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The Defense Production Act and the Green Energy Industry

By Jacob Hankin

The DPA has been invoked amidst several recent crises, including the Covid-19 pandemic and the baby formula shortage. Recently, the DPA has arisen again in the green energy context. This is not outside the scope of the Act, which explicitly declares that national defense preparedness requires “the availability of domestic energy supplies for national defense needs,” and even more specifically, that “domestic energy supplies should be augmented through reliance on renewable energy sources (including solar, geothermal, wind, and biomass sources).”[6] Yet President Biden’s June 2022 provision of authority to the Department of Energy under the DPA was still noteworthy. For one, the White House chose not to invoke the DPA to aid a foreign country, as it would have been allowed to do under the Act[7] and as some have called for the DPA to be used to directly aid Ukraine militarily.[8]

The Defense Production Act (DPA) has been in effect since 1950 and has seen its scope expand over fifty Congressional reauthorizations.[1] Enacted during the Korean War, the DPA provides the president with an “array of authorities to shape national defense preparedness programs and to take appropriate steps to maintain and enhance the domestic industrial base.”[2] However, the DPA’s title is deceptively narrow, since “national defense” is defined broadly, to also include matters such as “homeland security” and “emergency preparedness activities” under the Stafford Act.[3] The DPA has evolved to now provide the president significant powers to influence the domestic industrial base to supply essential materials and goods needed for national defense and to prepare for and respond to military conflicts, natural or man-made disasters, or acts of terrorism within the United States.[4] The president can work through several channels through the DPA, including (1) prioritizing government contracts above those of other buyers to obtain goods and services from domestic suppliers and (2) incentivizing domestic producers.[5]

Instead, President Biden took a less direct but potentially more permeating approach, amidst the invasion of Ukraine and concerns of Western dependence on Russian oil,[9] to push for domestic acceleration of solar technology, transformers and electric grid components, heat pumps, insulation, and electrolysers, fuel cells, and platinum group metals.[10] The Biden administration specifically invoked Section 303 of the DPA, which could enable the federal government to mandate, allocate, and subsidize equipment to be installed in private and public facilities.[11] Section 303 also allows the federal government to make advance market commitments to buy a set amount of a product at a set price (say, clean energy products) to then redistribute to firms, households, and foreign allies.[12]

It seems likely that geopolitical concerns, domestic politics, and possibly the lack of absolute necessity guided this decision not to harness the DPA for direct military aid to Ukraine. It is also plausible that using the DPA to slowly steer markets in a particular direction, rather than seizing control of them to immediately produce for the federal government (a quasi-monopsonist of defense equipment[13]) would be more palatable to more Americans. It is quite easy to envision the left, pacifists, and isolationists all protesting executive overreach for the purposes of war abroad, and equally easy to imagine the business community, libertarians, or climate change skeptics all balking at the wisdom and motivation to command industry for the (albeit indirect) purposes of war in Europe. 

Some express more skeptical views of energy independence, given the interconnectivity of the world economy via energy flows embedded within global supply chains.[14] Energy exports are composed of more than just “direct energy,” like crude oil or refined petroleum products.[15] World economies are also connected through “indirect energy” flows, which consist of the energy required to produce a good or service that is subsequently exported, throughout the supply chain.[16] For example, while the United States imports only a small amount of Russian oil directly, it imports just as much value from Russian energy indirectly, just through importing manufacturing goods from the EU and Asia that were created with Russian oil.[17] How then, might the United States wean itself from secondary energy security risks from these intertwined global supply chains? There are three options, none mutually exclusive, and all imperfect.[18] These are the “Buy American” approach, the “Made in America” approach, and increasing energy infrastructure (and thus energy security) home and abroad.[19] The first option, which would entail reducing American final demand for imports, would result in a drastic, and unlikely, lifestyle shift for American consumers.[20]The second option, emphasized by the Biden administration, would entail investing in domestic manufacturing of key commodities, but this is no panacea, since the supply chains for such items (like batteries and semiconductors) still require raw material inputs from other countries.[21] The third option would entail the U.S. facilitating a diversification of the global energy portfolio, including clean energy systems.[22] This last approach seems more of a holistic solution (or disaster, depending on one’s stances on climate change and market intervention), and is accordingly harder to imagine. 

Others criticize the use of the DPA ideologically, as backdoor industrial policy, using the crisis at hand as an excuse to subsidize unrelated, but politically favored industries.[23] Others view the DPA skeptically, better for political posturing than as a tool for quickly expanding industrial capacity.[24]

Some on the left, however, have even argued for a fuller embrace of the DPA with respect to green energy, even at the risk of doing so antidemocratically.[25] A brief by the Roosevelt Institute, considers the DPA a “powerful tool” and advocates for the usage of Title III for federal investments and projects in critical industries.[26] In particular, the Roosevelt Institute urges for DPA powers to be “supercharged” by making advance market commitments “without regard to the limitations of existing law,” seizing the language of § 4533(b) of the DPA.[27] This would allow the executive branch to not only take major action, but also to override laws in the way, which could be used to (1) preempt federal procedural requirements and state contract laws that limit the government’s ability to do so, (2) ensure that the government spending actually enables long-term productive capacity investments in critical sectors (e.g., renewable energy), and (3) ensure that DPA is used to steer resources to firms and institutions aligned in the clean energy mission.[28] The advanced market commitments advocated for by the Roosevelt Institute would come in the form of the government being a “buyer of last resort,” announcing that it will buy a specified amount of solar panels or green steel at some future date, at a specified price, if private-sector buyers cannot be found.[29]

While the maximalist interpretation of the DPA articulated above seems unlikely to gain traction due to its admittedly antidemocratic nature, the use of advanced market commitments should be more familiar. Operation Warp Speed, which marked the U.S. government using the DPA to sign priority-rated contracts for vaccines, therapeutics, and vaccine supplies during the heat of the Covid-19 pandemic, sought to incentivize enough aggregate production of vaccine doses for the entire U.S. population.[30] In this context, the federal government contractually agreed to (among other things) pay billions of dollars to several vaccine developers for millions of dosages, along with providing at-risk payments for vaccine development prior to FDA approval.[31]

Perhaps ambitious green energy advocates hoping to utilize the DPA should be encouraged by the DPA’s language, but discouraged by the political tolerance of U.S. taxpayers for using the DPA to undertake fundamentally international projects.[32] In the Covid-19 context, the federal government appeared tepid when it came to extending the DPA’s scope to vaccine production to fulfill international needs or compel US-headquartered multinationals.[33]However, a distinction might reasonably be drawn between the R&D incentives for vaccine demand amidst a global pandemic[34] and those for mitigating climate change, a slow and escalating crisis. Whether the recent, high-profile invocations of the DPA become the norm or turn out to be a historical apex remains to be seen.

[1] Cong. Rsch. Serv., R43767, The Defense Production Act of 1950: History, Authorities, and Considerations for Congress 1 (2020).

[2] Id. at 4.

[3] Id.

[4] Id. at 1. 

[5] Id. at 5–11.

[6] Defense Production Act § 2(a)(6), 50 U.S.C. § 4502. 

[7] 45 C.F.R. § 101.3 (2023) (“Certain programs to promote the national defense are eligible for priorities and allocations support. These include programs for military and energy production or construction, military or critical infrastructure assistance to any foreign nation, deployment and sustainment of military forces, homeland security, stockpiling, space, and any directly related activity.”).

[8] See Robert B. Weintraub, Letter to the Editor, Invoking the Defense Production Act could help Ukraine, Wash. Post (Feb. 24, 2023),

[9] President Biden Invokes Defense Production Act to Accelerate Domestic Manufacturing of Clean Energy, (June 6, 2022),

[10] See Jun Ukita Shepherd & Lincoln F. Pratson, The Myth of US Energy Independence, 7 Nature Energy 462–464 (May 25, 2022),

[11] Todd N. Tucker, Making Sense of Biden’s Green Energy Defense Production Act Announcements, Roosevelt Institute (Jun. 9, 2022),

[12] Id.

[13] For more on the regulatory problems in defense procurement, particularly the importance of research and development, uncertainty, economies of scale, and the role of the government as a sole purchaser, see William P. Rogerson, Economic Incentives and the Defense Procurement Process, J. of Econ. Perspectives 66 (1994).

[14] See Shepherd & Pratson, supra note 10. 

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] See, e.g., Scott Lincicome, Industrial Policy: A Bad Idea Is Back, Cato Institute (July/August 2021),

[24] See, e.g., Erik Gordon, What You Need to Know About the Defense Production Act – The 1950s Law Biden Invoked to Try to End the Baby Formula Shortage, University of Michigan Ross School of Business,

[25] See Joel Dodge, Joel Michaels, Lenore Palladino, and Todd N. Tucker, Corporate Extraction, Boost Worker Power, and Expedite the Clean Energy Transition, Roosevelt Institute 6 (December 2022).

[26] Id. at 5.

[27] Id. at 6.

[28] Id.

[29] Id. at 9.

[30] See Chad Bown, Covid-19 vaccine supply chains and the Defense Production Act, Peterson Institute for International Economics 777–778 (June 2022).

[31] Id. at 778.

[32] See id. at 787–789. See also supra note 7.

[33] Bown, supra note 30, at 787–789.

[34] See id. at 788–789.