US Government May Delay Tradable Credits for Electric Vehicles Manufacturers

US Government Considers Postponing Tradable Credits for EV Makers Under Renewable Fuel Program

Two sources familiar with the matter reveal that the U.S. government might postpone its decision to grant tradable credits to electric vehicle (EV) manufacturers under a renewable fuel program. The delay is due to concerns about potential legal challenges to the plan. The proposed scheme aimed to reward EV automakers like Tesla with credits for charging their vehicles using power derived from renewable natural gas or methane collected from sources such as cattle or landfills. The Environmental Protection Agency (EPA) recommended adding EVs to the Renewable Fuel Standard (RFS), which requires oil refiners to blend biofuels into the fuel they produce or purchase credits from other refiners that do. Currently, most credits generated under the RFS are for blending liquid fuels such as corn-based ethanol into gasoline. Adding credits for renewable gas-generated power to charge EVs would take the program in a new direction. Although the EPA initially proposed adding EVs to the program while outlining the mandates for blending biofuels for 2023-2025, the government intends to separate the two to avoid legal challenges that could delay the issuance of the next round of RFS quotas on biofuels.

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Proposed Scheme to Reward EV Makers with Tradable Credits Delayed Over Legal Concerns

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The deadline for finalizing the quotas for the Renewable Fuel Standard is in June, and the EPA is currently reviewing public comments on the proposed change from last year. However, whether the agency will separate EVs from June remains to be determined. An EPA spokesperson stated that the staff is working to finalize the rule by the June 14 deadline set by the consent decree. The Republican-led House of Representatives Energy and Commerce Committee recently challenged the EV program, arguing that the RFS should focus on liquid fuels rather than electrifying transportation. President Joe Biden's plan to combat climate change involves transitioning the nation's car fleet to EVs. The tradable credits would have been an additional incentive under the Inflation Reduction Act to accelerate this transition.
 
EPA Recommends Adding EVs to Renewable Fuel Standard But Separates from Biofuel Quotas

According to the November proposal, EV manufacturers were expected to generate up to 600 million credits in 2024 and 1.2 billion credits by 2025. In March, the price of a single credit was approximately $2.30, based on EPA data. However, the delay in finalizing the EV credit program could result in more volume being available for other renewable fuel pools under the 2023-2025 mandate, such as blending for renewable diesel and sustainable aviation fuel (SAF). Producers of these fuels have been lobbying the administration for higher volumes for several months.