The Biden administration may eliminate the electric vehicle (EV) proposal from the final Biofuel quota rule when they present a revised version next week, according to Reuters.
This move, if confirmed, would result in the removal of approximately 1.8 billion D3 Renewable Identification Number (RIN) credits that were expected to be generated by EVs over the next two years.
Earlier this month, reports emerged about a potential delay in the decision to include EVs in the biofuel credit program, adding to the uncertainty surrounding the future of eRINS (Electronic Renewable Identification Numbers) for renewable electricity.
During the comment period for the Environmental Protection Agency's (EPA) proposed eRIN rule, the Energy Marketers of America (EMA) expressed opposition to the eRIN proposal. EMA argued that the EPA lacks the authority to implement the eRIN credit for renewable electricity, stating that it is inconsistent with the statutory purpose of the Renewable Fuel Standard (RFS).
If EPA does decide to delay the implementation of eRINS, it would be a “major positive” for more traditional RNG producers that were also targeting the eRINS market with supplying RNG to the heavy duty market, according to analysts at UBS.
That could lead to upside for several biofuel-adjacent companies like Clean Energy Fuels Corp (NASDAQ:CLNE), Aemetis Inc (NASDAQ:AMTX), Montauk Renewables Inc and Gevo Inc (NASDAQ:GEVO), UBS noted.
“The bear case on these names was the over production of eRINS by EVs would result in sharp drop in prices of D3 RINs which would be a negative for the RNG producers,” analysts wrote. “If EPA decides not to go ahead with eRINs for next two years it removes a major sector overhang.”
The revised Biofuel quota rule is expected to be unveiled on June 14.
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