Biden delays bid to grant electric carmakers renewable fuel credits

The Biden administration has dropped, for now, a plan that would have awarded automakers such as Tesla Inc. credits for using renewable natural gas to power EVs.

That proposal was excluded from drafted regulation setting biofuel-blending quotas for the next three years that is undergoing final review at the White House, according to people familiar with the matter who asked not to be named because the decision isn’t public. 

Under the proposal, carmakers would be folded into the 18-year-old Renewable Fuel Standard that requires refiners to blend biofuels into gasoline and diesel. EV manufacturers would be able to claim new, tradeable credits in exchange for using electricity generated from natural gas harvested from landfills or farms.

EPA spokeswoman Maria Michalos declined to comment, citing the proposed rule’s ongoing interagency review. The draft regulation could still change before its formal, final release.

EPA officials were concerned they could not finalize details of the complex EV initiative in time to meet a court-ordered June 14 deadline to issue the quotas, the people said. Agency officials have told stakeholders they intend to advance the EV measure on a separate track later this year.

Tesla, Rivian Automotive Inc. and the Zero Emissions Transportation Association lobbied the EPA in favor of the plan, arguing it would advance President Joe Biden’s goals for decarbonizing the transportation sector. However, the proposal faces opposition from refiners, renewable fuel producers and some lawmakers who argue it flouts federal law. 

As initially proposed, the EV initiative would provide another layer of federal support for zero-emission vehicles on top of tax credits expanded in last year’s climate law and stringent proposed limits on tailpipe pollution. The benefit would come in the form of tradeable credits known as “renewable identification numbers” or RINs, which are used by refiners to prove they have fulfilled annual biofuel-blending quotas. 

Those credits are typically generated with each gallon of biofuel, but under the EPA plan, automakers could get eRINs when electricity from certain renewable sources is used as fuel to power EVs. 

The owners of truck stops and charging stations have balked at the approach, arguing that giving eRINs to automakers would further bolster EV production without spurring investment in charging infrastructure and biogas-to-electricity projects.

Fuel refiners, meanwhile, have argued that Congress never gave the EPA authority to create a new biofuel credit tied to electricity.