Biden Administration Relies on Tesla for Guidance on Renewable Fuel Policy Reform

By Jarrett Renshaw and Stephanie Kelly

(Reuters) – US President Joe Biden rarely publicly mentions electric car manufacturer Tesla Inc. But privately, his government has leaned on the company to help draft a new policy to allow electric vehicles (EVs) to take advantage of the country’s lucrative renewable fuel subsidies, according to emails reviewed by Reuters.

According to the emails, the Biden administration contacted Tesla on the first day of office, marking the start of a series of meetings on the subject between federal officials and companies associated with the EV industry.

The administration’s early and expanded reach reflects that expanding the scope of the U.S. Renewable Fuel Standard (RFS) to make it a tool for electrifying the country’s car fleet is one of Biden’s priorities in the fight. against climate change.

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 was mainly a subsidy for corn-based ethanol.

The White House’s contacts with Tesla also show that, despite a public grudge between Biden and Tesla founder Elon Musk, the Biden team tried early on to involve the automaker in one of its key policy efforts. Biden has set a goal of making half of all new vehicles sold by 2030 zero-emission vehicles.

The U.S. Environmental Protection Agency, which manages the RFS, is expected to unveil proposed policy changes sometime this year, defining new winners and losers in a multi-billion dollar credit market known as RINs, which has supported corn growers and biofuel producers for over a decade.

The first signs are that the administration is leaning towards 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 spread the subsidy to related industries, such as car charging companies and landfills that supply renewable biogas to power plants, industry players said.

“We’ve heard down the road that auto companies are going to really like this rule,” Maureen Walsh, director of federal policy at the American Biogas Council, said at a conference in May. But she added, “We all demolished that pile.”

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

The White House did not respond to requests for comment.

The EPA said it consulted “all interested stakeholders” in its RFS policy review.

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

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

“The RFS needs to be reformed to address dirty corn ethanol giveaways. It shouldn’t be expanded to include new factory farming and woody biomass giveaways,” said Friends of the Earth spokesperson Lukas Ross.

TURN TO TESLA

On the morning of Biden’s presidential inauguration in January 2021, EPA operative Dallas Burkholder emailed top Tesla lobbyist Rohan Patel to schedule a meeting on how to integrate electric cars into the RFS, according to the documents. that have been reviewed by Reuters. They scheduled a meeting a week later, records show.

Since then, the Biden EPA has had additional meetings on the topic with Tesla, groups representing biogas producers such as Waste Management Inc and Republic Services Inc and charging station companies such as ChargePoint Holdings Inc, according to the documents.

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

The Biden White House is an unabashed supporter of the EV industry and has pinned much of its climate hopes on getting more electric cars on the road. The bipartisan infrastructure bill passed last year included $7.5 billion for new EV charging stations, and Biden has sought to reinstate expired tax credits to help consumers pay for new vehicles.

Still, Tesla CEO Musk was often at odds with the White House, sending harsh tweets targeting Biden. In February, Biden publicly acknowledged Tesla’s role in EV production, after Musk repeatedly complained that he was being ignored.

WHAT EVERYONE WANT

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

Tesla has not responded to requests for comment for this story.

Members of the car charging industry, meanwhile, are also pushing for a share.

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

The United States currently has about 48,000 charging stations concentrated around coastal areas, according to data from the Department of Energy.

Biogas producers, like landfills, also want credit, on the grounds that they supply renewable fuel to the grid that generates the power for electric vehicles.

Electricity derived from biogas is already eligible for the generation of RINs. But the EPA has never approved an industry filing, as it has yet to determine the best way to trace the power entering EVs back to its origin.

In 2020, landfill gas generated about 10 billion kilowatt-hours of electricity, or 0.3% of U.S. utilities’ electricity consumption.

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

(Reporting by Jarrett Renshaw in Philadelphia and Stephanie Kelly in New York; editing by Richard Valdmanis and Matthew Lewis)

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