The Biden Administration has shelved a proposal that would have provided automakers, including Tesla Inc., with credits for utilizing renewable natural gas to fuel electric vehicles.

According to insiders familiar with the matter, the administration omitted the plan from the draft regulation outlining biofuel-blending quotas for the next three years. The individuals spoke to Bloomberg anonymously, as the decision has not been made public.

Under the proposed initiative, automakers would have been incorporated into the existing 18-year-old Renewable Fuel Standard, which mandates refiners to blend biofuels into gasoline and diesel. EV makers would have been eligible to receive new, tradable credits by using electricity derived from natural gas sourced from landfills or farms.

Maria Michalos, spokesperson for the Environmental Protection Agency, declined to comment on the matter for the Bloomberg article, citing ongoing interagency review of the proposed rule. The draft regulation could still undergo modifications before its formal release, according to the EPA.

The sources noted EPA officials are concerned with completing the EV initiative by the court-ordered deadline of June 14. As a result, they reportedly informed stakeholders they plan to pursue the EV measure separately later this year.

Tesla, Rivian, and the Zero Emissions Transportation Association have lobbied the EPA in support of the plan. They say it aligns with Biden's objectives of decarbonizing the transportation sector. However, the proposal has encountered opposition from refiners, renewable fuel producers, and some lawmakers who assert it violates federal law.

The EV initiative is aimed to provide additional federal support for zero-emission vehicles, supplementing the expanded tax credits introduced in last year's climate legislation and the stringent proposed limits on tailpipe emissions.

The support would have come as tradeable credits known as "renewable identification numbers," or RINs, which refiners use to show compliance with annual biofuel-blending quotas. While the credits are typically generated by gallon of biofuel, the EPA's plan would have allowed automakers to acquire RINs when using electricity from specific renewable sources to power EVs.

Critics of the proposal, including owners of truck stops and charging stations, argue granting RINs to automakers would further stimulate EV production without adequately incentivizing investment in charging infrastructure and biogas-to-electricity projects. Fuel refiners also contend the EPA lacks the authority to establish a new biofuel credit linked to electricity.