Biden administration leans on Tesla for guidance in renewable fuel policy reform

Biden administration leans on Tesla for guidance in renewable fuel policy reform

June 23 (Reuters) – U.S. President Joe Biden rarely mentions electric carmaker Tesla Inc (TSLA.O) in public. But privately, his administration has leaned on the company to help craft a new policy that allows electric vehicles (EVs) to benefit from the nation’s lucrative renewable fuel subsidies, according to emails reviewed by Reuters. .

Tesla was contacted by the Biden administration on his first day in office, marking the start of a series of meetings on the subject between federal officials and companies tied to the electric vehicle industry over the following months, according to the e-mails.

The administration’s early and extensive outreach reflects that expanding the scope of the US Renewable Fuel Standard (RFS) to make it a tool to electrify the nation’s car fleet is one of Biden’s priorities in the fight. against climate change.

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Dating back to 2005, the RFS is a federal program that requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels. Until now, it has been mainly a subsidy for corn-based ethanol.

The White House’s outreach to Tesla also shows that despite a public spat between Biden and Tesla founder Elon Musk, the Biden team tried early on to engage the automaker in one of its key political pushes. Biden has set a goal of making half of all new vehicles sold by 2030 zero emission vehicles.

The US Environmental Protection Agency, which administers the RFS, is expected to reveal the proposed changes to the policy sometime this year, defining new winners and losers in a multibillion-dollar market for credits, known as RIN, that has supported corn and biofuel producers. for more than a decade.

Early signs are that the administration is leaning toward a rule that benefits automakers like Tesla, giving them the most access to so-called e-RINS, or electric RINs. But the reform could also extend the subsidy to related industries, such as car-charging companies and landfills that supply renewable biogas to power plants, according to industry players.

“We’ve heard the rumblings that auto companies are really going to really like this rule a lot,” said Maureen Walsh, director of federal policy for the American Biogas Council, speaking at a conference in May. But she added: “We’ve all been scrapping that pile.”

The idea of ​​including electric vehicles in the RFS has been under consideration for years, but gained traction when Biden’s transition team zeroed in on electric vehicles as a work-friendly solution to the climate crisis. Transportation accounts for more than a quarter of US greenhouse gas emissions.

The White House did not respond to requests for comment.

The EPA said it was consulting “all interested parties” in its review of the RFS policy.

The current RFS requires oil refiners to blend ethanol and other biofuels in the fuel pool or purchase RINs from those who do. That policy has spurred an economic boom in the Farm Belt states. But it has also angered environmental groups who say the extra corn production harms land and water while prolonging the era of the internal combustion engine.

Friends of the Earth, an environmental group, has expressed disapproval of an e-RIN program. The group sees the RFS as a policy that has failed to increase the production of new-generation low-carbon fuels, while harming the environment. He also sees the expansion of the program as a slippery slope toward increasing the use of raw materials for wood and wood waste, which can generate electricity.

“The RFS must be reformed to address dirty corn ethanol giveaways. It should not be expanded to include new giveaways for industrial agriculture and woody biomass,” said Friends of the Earth spokesman Lukas Ross.

COME BACK TO TESLA

On the morning of Biden’s presidential inauguration in January 2021, EPA staffer Dallas Burkholder emailed a top Tesla lobbyist, Rohan Patel, to schedule a meeting on how to bring the cars in. electrical in the RFS, according to documents reviewed by Reuters. They scheduled a meeting for a week later, records show.

Since then, Biden EPA has had additional meetings on the issue with Tesla, groups representing biogas producers like Waste Management Inc (WM.N) and Republic Services Inc (RSG.N), and charging station companies like ChargePoint Holdings Inc. (CHPT.N). ), according to the documents.

The EPA also hosted at least one meeting with White House staffers, including climate adviser Ali Zaidi, to discuss the reforms, according to the emails.

The Biden White House has been a staunch supporter of the electric vehicle industry, pinning much of its climate hopes on putting more electric cars on the road. The bipartisan infrastructure bill that passed last year included $7.5 billion for new electric vehicle charging stations, and Biden has sought to restore expired tax credits to help consumers pay for new vehicles.

Still, Tesla CEO Musk has often been at loggerheads with the White House, sending harsh tweets directed at Biden. In February, Biden publicly acknowledged Tesla’s role in making electric vehicles, after Musk repeatedly complained that he was being ignored. read more

WHAT EVERYONE WANTS

Tesla is seeking changes to the RFS that would allow it to earn renewable fuel credits based on kilowatt hours driven or similar metrics, according to two sources familiar with the plan. The company has also explored partnerships with biogas producers to give them leverage in any markets that emerge from the new rule, the sources say.

Tesla did not respond to requests for comment for this story.

Meanwhile, members of the auto-charging industry are also lobbying for a share.

Matthew Nelson, a lobbyist for Electrify America, a charging company trade group, wrote to the EPA in October, telling them the e-RINs would do more to enable Biden’s 2030 goals of 500,000 charging stations and 50% of electric vehicle sales than any other policy. according to emails. He added that cargo companies need the credit to compete with gasoline.

The United States currently has some 48,000 charging stations, concentrated in coastal regions, according to data from the Department of Energy.

Biogas producers, such as landfills, also want credits, arguing that they provide renewable fuel to the grid that generates power for electric vehicles.

The electricity derived from biogas is already eligible to generate RIN. But the EPA has never approved an industry request because it has yet to determine the best way to trace the energy going into electric vehicles back to its source.

In 2020, landfill gas generated about 10 billion kilowatt hours of electricity, or 0.3% of US utility-scale power.

“We believe that implementing the electricity program in the RFS aligns well with the climate goals of the Biden administration,” Carrie Annand, executive director of the Biomass Power Association, wrote to the EPA, according to the documents.

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Reporting by Jarrett Renshaw in Philadelphia and Stephanie Kelly in New York Editing by Richard Valdmanis and Matthew Lewis

Our standards: the Thomson Reuters Trust Principles.

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