Biden administration looks to Tesla for guidance on renewable fuel policy reform

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

The Biden administration contacted Tesla on its first day in office, marking the start of a series of meetings on the topic between federal officials and companies linked to the electric vehicle industry in the months that followed, according to e-mails. mails.

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

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The RFS, dating from 2005, is a federal program that requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels. So far, it has been primarily a subsidy for corn-based ethanol.

The White House’s contact with Tesla also shows that despite a public dispute between Biden and Tesla founder Elon Musk, Biden’s 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 administers the RFS, is expected to unveil proposed policy changes later this year, defining new winners and losers in a multibillion-dollar credit market, known as RINs, that have supported corn growers and growers. of biofuels. for over a decade.

Early signs are that the government is leaning towards a rule that benefits automakers like Tesla by 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 insiders.

“We’ve heard from rumors that automakers are really going to like this rule,” 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 demolishing 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 focused on electric vehicles as a work-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 was consulting “all interested parties” in its RFS policy review.

The current RFS requires oil refiners to blend ethanol and other biofuels in the fuel pool or buy 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 damages 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 production of new-generation low-carbon fuels while also harming the environment. It also sees the expansion of the program as a slippery slope to increase the use of raw materials for wood and wood waste, which can generate electricity.

“RFS should be reformed to deal with freebies for ethanol from dirty corn. It should not be expanded to include new freebies for industrial agriculture and woody biomass,” said Friends of the Earth spokesman Lukas Ross.

TURN TO TESLA

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

Since then, Biden EPA has had additional meetings on the topic 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 unapologetic supporter of the electric vehicle industry, pinning much of its climate hopes on getting more electric cars on the road. The bipartisan infrastructure law passed last year included $7.5 billion for new electric vehicle charging stations, and Biden sought to reinstate expired tax credits to help consumers pay for new vehicles.

Even so, Tesla CEO Musk has always been at odds with the White House, sending scathing tweets aimed at Biden. In February, Biden publicly acknowledged Tesla’s role in making electric vehicles after Musk repeatedly complained about being ignored. see More information

WHAT EVERYONE WANTS

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

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

Meanwhile, insiders in the car-loading industry are also pushing for a slice.

Matthew Nelson, lobbyist for 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 the goals of 500,000 charging stations and 50% EV sales of Biden to 2030 than any other policy, according to the emails. He added that collection companies need credit to compete with gasoline.

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

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

Electricity derived from biogas is already eligible to generate RINs. But the EPA has never approved an industry order because it has yet to determine the best way to trace the power going into EVs to its source.

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

“We think 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 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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