The US government is reportedly considering postponing a decision on granting electric vehicle (EV) manufacturers tradable credits under the Renewable Fuel Standard (RFS), amid concerns about potential legal challenges to the plan. The move would have allowed companies such as Tesla to receive credits for charging EVs using power generated from renewable natural gas or methane collected from sources like landfills and cattle farms.
Last year, the Environmental Protection Agency (EPA) proposed adding EVs to the RFS, which mandates that oil refiners blend biofuels into the fuel they produce or buy credits from other refiners that do. However, most credits generated under the RFS are for blending liquid fuels like ethanol made from corn into gasoline, so adding credits for power generated from renewable gas and then used for charging EVs would take the program in a new direction.
The EPA initially suggested adding EVs to the RFS when it outlined the mandates for blending biofuels for 2023-2025. However, the government now wants to separate the two to avoid any legal challenges that could delay the issuance of the next round of RFS quotas on biofuels.
The EPA is currently reviewing public comments on the proposal but declined to say whether it would split out EVs from the June mandate. “EPA staff are currently working to finalize the rule by the June 14 consent decree deadline,” said EPA spokesperson Timothy Carroll.
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However, the Republican-led House of Representatives’ Energy and Commerce Committee has recently challenged the EV program, arguing that the RFS was not intended to center on electrifying transportation but on liquid transportation fuels. Meanwhile, the Biden administration sees transitioning the nation’s car fleet to EVs as a central part of its climate change plan.
The credits would have added to the billions of dollars of incentives under the Infrastructure Investment and Jobs Act to accelerate the transition. The November proposal suggested that EV manufacturers could generate as many as 600 million credits in 2024 and 1.2 billion of them by 2025, with prices for an equivalent credit around $2.30 each in March, according to EPA data.
A delay in finalizing the EV credit program may mean more volume is available for other renewable fuel pools under the 2023-2025 mandate, including blending for renewable diesel and sustainable aviation fuel. Producers of those fuels have been lobbying the administration for higher volumes for months.
Overall, the delay reflects the ongoing debate over the most effective ways to reduce emissions from transportation and the role of EVs in that transition. While some argue that EVs should be part of the RFS, others maintain that liquid fuels are the focus of the program, and any change to that could face legal challenges.
