The Patriot Post® · In Brief: Biden's 'Renewable' Wealth Transfer
Joe Biden and his leftist pals have made no bones about their desire to use the crushing weight of government to dictate results in the market. In few places is this as evident as in the ethanol mandate and push for EVs. Biden is now combining those goals, says the editorial board of The Wall Street Journal, in an income redistribution scheme for the ages.
Tesla’s stock market value has plunged by some $850 billion this year amid investor worries over Elon Musk’s Twitter takeover and slumping demand for its electric vehicles. But lo, the Biden Administration is coming to Mr. Musk’s aid with a new plan to use the renewable fuel program in a way that subsidizes Teslas and other already subsidized EVs.
Congress’s ethanol mandate offers a case study in the political difficulty of weaning industries off government support — and how regulators can revamp programs to serve new political ends. Politicians of both parties rallied around the renewable fuel standard (RFS) in 2005 as a way to boost U.S. energy independence and reduce CO2 emissions. It has done the opposite.
The Journal recaps the RFS mandates for biofuel blending, which is problematic in and of itself and is therefore compounded by the quantities demanded by the central planners. Refiners have either bought expensive “credits” in order to continue producing a usable product (at a higher cost), or they’ve gone under. The Journal says, “A refining shortage, especially on the East Coast, is a major reason prices for gasoline and diesel shot up early in the summer far more than for crude.”
The Biden EPA’s back-door EV subsidy will compound these problems. EPA is proposing to increase the overall RFS to 22.68 billion gallons in 2025 from 20.63 billion this year. The cellulosic ethanol component — which EPA in the past has repeatedly revised down because production has fallen far short of its ethereal mandates — will climb to 2.13 billion gallons from 630 million.
Here’s the kicker: Refiners will be allowed and by necessity required to comply with these mandates by buying “eRINs” credits from EV manufacturers. “While the production of liquid cellulosic biofuel has remained limited in recent years,” EPA says, “the inclusion of eRINs into the program affords another opportunity for dramatic growth of cellulosic biofuel.”
Not really. The proposal is one more way to boost EV margins at the likes of Tesla, which lobbied for inclusion in the RFS. As EPA explains, the new eRINs credits will “incentivize activities that can increase electrification of the fleet, which could include lowering the cost of EVs and/or increasing the availably [sic] of public access charging infrastructure.”
The details of the scheme would win a Rube Goldberg award.
The Journal summarizes some of those details, including, believe it or not, algorithms that take into account landfills and dairy farms, before concluding:
Tesla is expected to be the program’s biggest beneficiary because it has the most EVs on the road.
The more EVs that auto makers sell, the more credits they will generate. Meantime, the Administration’s rising fuel economy mandates will make it harder for refiners to comply with the increasing renewable-fuel mandates. That means refiners will have to buy more eRINs and will pass on the costs via higher gas prices.
In sum, the Administration is proposing another huge wealth transfer from folks who drive gas-powered cars to Tesla and other makers of electric vehicles.
Wall Street Journal subscribers can read the whole thing here.