Biden wants ‘green’ economy, but talks fail to revive key aluminum plant

WASHINGTON – President Biden has repeatedly said he wants electric cars and other clean-energy technologies to be built from domestic supply chains, serving twin goals of helping the climate and growing jobs in the United States.

But in the Pacific Northwest, negotiations collapsed this week over an attempt to reopen an aluminum smelter that was seen as a litmus test of Biden’s plan to build a homegrown “green” economy.

A private equity firm – backed by labor unions, electric-car makers and much of the Washington state political establishment – said it has failed to seal a deal with a federal electricity agency that would have restarted an aluminum smelter that has been idle for 21/2 years, and some are questioning why the White House hasn’t intervened.

“The administration has done a lot of work to restart manufacturing,” said Joe Quinn, vice president of strategic industrial materials at Securing America’s Future Energy, a group of business and retired military officials concerned about energy security. “It’s not clear to me why aluminum is not high up on their agenda.”

Blue Wolf Capital and the Bonneville Power Administration have been negotiating all year to revive the plant, which would have become the only aluminum plant west of the Mississippi River.

The reopening would also have put about 700 highly paid union employees back to work and supplied the sturdy lightweight alloys that automakers and other manufacturers require.

The sticking point has been the cost of electricity, which aluminum production requires in abundance.

Electricity accounts for 40% of manufacturing costs in aluminum smelters, according to the Congressional Research Service.

Bonneville Power, which markets electricity from the Pacific Northwest’s huge dams and sprawling transmission lines, says it simply doesn’t have enough dependable, low-cost carbon-free hydropower for the Intalco plant, which is set amid forests and pastureland on the shores of the Puget Sound.

And BPA’s position is backed by local electrical utilities who cherish their dependable power supplies – and low rates – from the federal agency, which is overseen by the U.S. Energy Department.

But Bonneville Power said it could offer only a portion of the 400 megawatts of electricity that Blue Wolf said it needed to ensure its roughly $150 million investment would cover the cost of overhauling and then running the plant.

Moreover, Bonneville Power spokesman Douglas Johnson said that the agency would supply that electricity only at market prices – rates significantly higher than those paid by the agency’s existing customers.

Union officials hope another investor will step in to revive the plant, “but the outlook isn’t very good,” Luke Anderson, business representative of the local branch of the International Association of Machinists and Aerospace Workers, said on a Facebook group.

While he said a new funding source was “just a few days away,” Anderson said that “no amount of money will make BPA budge.”

Senior labor union officials urged Energy Secretary Jennifer Granholm to step in because Bonneville Power is a self-funding agency within the Energy Department.

But such a move would be highly unusual, and it is unclear whether Granholm tried to intervene. Department spokesmen did not return requests for comment.

In Washington, IAM International President Robert Martinez Jr. said the “inability to find a competitively priced source of power is beyond disappointing.”

He said “it remains vitally important to our economic and national security to increase strategic domestic manufacturing and bolster our supply chains.”

Earlier this year, Washington Gov. Jay Inslee had urged Bonneville Power to reach an agreement with Blue Wolf Capital, saying in an email that an agreement would “demonstrate our national commitment to enhancing America’s competitiveness and investing in clean manufacturing technology.”

The state also offered to provide $10 million to upgrade the plant.

On Thursday, Inslee issued a statement saying he “remains committed to the vision of upgrading and reopening the plant as a secure, domestic source of the green aluminum that is critical for our clean energy transition.”

In the Pacific Northwest, the decline of the aluminum manufacturers has reduced electricity usage, but that has been offset by greater industrial demands; a 15% increase in Washington state’s population; computer servers used by big tech firms to store information; and an influx of computers run continuously in a search for digital keys used to unlock cryptocurrencies.

Bonneville Power Administration has also sold power to California to help that state shore up its grid and avoid more power blackouts.

BPA also said that when Alcoa, the plant’s previous owner and operator, closed the facility, it severed the power agreement and lost its contractual right to buy power as a direct industrial customer at special low rates.

Blue Wolf Capital disputes that contractual interpretation.