Energy

Tesla is Gearing Up to Disrupt Ethanol Suppliers by Entering the Renewable Fuel Credit Market

Tesla has recently intended to join the lucrative renewable fuel credit market, which is currently dominated by ethanol producers and is soon to be opened up to electric vehicles.

At least eight companies have submitted to the Environmental Protection Agency to be included in the multibillion-dollar US renewable credit market, but their names have not been released.

According to Reuters, Tesla is one of those companies: “Tesla Inc is trying to penetrate the multibillion-dollar U.S. renewable credit market, aiming to benefit from the Biden administration's march toward new zero-emission targets, according to two sources familiar with the matter.”

The program was launched in the mid-2000s by the Bush administration to improve the US biofuel industry and reduce the country's reliance on foreign oil.

In the meantime, it created an unusual scenario in which a large amount of farmland began to be used by ethanol producers, who are now largely funded by the program.

Since electric cars will also help achieve this aim, it has been recommended that they be included in the program, which the Biden administration is expected to review.

According to Reuters, Tesla's inclusion in the program may be very disruptive:

“However, it is likely to irritate those in the United States refining industry, which will need to purchase the credits, known as RINs, generated by Tesla and other alternative fuel providers, essentially subsidizing an electric car firm that aims to push petrochemical refiners out of business.”

The specifics of Tesla's participation remain unknown at this time, as they will need to track the use of renewable energy in their electric vehicles.

It seems difficult to execute, but it makes sense because it seeks to accomplish the same purpose as the original program.

Around the same time, it will most likely benefit farmers whose yields have been severely affected by ethanol producers, who are currently utilizing approximately 40% of corn crops.

It would certainly be a new source of revenue for Tesla, which could be significant, particularly when combined with the possible reform of the federal EV rebate program.

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