Flow Oil and Gas Revenues to Cleantech R&D: Common Ground on Energy?

Can Congress pass any sort of energy legislation?  I’m not holding my breath. For too long now meaningful action through compromise has been a chimera.  Even the most plausible deals have been dissipated by ideological tribalism.

Still, there remain potential convergence points.

 Last month the Bipartisan Policy Center advanced more than 50 middle-of-the-road energy policy recommendations developed by its Strategic Energy Policy Initiative, co-chaired by former Sen. Byron L. Dorgan (D-ND) and former Senate Majority Leader Trent Lott (R-MS). And for that matter, interesting discussions surround energy efficiency issues, thoughtful subsidy reform, and steps like opening master limited partnership status to renewable energy projects. 

Now comes President Obama’s modest proposal to capitalize an Energy Security Trust fund to support research into de-carbonizing the vehicle sector.

To be funded with $2 billion over 10 years drawn from royalties the government receives from offshore drilling on the Outer Shelf, the new proposal—first aired in Obama’s State of the Union address last month—represents an important check point on the potential for constructive action through compromise in Congress.

To be sure, the proposed research fund is tiny, given the scale of the nation’s cleantech research needs.  And yes, it’s focused only on the transportation sector.  And yes, the proposal is quite vague and so hard to gauge.

But even so, the energy trust concept represents a significant bid to test the potential for advancing energy policy.

Research on clean energy technologies remains a critical priority.  Locating funding for it remains a critical challenge. And the president’s proposal probes an area of genuine potential for convergence.

For one thing a modest bargain on energy research and oil and gas royalties has always had a sound intellectual grounding.  Through such an architecture the costs of investment would be internalized across the energy sector, and the revenues of “dirty” exploitation would be used to fund clean innovation. That just makes sense.

Beyond that there is the fact that the concept has some authentic bipartisan lineage and maybe traction. Some of that comes from the support for the idea by a group of retired military and business leaders, including some Republicans, called Securing America’s Future Energy. More importantly, Sen. Lisa Murkowski (R-Alaska), the top Republican on the Senate Energy Committee, has proposed a similar idea (albeit one focused on drilling on lands now off-limits, such as the Arctic National Wildlife Refuge in Alaska).  This convergence might well mean there is room to negotiate a deal that pleases both sides, especially with royalty growth likely in the coming years. 

Or, maybe not. Perhaps the Energy Security Trust is just another illusion of plausible potential compromise, soon to evaporate.

Yet, there is encouragement in something called the American Energy Act, the 2009 energy plan introduced by House Republicans under the leadership of Rep. John Boehner, now speaker of the House.  At the center of that plan was a proposed bargain that would have paired expanded oil and gas drilling and nuclear development with new investments in renewable and alternative energy.  To fund the latter the bill proposed putting hundreds of billions of anticipated new oil and gas royalties into a trust fund to accelerate clean energy innovation.  Sound familiar?

 That proposal may have been mostly a rhetorical counter to the big Democratic push on cap-and-trade legislation, but it was discussed widely by GOP leadership and represents a useful precedent for a new deal now.

So, we’ll have to see. Whether it’s called an Advanced Energy Trust Fund a la Sen. Murkowski or an Energy Security Trust as per the White House, a clean energy R&D fund for the transportation sector remains a meaningful test of whether there is any room at all for significant energy legislation in Congress.

Again, I’m not holding my breath.  But I’m happy to be proven wrong.