In his recent State of the Union speech, President Obama proposed an Energy Security Trust that would rely on the money from increased oil and gas drilling to support research that could move cars and trucks off oil-derived fuels.
From a White House briefing document accompanying the President’s speech:
“While the United States will continue to rely on responsibly produced oil and gas in the near term, President Obama is committed to a long-term policy that allows us to transition to cleaner alternatives, continuing to increase our energy security. The Energy Security Trust proposal, which is funded by revenue from oil and gas development on federal lands and offshore, has broad non-partisan support, including retired admirals and generals and leading CEOs. It is focused around one achievable goal: shifting our cars and trucks off oil. The trust will support research into a range of cost-effective technologies – like advanced vehicles that run on electricity, homegrown biofuels, and vehicles that run on domestically-produced natural gas.”
Reaction around Washington has been confused as the various lobbies and industries that support individual fuel types or transportation technologies express dismay over a lack of guidance or preference on what kind of research the fund would actually support.
In a blog post generally supportive of the Obama Administration’s approach to improving energy security while encouraging research into oil and gas alternatives, Kevin Massy of The Brookings Institution expressed doubt about the role and the sufficiency of the Energy Security Trust:
“The Energy Security Trust proposal, which will probably require an act of Congress to be implemented, fixes only part of the problem. While U.S. vehicle-related emissions are substantial, reducing them – even to zero – is not going to address global climate change. The political economy of the Trust is also questionable: by designing the Trust as a tax on oil production that is specifically destined to back out gasoline for the U.S. vehicle fleet, the initiative essentially asks oil producers to pay to diminish their largest market.”
The think tank raises the idea of a carbon tax, long held to be the simplest conceptually but also potentially the hardest to implement and design of mechanisms to fund a low-carbon economy. States and regions have largely relied on market-oriented cap and trade designs for the power sector and left carbon emissions from transport alone, but the success of those programs without federal support has been limited and fails to address the most pressing components of US energy security.
“The Administration should implement a modest but meaningful carbon-based tax on fossil-fuel production, with a clear schedule for incremental increase,” Massy says.
“The introduction of a carbon tax would serve a two-fold purpose. It would demonstrate to the international community that the United States takes climate change seriously and is willing to introduce measures to address it; such an overture would increase Washington’s credibility in discussions around emissions reductions and would serve to encourage other large emitters to follow suit. It would also generate revenue, which should be allocated to technologies that have the best chance of addressing emissions on a global scale: carbon capture and storage (CCS) and advanced battery technologies. While policy tools like renewable portfolio standards and production tax credits have added to the stock of non-fossil energy sources, they will have a negligible impact on climate change as long as coal – soon to overtake oil as the world’s leading energy source – continues to be burned in the developing world.”
For the full post on the Brookings site, click here.
