Building ‘Battery Boulevard’ Before Erecting Regulatory Roadblocks

By February 15, 2011Energy

The Obama Administration believes in electric and hybrid vehicles, not just as a mode of transportation but also as an impetus for research and development, U.S. leadership in “clean energy,” and a new “green workforce.”

Prospects for the industry are promising. Crain’s Detroit Business reports “Powered by batteries: Holland area vies to be national hub for lithium-ion manufacturing,” describing the scene along a two-mile stretch of 48th Street in rural Holland (that’s western Michigan).

Battery Boulevard terminates in two new operations: The Johnson Controls-Saft Advanced Power Solutions Meadowbrook plant and  the LG Chem Ltd. factory, still under construction.  There’s Trans-Matic Manufacturing Co., which makes deep-drawn metal canisters, TUV SUD America, a supplier of battery testing equipment. Forty miles north, there’s the Swiss-German manufacturer, Fortu PowerCell Inc.

“It’s no longer what can be — we’re not just looking at cornfields now,” says Randy Thelen, president of Lakeshore Advantage in Zeeland, a grassroots organization credited with helping bring battery manufacturing to the Holland area. “We are looking at steel going up in the air and parking lots filled with people working at the plant, as well as contractors.”

Not bad for an industry that didn’t even exist three years ago in America — or anywhere else, for that matter.

“For all intents and purposes, the lithium-ion battery industry for transportation purposes did not exist globally anywhere three years ago,” said Eric Shreffler, sector development director of advanced energy storage for the Michigan Economic Development Corp.

Yes. Not bad at all.

So why, oh why, is the Executive Branch considering regulations that would make air shipment of lithium-ion batteries more slow and expensive, damaging the nascent U.S. industry’s global competitiveness and negating one of the Administration’s signature initiatives?

In his prepared testimony for last week’s House Oversight Committee hearing on regulatory overreach, NAM President Jay Timmons cited as an example the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) new shipping and handling requirements proposed in January 2010:

The proposed rule applies to a variety of products and manufactured goods ranging from everyday consumer items to implantable medical devices. Billions of lithium batteries and products containing them are shipped annually by air without incident. The costs of the current proposal are conservatively estimated at $1 billion annually. If implemented as currently written, manufacturers will face reductions in existing air freight capacity, new costs associated with massive supply chain redesigns, additional training costs, inefficiencies that could cause confusion with international partners that adhere to alternate standards and lost business to foreign companies not subject to these proposed rules. Manufacturers strongly support a rule that instead achieves harmonization with internationally agreed-upon requirements for lithium battery transport.

The PHMSA rejected industry’s requests for an extended comment period on the very complicated rule, even as it missed its own Feb. 9th target for publishing the final rule. (We understand the rule is still under review at the Office of management and Budget.) For more background, see the DOT’s Report on Significant Rulemakings.

Speaking of “green workforce,” the Crain’s article includes a sidebar, “Colleges look to train battery workers”: “Many colleges and universities in the area are in discussions with the major manufacturers — Johnson Controls-Saft, LG Chem Ltd. and Fortu PowerCell Inc. — to create customized training for those entering the fledgling battery industry along Lake Michigan.”

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