Biden administration leans on Tesla to reform renewable fuel policy

JUNE 23 (Reuters) – US President Joe Biden rarely mentions electric car maker Tesla Inc (TSLA.O) in public. But privately, his government has leaned on the company to help draft a new policy to allow electric vehicles (EVs) to benefit from the country’s lucrative renewable fuel subsidies, according to emails verified by Reuters.

The Biden administration contacted Tesla on his first day in office, marking the beginning of a series of meetings on the issue between federal officials and companies associated with the electric vehicle industry over the following months, the emails said.

The administration’s early and extensive outreach reflects that expanding the scope of the US Renewable Fuels Standard (RFS) to make it a tool to electrify the national automobile 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 that transportation fuel sold in the United States contain a minimum amount of renewable fuels. So far, it has primarily been a subsidy for corn-based ethanol.

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

The U.S. Environmental Protection Agency, which administers the RFS, is expected to table proposed policy changes later this year, defining new winners and losers in a multibillion-dollar market for loans, known as RINs, that has supported corn farmers and biofuel producers for more than a decade.

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

“We’ve heard through rumors that auto companies 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 at that heap.”

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

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 oil refiners to blend ethanol and other biofuels into the fuel pool or to purchase RINs from those who do. This policy has triggered an economic boom in the Farm Belt countries. But it’s also angered environmental groups, who say the extra corn production is damaging land and water while prolonging the internal combustion engine era.

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

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

CONTACT TESLA

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

Since then, the Biden EPA has had other meetings on the matter 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 has also scheduled at least one meeting with White House officials, including climate adviser Ali Zaidi, to discuss the reforms, according to the emails.

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

Despite this, Tesla’s CEO Musk has often been at odds with the White House and sent sharp tweets to Biden. In February, Biden publicly acknowledged Tesla’s role in making electric vehicles after Musk repeatedly complained about being ignored. Continue reading

WHAT EVERYONE WANTS

Tesla is seeking changes to the RFS that 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 been exploring partnerships with biogas producers to give them leverage in any market resulting from the new rule, the sources say.

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

Meanwhile, members of the car charging industry are also pushing for participation.

Matthew Nelson, a lobbyist at Electrify America, a charging company trade group, wrote to the EPA in October, telling them that 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 the credit to compete with gasoline.

According to Department of Energy data, the United States currently has about 48,000 charging stations, concentrated in coastal regions.

Biogas producers, like landfills, want credit, arguing that they are feeding renewable fuel into the grid that powers electric vehicles.

Electricity generated from biogas is already suitable for generating RINs. But the EPA has never approved an industry application because it has yet to find 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 electricity.

“We believe the implementation of the power program in the RFS aligns well with the Biden administration’s climate goals,” 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.