The US Renewable Fuel Standard (RFS) is an 18-year-old program that incentivizes the use of biofuels and has helped the US become the largest biofuel producer in the world. In a proposed update to the standard, electricity generated from biogas would become a credited fuel, with BloombergNEF estimating these new electricity-based credits, called eRINs, could be worth $1.6 billion in 2024 and $3.6 billion in 2025. While this is an encouraging sum of money for the auto industry, it pales in comparison to the $32 billion of credits likely to be generated from producing biofuels that will be burned in combustion engines. The RFS will not incentivize renewable electricity from sources such as wind and solar, and vested interests from companies such as Archer-Daniels-Midland to ethanol producers including Green Plains are fighting to preserve and protect the funds from biofuels.
The methodology for approving eRINs and deciding who can claim them still needs to be finalized, and there is a battle over which industries should lay claim to these funds. Automakers may be able to make an argument for a share of proceeds by providing data on the actual electricity usage of their vehicles, while utilities, fleet companies and charging operators are likely to be the primary claimants. The RFS update is a legislative compromise to appease those questioning why the major federal transport fuel-subsidy scheme has had no focus on electrification to date. While the $3.6 billion sum BNEF is expecting for 2025 is far from paltry, it is still a small sum compared to the $32 billion of credits likely to be generated from producing biofuels that will be burned in combustion engines. The US will be an exception in this regard, as other countries treat renewable electricity from these sources as worthy of carbon credits.