliant on foreign sources and adversarial nations. With the new DPA authority, DOE can help strengthen domestic solar, heat pump and grid manufacturing industries while fortifying America’s economic security and creating good-paying jobs, and lowering utility costs along the way.”

This measure is announced to support the manufacturing of clean energy technologies as part of a broader set of measures announced by the U.S. Administration to lower energy costs, strengthen national security, and achieve energy independence that reduces demand for fossil fuels and bolsters (see related state act).

 

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
Inception date: 06 Jun 2022 | Removal date: open ended

State aid, unspecified

On 6 June 2022, the U.S. Administration issued an authorization determining electric heat pumps as eligible to receive unspecified subsidy payments following the designation of subject products as essential to national defense under the Defense Production Act Title III Section 303. Other support mechanisms are also available under DPA Title III, for details, please see related interventions.

This authorization is based on the government’s determinations that electric heat pumps are industrial resources, materials, or critical technology items essential to the national defense; and without a Presidential action under section 303 of the DPA Title-III, the industry cannot supply these materials in a timely manner without delay.

According to the memorandum for the secretary of Energy, “[A]ction to expand the domestic production capability for insulation is necessary to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.”

DPA Title III authorizes various government incentives to create, expand, or preserve domestic productive capacity for industrial resources, technologies, and materials that are critical for national security. DPA Section 303 incentives can be in various forms including purchases, purchase commitments, subsidy payments, and installation of equipment.

According to an announcement from the Department of Energy, “Our nation’s buildings, homes, offices, schools, hospitals, military bases, and other critical facilities drive more than 40% of all U.S. energy consumption. To reduce the amount of energy needed in our buildings, leading to less reliance by the U.S. and allies on adversaries such as Russia for oil and gas, heat pumps are an important solution. Their use by the U.S. and allies can shrink Russian revenue for war and reduce climate instability. However, currently, U.S. HVAC manufacturers are not producing heat pumps at the rate needed. The Biden-Harris Administration can help American manufacturing expand and expedite the installation of heat pumps in homes and residential buildings by qualified building professionals.”

In this context, U.S. Secretary of Energy Jennifer M. Granholm said: “President Biden has invoked the Defense Production Act so that the U.S. can take ownership of its clean energy independence. For too long the nation’s clean energy supply chain has been over-reliant on foreign sources and adversarial nations. With the new DPA authority, DOE can help strengthen domestic solar, heat pump and grid manufacturing industries while fortifying America’s economic security and creating good-paying jobs, and lowering utility costs along the way.”

This measure is announced to support the manufacturing of clean energy technologies as part of a broader set of measures announced by the U.S. Administration to lower energy costs, strengthen national security, and achieve energy independence that reduces demand for fossil fuels and bolsters (see related state act).

 
Inception date: 06 Jun 2022 | Removal date: open ended

In-kind grant

On 6 June 2022, the U.S. Administration authorized various incentives to strengthen and expand the domestic industrial base for electric heat pumps. Such support includes the installation of equipment in industrial facilities. Specifically, the DPA Title III authorizes the president to purchase and install equipment in industrial facilities or to make other types of improvements to these industrial facilities. Additionally, other forms of support mechanisms are available under DPA Title III, for details, please see related interventions.

This follows the government’s determinations that electric heat pumps are industrial resources, materials, or critical technology items essential to the national defense; and without a Presidential action under section 303 of the DPA Title-III, the industry cannot supply these materials in a timely manner without delay.

According to the memorandum for the secretary of Energy, “[A]ction to expand the domestic production capability for insulation is necessary to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.”

The purpose of the DPA Title III – Expansion of Productive Capacity and Supply – is to ensure that the U.S. has an adequate supply of essential materials and goods deemed critical for the national defense. DPA Title III allows the President to provide financial incentives for domestic private industry to produce and supply these critical materials and goods.

According to an announcement from the Department of Energy, “Our nation’s buildings, homes, offices, schools, hospitals, military bases, and other critical facilities drive more than 40% of all U.S. energy consumption. To reduce the amount of energy needed in our buildings, leading to less reliance by the U.S. and allies on adversaries such as Russia for oil and gas, heat pumps are an important solution. Their use by the U.S. and allies can shrink Russian revenue for war and reduce climate instability. However, currently, U.S. HVAC manufacturers are not producing heat pumps at the rate needed. The Biden-Harris Administration can help American manufacturing expand and expedite the installation of heat pumps in homes and residential buildings by qualified building professionals.”

In this context, U.S. Secretary of Energy Jennifer M. Granholm said: “President Biden has invoked the Defense Production Act so that the U.S. can take ownership of its clean energy independence. For too long the nation’s clean energy supply chain has been over-reliant on foreign sources and adversarial nations. With the new DPA authority, DOE can help strengthen domestic solar, heat pump and grid manufacturing industries while fortifying America’s economic security and creating good-paying jobs, and lowering utility costs along the way.”

This measure is announced to support the manufacturing of clean energy technologies as part of a broader set of measures announced by the U.S. Administration to lower energy costs, strengthen national security, and achieve energy independence that reduces demand for fossil fuels and bolsters (see related state act).