Tesla has reportedly applied to enter the profitable renewable fuel credit market that is currently dominated by ethanol producers as it is expected to be opened to electric vehicles.
There are currently at least eight companies who applied with the Environmental Protection Agency to be included in the multi-billion dollar US renewable credit market, but the agency did not release their names.
Reuters released a new report confirming that Tesla is amongst those companies:
“Tesla Inc is seeking to enter the multi-billion dollar U.S. renewable credit market, hoping to profit from the Biden administration’s march toward new zero-emission goals, two sources familiar with the matter said.”
The program was established in the mid-2000s under the Bush administration, and it was set up to boost the US biofuel industry in order to reduce US dependence on foreign oil.
In the process, it created a strange situation where a ton of farmland started being used by ethanol producers who are now heavily subsidized by the program.
Since electric vehicles would also help accomplish this goal, it has been proposed that they could be included in the program, and the Biden administration is expected to review the proposal.
Reuters reports that Tesla’s addition to the program could be very disruptive:
“However, it is likely to anger some in the U.S. refining industry who would need to buy the credits, known as RINs, generated by Tesla and other alternative fuel providers, essentially subsidizing an electric car company that seeks to put petrochemical refiners out of business.”
The details are not clear yet on how Tesla’s inclusion would work since they would need to track the use of renewable energy in their electric vehicles.
It looks like it would be hard to implement, but it makes sense since it aims to achieve the same goal that the program was originally after.
At the same time, it would likely help farmers who have been seriously disrupted by ethanol producers who are now reportedly using about 40% of corn crops.
For Tesla, it would obviously be a new source of income, which could be significant, especially when combined with the likely reform of the federal EV rebate program.
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