Questions for the Obama Administration on the Energy Security Trust

The Obama administration has taken hold of an idea called the Energy Security Trust.

First proposed in this year’s State of the Union, it would allocate $2 billion over 10 years for research and development of clean energy. This idea has been proposed in various forms before, and will be the subject of a half-day ‘summit’ tomorrow at the National Press Club. While well-intentioned, this proposal has many questions left unanswered that will determine the merit of this idea. Specifically, the questions of how exactly we would get this money and where it would go. Given the lack of details that have been proposed so far, we have a list of questions and ideas the Obama administration should consider before fleshing out this plan.

  1. Does the proposal rely on money coming out of the current budget?
    The administration has held firm to the $2 billion over 10 years proposal, but this money has to come from somewhere. The Energy Security Trust simply cannot take money away from key programs where it has already been allocated, such as the Land and Water Conservation Fund (LWCF), which is a pot of money from offshore oil and gas royalties that is used to protect and conserve land around the country. Important federal conservation programs are still stinging from sequestration, and some in Congress would like to further pare back the already bare-bones resources available for landscape planning and permitting new renewable energy projects on public lands and waters.
  2. Does the proposal rely exclusively on money coming primarily from growth of drilling in the Gulf of Mexico?
    The White House has preliminarily indicated that the Energy Security Trust would be funded from oil and gas drilling offshore, specifically that it will come from planned growth on drilling in the Gulf of Mexico. Relying on expanding drilling would certainly result in new money, but unless the scope of drilling is significantly expanded, those dollars are already accounted for in budget projections. The administration, and ultimately Congress, must look beyond more drilling as a source of needed new revenue for things like the Energy Security Trust. We think they should start with looking at a step taken by the Bush administration, raising royalty rates on federal oil and gas lessees. Currently, the federal government leases its onshore lands for fossil fuel production at a 12.5% royalty, a rate that has not been changed since 1920, and which is markedly below what most states charge for leases on state lands. For example, Wyoming has an effective royalty rate of over 28%, where the federal government doesn’t even charge half of that. In addition western states automatically get half of the federal government’s 12.5%. It means the federal government could increase their royalty rates substantially and still come up below what the states charge and what would be fair market value.
  3. Does the proposal rely on new revenue from drilling in the Arctic Ocean or the Arctic National Wildlife Refuge?
    The Obama administration’s 2012 five-year leasing plan, on which the Gulf of Mexico drilling is based, had included the potential for two additional oil and gas drilling lease sales in the Arctic Ocean. Also, past efforts to establish a similar program have relied on drilling in sensitive areas of Alaska. Drilling in Alaska’s Arctic National Wildlife Refuge would be a deal breaker for any proposal. The administration recently made some very important and encouraging decisions concerning Alaska wilderness and public lands, including setting aside millions of acres of wild lands from leasing in the Western Arctic Reserve. However, they have allowed Shell to proceed with drilling in the Arctic Ocean, despite the numerous setbacks and problems that have arisen. With Shell now postponing their Arctic drilling adventures indefinitely, it is clear that any drilling in the Arctic would have massive negative consequences, with little positive impact. The administration should assure everyone that new drilling in Alaska is not on the table for the Energy Security Trust proposal.
  4. Once we get the $2 billion over 10 years, what do we do with it?
    The administration has implied that much of the money will be marked for modernizing transportation. This is a laudable goal; less oil being used for transportation means less land being opened up for oil drilling. But this proposal should reduce and not expand our reliance on fossil energy resources including, natural gas and coal. As we have reported before, natural gas is at best only 50% cleaner burning than coal, and poses a host of problems related to its development and extraction. And committing to “clean coal” relies on unproven technologies that will only capture a portion of the harmful air pollutants unleashed into the atmosphere when coal burns. Continuing to rely on fossil fuels of any type for our energy future is anything but clean, or renewable. If the administration is serious about weaning us from oil and combatting climate change, a good chunk of this money should be used for deploying truly renewable energy resources for our nation.

The Obama administration’s leadership should be applauded for looking at new ways to serve our nation’s energy needs. But at present, this Energy Security Trust proposal is one that currently has more questions than answers. We should be looking to making sure fossil energy is being charged fair market value when leasing our public lands, and that money goes into truly clean and renewable energy. When these questions, and others, are answered, we can start to move forward in a way that secures our nation’s energy future.