Per- and polyfluoroalkyl substances (PFAS) have been headlining newspapers across the nation as of late. States like Maine have pushed rules and regulations to limit the presence of PFAS in consumer products; the EPA recommended PFAS water limits that are near zero, and class action lawsuits have embroiled producers.
PFAS, a diverse group of man-made chemicals used in everything from microchip production to pharmaceuticals and medical implants, are under the gun, to put it mildly. In fact, St. Paul-based 3M, in response to the mounting pressure, announced in December that it would be seeking to leave the market altogether with hopes of no longer producing any PFAS at all by 2025.
Critics of the current regulatory approach to PFAS have warned that eliminating the production of PFAS in the U.S. entirely would create huge supply chain disruptions for everyday consumer goods, and create a laundry list of externalities. In fact, it would appear that U.S. Rep. Betty McCollum sees the writing on the wall and the disaster that will unfold if the U.S. produces no PFAS whatsoever. The Democratic congresswoman from Minnesota’s Fourth District explained that 3M leaving the market presents a national security risk, primarily because of how vital PFAS is for chip production. Congress, and the Biden administration, allocated $53 billion to increase chip production in the U.S., with the hopes of ending U.S. reliance on China for chips.
This is where the PFAS debate gets geopolitical. McCollum went so far as to say that the Biden administration could mandate that 3M continue to produce PFAS, and use the Defense Production Act, which requires private companies to prioritize the government’s needs.
So on one hand, we have government agencies significantly limiting PFAS in the U.S., while at the same time Congress may counter those efforts to require PFAS to continue to be produced domestically. It would appear that legislators are starting to realize that phasing out PFAS production in the U.S. doesn’t eliminate the demand for PFAS along the supply chain, which means that microchip producers, for example, will have to import these chemicals to avoid a production shortage. This is no easy feat, given that in 2019, the last time production data was available, the U.S. domestically produced 625 million pounds of PFAS, with only 54 million pounds being imported. A 571 million pound shortfall is a significant sum.
And where would U.S. chip manufacturers import PFAS from if U.S. production ceased? Ironically, U.S. chip producers would have to import the bulk of that shortfall from China, which completely undermines the purpose of reshoring chip production in the U.S. We know that this is likely what will happen because it already happened in Europe when 3M’s Belgium plant was temporarily shut down. Major Korean chip producers like Samsung and SK Hynix purchased PFAS from Chinese suppliers to avoid production shortages.
It certainly makes great sense to try to decouple from China in regards to chips, especially with increased tensions over Taiwan’s autonomy and Biden’s commitment to militarily defend Taiwan if the People’s Republic of China does invade. That is something that is becoming increasingly more likely with China’s President Xi Jinping instructing China’s military to be prepared for an invasion by 2027.
If U.S. chip producers end up having to import PFAS to produce chips, the U.S. will be setting the table for a scenario eerily similar to Europe’s reliance on Russian gas. If, or when, China invades Taiwan, the U.S. would be in an active armed conflict with a country who is now the primary supplier of vital inputs for microchips. In that scenario, those imports likely end, either by decision from China, or sanctions against China, grinding the supply chain to a halt.
And the cost of this would be astronomical. For example, chip shortages cost the U.S. economy $240 billion in 2021. The shortage heavily affected the auto industry, costing manufacturers $210 billion in revenue as cars sat in lots waiting for chips to be installed. A true national chip shortage, not just with cars but with all products reliant on chips, would be so costly that it is difficult to actually forecast.
At the end of the day, PFAS policy needs to encompass the full view on costs and benefits, taking into account the emerging geopolitical discussion. There has to be a path forward that allows for responsible production, ensuring clean drinking water, while avoiding a wholesale chip shortage and the chaos that would ensue.
Originally published here