The Biden administration is counting on Tesla for guidance in reforming its renewable fuel policy

(Reuters) – US President Joe Biden rarely mentions electric car maker Tesla (TSLA.O) in public. But in private, his administration has relied on the company to help craft a new policy to allow electric vehicles to take advantage of the country’s lucrative renewable fuel subsidies, according to emails seen by Reuters.

The Biden administration called Tesla on its first day in office, ushering in a series of meetings on the topic between federal officials and companies associated with the electric car industry over the ensuing months, according to the emails.

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

RFS, dating back to 2005, is a federal program that requires transportation fuels sold in the United States to contain a minimum amount of renewable fuels. Until now, it was primarily a subsidy for ethanol from corn.

The White House’s outreach to Tesla also shows that while there was a public grudge between Biden and Tesla founder Elon Musk, early on Biden’s team tried to involve the automaker in a major policy push. Biden has set a goal to make half of the new cars sold in 2030 zero-emissions.

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

Early evidence suggests that management is leaning toward a rule that benefits automakers like Tesla, giving it the greatest access to so-called e-RINS, or electric RINs. But the reform could also extend support to related industries as well, such as car shipping companies and landfills that supply renewable biogas power plants, according to industry players.

“We’ve heard through Karma that auto companies are really going to like this rule,” Maureen Walsh, director of federal policy at the US Biogas Council, said at a conference in May. But, she added, “we were all getting rid of that pile.”

The idea of ​​including electric vehicles in the RFS has been under study for years, but gained traction when Biden’s transition team focused on electric vehicles as a job-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 was consulting with “all interested stakeholders” in reviewing the RFS policy.

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

Friends of the Earth, an environmental group, has expressed its disapproval of the e-RIN programme. The group sees the RFS as a policy that has failed to increase production of the new generation of low-carbon fuels, while also harming the environment. You also see that expanding the program represents a slippery slope towards increasing the use of waste timber and timber feedstock, which can generate electricity.

“The RFS should be reformed to address giveaways for dirty corn ethanol. It should not be expanded to new gifts for factory farming and woody biomass,” said Lucas Ross, a spokesperson for Friends of the Earth.

Go to TESLA

On the morning of Biden’s presidential inauguration in January 2021, EPA employee Dallas Burkholder emailed Tesla lobbyist Rohan Patel for a meeting on how to integrate electric vehicles into the RFS, according to documents reviewed by Reuters. Records show that they scheduled a meeting a week later.

Since then, Biden’s Environmental Protection Agency has held additional meetings on the topic with Tesla, groups representing biogas producers such as West Management. (WM.N) And Republic Services Company (RSG.N) and charging station companies such as ChargePoint Holdings Inc (CHPT.N)According to the documents.

The Environmental Protection Agency also held 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 has been an unapologetic supporter of the electric car industry, pinning many of its climate hopes on getting more electric cars on the road. A bipartisan infrastructure bill passed last year included $7.5 billion for new electric car charging stations, and Biden sought to bring back expired tax credits to help consumers pay for new vehicles.

However, 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 cars, after Musk repeatedly complained of being ignored. Read more

What everyone wants

Tesla is seeking changes to the RFS that will allow it to earn renewable fuel credits based on paid kilowatt-hours 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 norm, sources say.

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

Meanwhile, members of the auto shipping industry are also pushing for a stake.

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

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

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

Electricity derived from biogas is already eligible to generate RINs. But the Environmental Protection Agency has never agreed to an industry request because it has not yet determined the best way to track the force that brings electric vehicles to their origin.

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

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

Additional reporting by Garrett Renshaw in Philadelphia and Stephanie Kelly in New York; Editing by Richard Valdemanis and Matthew Lewis

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