Biden administration leans on Tesla for advice on renewable fuels policy reform


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

The Biden administration contacted Tesla on his first day in office, marking the start of a series of meetings on the subject between federal officials and companies linked to the electric vehicle industry over the following months, according to emails.

The administration’s early and extensive outreach shows that expanding the scope of the U.S. Renewable Fuels Standard (RFS) to make it a tool for electrifying the nation’s fleet is one of Biden’s priorities in the fight against climate change.

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The RFS, which dates back to 2005, is a federal program that requires transportation fuel sold in the United States to contain a minimum amount of renewable fuels. Until now, it was mainly a subsidy for corn-based ethanol.

The White House’s outreach to Tesla also shows that, despite a public grudge match between Biden and Tesla founder Elon Musk, Biden’s team tried early on to implicate the automaker in one of its major policy initiatives. 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 administers the RFS, is expected to unveil proposed changes to the policy this year, defining new winners and losers in a multi-billion dollar market for credits, known as RIN, which has supported corn farmers and biofuel producers. for over a decade.

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

“We heard from the grapevine that automakers are going to really, 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 scrapped on that pile.

The idea of ​​including EVs in the RFS has been on the table for years, but gained momentum when Biden’s transition team focused on EVs as a user-friendly solution to the climate crisis. Transportation accounts for more than a quarter of greenhouse gas emissions in the United States.

The White House did not respond to requests for comment.

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

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

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

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

TURN TO TESLA

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

Since then, the Biden EPA has had additional meetings on the subject 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 held at least one meeting with White House staffers, including climate adviser Ali Zaidi, to discuss the reforms, according to the emails.

The White House Biden has been an unabashed supporter of the electric vehicle industry, pinning 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 electric vehicle charging stations and Biden has sought to restore expired tax credits to help consumers pay for new ones. vehicles.

Even so, Tesla CEO Musk has often been at odds with the White House, sending harsh tweets to Biden. In February, Biden publicly acknowledged Tesla’s role in making electric vehicles, after Musk repeatedly complained about being ignored. Read more

WHAT EVERYONE WANTS

Tesla is seeking to make changes to the RFS that will 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 market emerging from the new rule, the sources say.

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

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

Matthew Nelson, a lobbyist at Electrify America, a trade group of charging companies, wrote to the EPA in October and told them that e-RINs would do more to enable Biden’s 2030 goals of 500,000 charging stations and 50% off electric vehicle 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 regions, according to data from the Department of Energy.

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

Electricity derived from biogas is already eligible to generate RIN. But the EPA never approved an industry request because it has yet to determine the best way to trace the power entering electric vehicles back to its origin.

In 2020, landfill gas generated approximately 10 billion kilowatt hours of electricity, or 0.3% of utility-wide electricity in the United States.

“We believe the implementation of 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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