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It's a favorite promise of politicians - keep manufacturing jobs and technology in America. And yet the U.S. keeps losing both to other countries. NPR's Laura Sullivan and Courtney Flatt from Public Radio's Northwest News Network investigate one story about a cutting-edge battery and how the U.S. may have lost the next big thing to China, again.
LAURA SULLIVAN, BYLINE: Chris Howard is standing in the rain outside an empty warehouse in Mukilteo, Wash.
CHRIS HOWARD: We used to have 10 shipping containers here; there were empty containers back here; customers and clients coming for visits.
SULLIVAN: Howard used to work in this warehouse with more than a dozen other engineers and researchers for an American company called UniEnergy. Its name is still on the sign out front. What they were doing here was building a battery. Not just any battery - something called a vanadium redox flow battery. It was about the size of a refrigerator. And Howard and the rest of the employees thought it was going to change the world.
HOWARD: It was more than a job. It was a lot of blood, sweat and tears into developing a product that we were really excited about and really proud of.
SULLIVAN: Unlike batteries in cellphones or even cars, these batteries could charge and discharge energy for as long as 30 years. And this particular design seemed to hold enough energy to power a house. Researchers pictured people plunking them down next to their air conditioners, attaching solar panels to them and everyone living happily ever after off the grid.
HOWARD: It was beyond promise. We were seeing it functioning as designed, as expected.
SULLIVAN: They thought the batteries would be the next great American success story. But that's not what happened. Today, this warehouse is shuttered and empty. All the employees who worked here were laid off. And across the world, a Chinese company is making the batteries in Dalian, China. The Chinese company didn't steal this technology. It was given to them by the U.S. Department of Energy. An NPR investigation found the department allowed the technology and jobs to move overseas, violating its own licensing rules while failing to intervene on behalf of U.S. workers in multiple instances, according to internal department emails. Now China is forging ahead, investing millions into this cutting-edge green technology that was supposed to help keep the U.S. and its economy out front.
JOANNE SKIEVASKI: It just is mind-boggling.
SULLIVAN: Joanne Skievaski is the vice president of finance for a U.S. company called Forever Energy that has been trying to get a license from the department to make the batteries here for more than a year.
SKIEVASKI: This is technology made from taxpayer dollars. It was invented by a national lab, and it's deployed in China, and it's held in China. To say it's frustrating is an understatement.
SULLIVAN: Department of Energy officials declined NPR's request for an interview and wouldn't explain how technology that costs U.S. taxpayers $15 million ended up in China. But after NPR sent department officials detailed questions laying out the timeline of events, officials terminated the license it gave to the Chinese company. In a statement, officials said the department, quote, "takes American manufacturing obligations extremely seriously" and is now, quote, "undertaking an internal review of the licensing of vanadium battery technology." The story of how this happened begins where the battery was born, three hours southwest of Seattle, in the basement of a government lab called the Pacific Northwest National Laboratory where Courtney went to visit.
COURTNEY FLATT, BYLINE: Safety goggles on.
VINCE SPRENKLE: Yep.
FLATT: Vince Sprenkle works with energy storage here at the lab.
SPRENKLE: We're going to go down into the redox flow battery lab.
FLATT: It was down here in 2006 that more than two dozen scientists began to suspect that a special mix of acid and electrolyte could hold unusual amounts of energy without degrading. It turned out to be right.
Do you feel kind of, like, on the cutting edge of learning about these batteries?
SPRENKLE: Yeah, we are. I mean, I think we've got one of the leading research groups in the country and probably the world in this technology.
FLATT: It's because of this leading edge that when a success happens, the lab encourages scientists to go out and see if they can make and sell the inventions in the real world. The lab and the U.S. government still hold the patents because American taxpayers paid for the research, but the Department of Energy licenses the patents to scientists and companies willing to take a shot. In this case, it took six years and millions of taxpayer dollars to discover the perfect battery recipe.
Gary Yang was the lead scientist, and he was excited to see if he could make them. In 2012, he left the lab with the license in hand and started UniEnergy Technologies at the warehouse in Mukilteo, Wash.
GARY YANG: I left the lab, full legal process and start UniEnergy Technology in Washington state.
FLATT: He hired engineers and researchers, but then he ran into trouble. He says he couldn't find any U.S. investors.
YANG: I talked to almost all major investment bank. None of them invest in battery.
FLATT: So he turned to a Chinese businessman and a company called Dalian Rongke Power and its parent company, which agreed to invest and even help manufacture the batteries. And so began a slow shift. First, Chris Howard said, it was just some parts; ultimately, it was the whole process.
HOWARD: Manufacturing was subsequently shifted to our sister company in China, and they would take on that role.
FLATT: In 2017, Yang and UniEnergy formalized the situation and gave Rongke Power an official sublicense, allowing the company to make the batteries.
SULLIVAN: So here's the thing - companies can choose to manufacture in China, but in this case, Yang's original license clearly says on Page 6 he has to sell batteries in the United States, and those batteries have to be, quote, "substantially manufactured" here. Yang acknowledges he didn't do that. He was mostly selling batteries in China. And the batteries he did sell here were largely made in China. But he says in all those years, the department never raised any concerns or intervened. Then in 2019, Chris Howard said he and the other engineers were called to a conference room. Supervisors told them they, too, would have to go to China to work there for four months at a time at Rongke Power.
HOWARD: And that was set to be increased on the premise that there were certain government programs, Chinese government programs, that would support funding efforts. So it was unclear, certainly to myself and some of the other engineers, what the plan was.
SULLIVAN: In a statement, the department said that license monitoring is a priority and that a review of this case is underway. All of which brings us to Yang. Yang was born in China, but he is a U.S. citizen and got his Ph.D. at the University of Connecticut. He says he wanted to manufacture here, but at the time, China was doing more to encourage battery production. And he told us China could do it better.
YANG: In this field - manufacturing, engineering - China ahead of U.S.
SULLIVAN: China is ahead of the U.S.
YANG: Ahead of U.S. Many wouldn't believe - engineering wise, ahead
SULLIVAN: He says far from helping China, the Chinese engineers were helping his U.S. employees. But you can see in several news reports at the time, it was helping China. The Chinese government launched several large demonstration projects and announced millions in funding.
FLATT: As things began to take off in China, here in the states, Yang was once again in financial trouble. So he made a decision that would again keep the technology from staying in the U.S. He transferred the license from UniEnergy to a company called Vanadis.
ROELOF PLATENKAMP: Vanadis is based in the Netherlands, and we will set up a holding company in Switzerland.
FLATT: Roelof Platenkamp is Vanadis' founding partner. Platenkamp told NPR the company's plan was to continue making the batteries in China and then set up a factory in Germany and eventually maybe the U.S. He says he has to manufacture in Europe because the European Union has strict rules about these things.
PLATENKAMP: I have to be a European company, or certainly a non-Chinese company, in Europe.
FLATT: But the United States has these rules, too. And any transfer of a U.S. government license needs U.S. government approval.
SULLIVAN: Which Yang apparently had no trouble getting. We looked at department emails and found that last summer, on July 7, one of the top officials at UniEnergy wrote to a government manager at the Department of Energy Lab in Washington saying they were going to make a deal with Vanadis. We believe they have the right blend of technical expertise, the official wrote. The manager wrote back that he would need confirmation. A second employee sent confirmation an hour and a half later, and the license was transferred.
Now, if anyone from the lab or the Department of Energy during that hour and a half thought to check whether Vanadis was an American company or whether it intended to manufacture in the United States is unclear. Even Vanadis' website says it plans to make the batteries in China. Department of Energy officials told us they take all license transfers seriously and have recently closed significant loopholes. But they acknowledge their efforts rely to some extent on, quote, "good faith disclosures" by the companies, which means if companies like UniEnergy don't say anything, the U.S. government may never know. It's a problem government investigators found has been going on for years. In 2018, the Government Accountability Office found the department lacked resources to properly monitor its licenses, was relying on antiquated computer systems and didn't have consistent policies across its labs.
FLATT: It was an American company, Forever Energy, that actually read the vanadium battery license and raised a red flag more than a year ago. Joanne Skievaski and others there say they repeatedly warned department officials that the UniEnergy license was not in compliance. Officials repeatedly told them it was.
SKIEVASKI: How is it that the national lab did not require U.S. manufacturing? Not only is it a violation of the license, it's a violation to our country.
FLATT: Skievaski hopes that now that the department has revoked the license, Forever Energy will get a chance. They're hoping to open a factory in Louisiana.
SKIEVASKI: We are ready to go with this technology.
SULLIVAN: Skievaski told us it will be hard at this point for any American company to catch up. Industry trade reports lists Dalian Rongke Power as the No. 1 manufacturer of vanadium flow batteries worldwide. And the bigger question looming over all of this is whether China will stop making the batteries once an American company is granted the right to start making them.
FLATT: That may be unlikely. Chinese news reports announced this summer that China is about to bring online one of the largest battery farms in the world, hoping to set new records for energy output. The reports say the entire battery farm is built out of vanadium redux flow batteries.
I'm Courtney Flatt.
SULLIVAN: And I'm Laura Sullivan, NPR News.
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