Tesla wants US biofuel tickets from its renewable energy supply: Reuters

12 May 2021

London (Quantum Commodity Intelligence) - Electric vehicle maker Tesla wants to enter the market for biofuel credits in the US, known as Renewable Identification Numbers (RINs), likely tied to its production of electricity from biogas, reported Reuters Wednesday.

The company is one of eight with applications related to power generation and renewables credits pending at the Environmental Protection Agency (EPA), said Reuters citing sources familiar with the matter.

Tesla already benefits heavily from the sale of regulatory credits, which brought in 14.7% of 2020 revenues at $1.58 billion, a 202% year-on-year increase.

No biogas pathways are currently approved by the EPA, but any RINs generated from it would be of the most valuable D3 type, potentially creating a large additional income stream for the carmaker.

The Biden administration is expected to shake up the nation's green and renewables policy following years of stagnation under Trump, including setting out how electric vehicles will be included within renewables programmes.

The US biofuel ticket market created by its Renewable Fuel Standard (RFS) is the world's largest with 19.75 billion RINs generated in 2019, each of which represents one gallon of renewable fuel blending.

The RFS been a point of contention in US politics since it was passed into law by Bush Jnr in 2006, with powerful lobbies from the agricultural and energy sectors fighting for the size and reach of the programme extended or curtailed respectively.

The vast majority of RINs are created by the blending of ethanol from domestic corn, as well as biodiesel from soybean oil and various waste products.

Meanwhile, traditional fossil fuel companies without green assets have largely viewed the programme as an attack on profits, transferring income from them to biofuel and agricultural producers.

Any move by Tesla and other renewable electricity companies into the market is likely to eat into the share of the nation's automotive energy pool for both sides unless overall targets are increased.