U.S. Efforts to Secure Its Clean Energy Supply Chains and the Value of Cooperating with Japan

This commentary is part of the Deepening U.S.-Japan Clean Energy Cooperation project, a CSIS initiative featuring analysis by leading Japanese and U.S. experts on the potential for enhanced coordination on energy strategy.

The modern energy system relies on a variety of energy resources and technologies. Energy resources include fuels to generate electricity and heat, as well as nonferrous minerals, such as those needed in energy technology components. As diversification is key to strengthening the security of an energy system, introducing renewable energy sources to reduce heavy dependence on fossil fuels—the energy transition—has contributed not only to reducing greenhouse gas emissions, but also to strengthening energy security. Ensuring access to these fuels and technology components for electricity generation and transmission requires robust and transparent supply chains. As such, securing robust and transparent supply chains has become synonymous with safeguarding the energy transition.

The United States has been investing in strengthening the nation’s energy industrial base. The successive U.S. administrations in recent decades have assessed the nation’s energy-related supply chain resilience and undertaken measures to address its vulnerabilities. For example, the first Trump administration (2017–2020) issued the first federal strategy to strengthen critical minerals supply chains, several executive orders related to the supply chains for electric power components, as well as actions such as the issuance of federal support for minerals projects. The supply-chain agenda continues to enjoy bipartisan support from the executive and legislative branches. During the Biden administration (2021–2024), critical minerals were a key focus of a wide-ranging vulnerability assessment that the White House undertook on the state of supply-chain resilience and resultant federal actions. The second Trump administration (2025–present) has already signaled continued strong attention on the availability and access to resources, such as critical minerals and uranium.

Supply-chain security has emerged as a top-tier priority for Washington due to a confluence of global developments. Earlier last decade, Beijing’s increasing assertiveness began raising a policy question on the efficacy of relying on China for materials as important for energy and advanced technologies as critical minerals. The debilitating effects of the Covid-19 pandemic on the global economy, starting around spring 2021, illuminated the fragility of global supply chains for commodities that are essential for public health and energy resources alike. Adding to these major drivers was Russia’s full invasion of Ukraine in spring 2022. The economic plight—let alone the security challenges—faced by Ukraine and the European economies underscores how energy supplies can be weaponized in a major global conflict, and how energy security and economic security are closely intertwined. The notion of securing the energy supply chains has also gained a geoeconomic driver more recently. The growing demand for energy that is anticipated from running the AI and underlying data centers, together with the electrification trend for decarbonization, requires the expansion and modernization of the electric power grid as well as power plants.

Major Areas of Supply-Chain Challenges and the Existing Bilateral Cooperation

Several energy resources and technologies for a clean energy economy exhibit major vulnerabilities in their supply chains. The following are the top areas where inaction would have energy security, economic, and geopolitical consequences.

Clean Technology Components and Requisite Minerals

The demand for clean energy technologies, such as solar power and electric vehicle (EV) batteries, has been on a growth trajectory. A policy concern is that their global supply chains have a significant level of Chinese presence, where the country accounts for at least 60 percent of their global production capacity. What’s more, the expansion of clean energy technologies is expanding mineral demands, as an energy system powered by clean energy technologies requires more minerals than its fossil fuel-based counterparts. The types of mineral resources used in clean energy technologies vary by technology, but China generally dominates their global supply chains, especially in mineral refining. Notably, the United States is highly dependent on China for many of its official list of critical minerals.

While it is not mineral-rich, Japan is a vital partner in strengthening the critical minerals supply chains, as an off-taker, a source of project finance, downstream manufacturing, as well as a materials research and development (R&D) hub. Japan, along with the European Union, has been a founding partner under the U.S.-EU-Japan Trilateral Conference on Critical Materials. Established in response to soaring prices of some rare earths and critical minerals in 2011, the Trilateral Conference (known as the Conference on Critical Materials and Minerals since June 2021) has advanced information exchange on policies and R&D as well as helped the successful pursuit of a World Trade Organization dispute settlement case in 2014, against China’s export duties and quotas.

Also, Washington and Tokyo reached an agreement in March 2023 that the two countries would not levy export duties on critical minerals they trade. This sectoral trade agreement reflects not only Japan’s interest in accessing tax credits under the Inflation Reduction Act but also the U.S. interest in engaging Japan in its friendshoring efforts. For example, Japan and South Korea are currently the only other key sources of EV battery cathode active materials outside China; China accounts for 90 percent of the global capacity, while Japan and South Korea jointly account for the remaining 10 percent.

The two countries cooperate through multilateral fora, too. Under the U.S.-initiated Mineral Security Partnership (MSP), Japan is partnering with a major Congolese entity over minerals development that is tied to a G7-initiated Lobito Corridor railway modernization project in Africa. Under the U.S.-led Indo-Pacific Economic Framework for Prosperity, making supply chains diversified, resilient, and transparent was a key objective of its supply chain pillar. Critical minerals and mining, and energy industries (e.g., electric grid technologies, nuclear energy, advanced batteries, and solar and wind components) were two of the sectors that Washington identified for potential cooperation in its August 2024 announcement.

Nuclear-Power Technology and Fuels

Nuclear energy is gaining renewed attention for its non-carbon-emitting attribute. At the COP28 climate meeting in Dubai in 2023, about 30 countries pledged to work towards tripling the installed nuclear power generation capacity by 2050. In the United States, the renewed interest in nuclear—both large and small—comes especially due to the strong forecast for electricity demand from the computational energy requirement of AI. However, a stagnant domestic orderbook over several decades has led to supply-chain challenges, such as the limited capacity in large-scale forging and fabrication. In contrast, Russia leads the world in exporting nuclear power reactors and enriched fuel, while China is set to rival the United States in the installed capacity of domestic, civilian nuclear reactors by 2030.

The resilience of domestic supply chains for nuclear components affects not only the ability to meet the domestic needs for reactor construction, but also the opportunity to capture overseas markets. While most of the global nuclear power plants are in advanced economies today, interest is rising among many in the Global South that currently do not have a nuclear power generation program. What is at stake is not merely economics, as nuclear commerce helps maintain or expand ties between technology supplier and importer countries.

Nuclear energy has long been a key area of bilateral cooperation, involving national R&D institutions. Under the first Trump administration, the two governments reinforced the commitment. The ongoing interests and investments in U.S. reactor projects—both public and private—from Japanese utility and engineering companies demonstrate Japan’s importance as a close partner. Multilaterally, Japan has been contributing actively to the U.S. efforts to promote small modular nuclear globally, such as that under the Foundational Infrastructure for Responsible Use of Small Modular Reactor Technology (FIRST) program, while also joining forces with the United States in striving to diversify the global supply chains for nuclear fuels under the Sapporo 5, a multilateral initiative launched at Japan’s G7 energy ministerial in 2023.

Electric Grid System

The electric power system is another area of supply chain challenges. Growing electricity demand from both decarbonization and AI and datacenter operational purposes points to a significant requirement for additional power supply. This means that the nation will need more grid components, such as transformers and equipment like switchgear, as well as transmission lines in the coming years. However, the U.S. ability to meet the requirement is severely constrained. The limited capacity for domestic production has rendered the replacement lead times for large power transformers to more than double between 2021 and 2024.

Moreover, our modern electricity system is increasingly reliant on information and communications technology (ICT). Therefore, the risk of cyberattacks has become one of the paramount concerns. Cyber risks to the electric power system can arise not only from direct attacks aimed at the critical infrastructure, but also through exploitation of vulnerabilities in the component supply chains, including insertion of counterfeits and insertion of malicious software.

Supply-chain resilience for these components and infrastructure has become a national security concern, not only for its high import dependence (80 percent in 2019) but also for its reliance on Chinese imports. Meanwhile, Japan, with its significant expertise in material science, is a key supplier of critical materials, such as high-grade grain-oriented electrical steel, which is a key raw material for large power transformers. On the ICT supply-chain front, Washington and Tokyo have begun consulting closely, including through the U.S.-Japan Dialogue on Digital Economy.

A Way Forward

Advancing an objective as strategic as securing these energy supply chains is most effective when pursued in partnership with countries that have a shared assessment of the nature and urgency of the challenge, as well as the technological and industrial capacity to address them. Japan is head above the rest. Cooperation with Japan will significantly enhance U.S. efforts to secure these supply chains, given the strong synergies between the two countries.

Clean Energy Technology

While clean energy does not enjoy a high-level focus under the Trump administration, some of the technologies continue to merit strong government focus as they provide security as well as decarbonization benefits. While the effort to reduce the China dependence in the supply chains for established technologies may continue to merit, Washington and Tokyo should consider dedicating a sizable share of their joint efforts also towards clean energy technologies that are still in their early stage.

Hydrogen fuel cells and electrolyzers are one such category of technologies. Fuel cells can provide a reliable (and backup) power supply from hydrogen on-site, either for civilian and non-civilian applications. Also, electrolyzer technology is key to producing cleaner hydrogen by splitting water into oxygen and hydrogen. In particular, the global supply chains for proton exchange membrane (PEM) based fuel cell and electrolyzer technologies are still in the nascent stage. PEM technology may be more complex, yet more compatible with intermittent renewables than alkaline-based technologies, where China already leads in global manufacturing capacity.

Due to their nascency, policy support and industry actions are likely to effectuate PEM technology supply chains which have more diversity, robustness, and resilience that are lacking in many other clean tech supply chains today. The U.S.-Japan cooperation should consider a consultative platform to ensure that their innovation outcomes are successfully scaled up for manufacturing and mass production within the West. The two countries could also engage like-minded countries, such as the European Union, to jointly formulate measures to nurture the technology supply chains that are resilient against the potential inflow of components due to overcapacity problems in China.

Critical Minerals

The second Trump administration has signaled a significant commitment to expanding the domestic capacity in minerals production. This will likely encompass more expansive use of federal financing tools, including for engagement of resource-rich foreign countries. Multilaterally, Washington and Tokyo should continue to leverage existing platforms, such as the Quadrilateral Security Dialogue (QUAD), the Minerals Security Partnership (MSP), and the International Energy Agency (IEA), to effectively infuse competitiveness, sustainability, and transparency in their global supply chains.

Such potential was already evident as the “Unleashing American Energy” executive order directed the secretary of state to “consider opportunities to advance the mining and processing of minerals within the United States through the Quadrilateral Security Dialogue.” Moreover, Japan may consider serving as the MSP chair in the coming years, while the two countries can also guide the minerals security agenda for the IEA. Bilaterally, the United States may consider partnering with Japan to raise additional capital to support the development of mineral production capacity at home that, in turn, accords Japan access to U.S. mineral supplies in times of supply disruptions.

Nuclear-Power Technology and Fuels

Nuclear energy is among the domestic energy priorities for the Trump administration. With its continued expertise in large-scale forging and fabrication, Japan would be a natural ally for the United States, as the U.S. power sector strives to meet the requirement for component supplies for refurbishing or replacing large reactors. Meanwhile, U.S. developers of small modular reactors and advanced reactors may find engineering and construction partners in the Japanese nuclear industry, especially as the U.S. vendors eye emerging nuclear markets with limited local industrial capacity.

Moreover, Washington could work closely with Japan in instilling diversity and robustness in the global supply chains for nuclear fuels. Potential measures may include Japan’s investment in the new U.S. fuel production capacity, including for High-Assay Low-Enriched Uranium fuel that is needed for advanced reactors in development. Such engagement would mean additional capital for the U.S. effort as well as an alternate supply source to enhance Japan’s nuclear fuel supply security. The two governments should also consult on how they may further leverage the Sapporo 5 framework.

Electric Grid System

Securing the grid system supply chains is an important task not only to meet the future volumetric requirement, but also to safeguard our modern electric network from exploitation of vulnerabilities in technology components. Washington should consider strategic partnerships with Tokyo and others with production capacities that are geopolitically aligned.

For example, the Japanese component supplies can help fill the U.S. supply gap, as U.S. utilities strive to meet the growing demand for these grid components. Another idea is for the Japanese manufacturers to invest in the United States to help augment the supply chain resilience.

As Chinese components are generally much cheaper than their competitors, Washington may consider providing support, such as the Defense Production Act (DPA) authorities. In fact, while the use of DPA for energy technology components as promulgated by the Biden administration was rescinded in March 2025, the DPA use for transformers appears to have been left intact. Washington and Tokyo should explore paths towards closer supply-chain engagement over critical electric grid components, such as transformers.

Jane Nakano is a senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies in Washington, D.C.