President Obama calls on Congress to establish $2B Energy Security Trust for advanced transportation research, funded by oil and gas royalty revenues
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In an speech at Argonne National Laboratory today, President Obama called on Congress to establish a new Energy Security Trust (EST) to invest in critical, breakthrough research focused on developing cost-effective transportation alternatives. The President had referenced the concept of the EST during his State of the Union address earlier this year. (Earlier post.)
The President’s proposal sets aside $2 billion over 10 years and will support research into a range of technologies such as advanced electrified vehicles, biofuels, fuel cells, and domestically produced natural gas. The mandatory funds would be set aside from royalty revenues generated by oil and gas development in Federal waters of the Outer Continental Shelf (OCS), already included in the administration’s five-year plan.
These revenues are projected to increase over the next several years based on a combination of leasing, production, and price trends, with additional revenues potentially generated as a result of reforms being proposed in the FY 2014 Budget. The Trust is paid for within the context of the overall budget.
|“This idea...is not just about saving money. It’s also about saving the environment... but also about national security. This is not a Democratic idea or a Republican idea, it’s just a smart idea.”|
The basic concept for the current proposal for an Energy Security Trust is derived from a proposal by the Energy Security Leadership Council (ESLC), a project organized by the non-partisan organization Securing America’s Energy Future (SAFE).
The ESLC is led by Co-Chairmen Frederick W. Smith, Chairman, President, and CEO of FedEx Corporation; and General P.X. Kelley (Ret.), former Marine Corps Commandant and member of the Joint Chiefs of Staff.
The ESLC/SAFE plan,as outlined in the report A National Strategy For Energy Security, would use royalty revenue generated from expanded domestic energy production—including in the Outer Continental Shelf (OCS) and off-limit areas of Alaska—to seed an Energy Security Trust Fund, which would be focused exclusively on R&D of oil displacement technologies in the transportation sector. Yearly receipts would be capped at $500 million and it includes mandatory reports to Congress
One of the key points of the ESLC/SAFE report—and one re-iterated by the President in his remarks at Argonne—is that the US is still dangerously dependent on petroleum fuels to power its massive transportation sector, and that dependency poses a very significant risk.
Oil dependence is one of the greatest threats to U.S. national security, and it deeply undermines our ability to achieve an enduring period of American economic growth and prosperity.
This report presents a vision for achieving a sharp improvement in American energy security through greater diversity in transportation fuels, continued growth in domestic production of oil and natural gas, and a more efficient regulatory system that prioritizes safety and security without sacrificing transparency. While market forces will surely take the country forward, the global oil market suffers from numerous market failures with grave national and economic security costs. This circumstance creates an unavoidable role for government policy. The Council does not take this position lightly, as we recognize that such intervention in the marketplace can produce unintended consequences. For this reason, we have strived to evaluate each individual policy recommendation through the lens of a rigorous and clear-eyed analysis of its costs and benefits.
Such an analysis, however, must be conducted within a framework that captures the significant economic, fiscal, and other costs of the status quo. Oil dependence inflicts staggering economic costs on the United States, and a set of policies designed to address this ongoing vulnerability must be evaluated with that broader context in mind. Therefore, in addition to analyzing the direct budgetary costs of public policies designed to improve US energy security, the Council also considered the costs of oil dependence with regard to the federal government’s fiscal position, the US current account balance, and consumer spending and economic growth.—A National Strategy For Energy Security
A National Strategy For Energy Security (ECLC, 2013)