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Exclusive: White House Asks EPA To Study Whether Electric Vehicles Can Generate Renewable Fuel Credits

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NEW YORK: The White House has asked the US Environmental Protection Agency to investigate whether using renewable fuels to power electric vehicle charging should generate tradable credits under the National Biofuels Program, two sources familiar with the talks told Reuters.

The proposal could give America’s young electric vehicle industry a big boost, as it could give it new incentives and a new source of revenue.

But the idea would introduce new players like Tesla Inc to a program that has already bitterly divided the oil and corn industries.

Under the US Renewable Fuels Standard, petroleum refiners must blend biofuels such as corn-based ethanol into their fuel blend or purchase tradable credits, called RINs, from those who do. The program was launched over ten years ago to support farmers and reduce oil imports.

If the program were expanded to include electric vehicles, INRs would come from recharging the vehicle using electricity produced by a renewable source of methane, such as gas siphoned from landfills or dairy farms, according to the sources. There is potentially a lot of this type of fuel available: Agriculture accounts for 10 percent of greenhouse gas emissions in the United States, with livestock accounting for more than a third, according to EPA data. Landfills are a major source of methane.

A key question, however, would be how to trace credit-eligible biogas from its origin to a car battery, and who along this supply chain can claim the lucrative credits.

“There is going to be a big fight between biomass producers, charging station operators and electric vehicle manufacturers like Tesla over who gets custody of the RIN,” one of the sources said.

The White House and the EPA declined to comment.

The existing RFS program is already a lightning rod of contention between the oil and corn industries.

Refiners complain that regulatory compliance is costing them a fortune, while farmers and biofuel producers say the program is essential to keep them in business.

A source told Reuters that Tesla, which produces both cars and charging stations, is pressuring the Biden administration to ensure it can generate and sell credits if the new plan takes off.

Tesla did not respond to a request for comment.

CLIMATE AMBITION

Strengthening the electric vehicle market is a key priority for the Biden administration, which seeks to decarbonise the country’s economy by 2050 to tackle climate change. Transportation is the main source of greenhouse gas emissions in the United States, just ahead of the electricity sector, according to the EPA.

Groups such as the Biomass Power Association have lobbied for the federal government to create a path for power producers who source from renewable raw materials qualified to generate INRs.

This group, whose members include biomass companies and associations, wrote to Biden’s transition team in December as part of the RFS Power Coalition, urging them to act quickly.

“When you put electricity online from a raw material that meets the RFS criteria and the electricity is used to power an electric vehicle, that power producer should be able to generate RIN just like a producer ethanol is able to do that, ”said Carrie Annand, executive director of the Biomass Power Association.

RINs generated in this way would likely be classified as “advanced” D3 biofuel credits, a category the EPA has struggled to develop in recent years.

Some oil refiners like Carl Icahn of CVR Energy have been very critical of the D3 market, with some calling them “unicorn” fuels because of their scarcity.

(Reporting by Jarrett Renshaw and Stephanie Kelly)

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