Clean energy would gain from drilling

Feb 16 - Tulsa World

President Barack Obama's proposal to fund clean-energy research with fees paid by oil and gas producers is renewing a debate over whether the promise of innovation tomorrow is worth expanding drilling today.

Obama's idea for an "Energy Security Trust," which he announced Tuesday in his State of the Union address, would redirect about $200 million in royalties for drilling on federal lands to pay for the development of biofuels, electric batteries and cars and trucks powered by natural gas, the White House said Wednesday. The trust would operate for 10 years and spend a total of $2 billion.

While Obama's plan doesn't open new areas to producers, clean- energy advocates say the idea of an oil-backed fund could ensure further support for fossil fuel alternatives even in an era of austerity and federal budget cuts.

"There is a lot of logic to it," said Mark Muro, a clean-energy expert at the Brookings Institution in Washington, D.C. "It resonates to a broad segment of the population that we should make the best of fossil fuels while accelerating the effort to transform our energy system."

Drillers have lobbied to open areas off the Atlantic Coast and put more acreage in the Gulf of Mexico up for leasing, as well as in the Arctic National Wildlife Refuge on land. On Thursday, the Republican governors of Virginia, North Carolina and South Carolina wrote to Sally Jewell, Obama's nominee to be Interior Department secretary, urging her support for allowing drilling off their states' coastlines.

Proposals similar to Obama's have floated in Congress for years. In 2009, Republicans introduced an energy bill that would have directed money from oil and gas lease sales to pay for clean-energy programs as a counter to climate-change legislation Democrats were pushing.

Obama's proposal is similar to an idea offered by Sen. Lisa Murkowski of Alaska, the top Republican on the Energy Committee, with one key difference: hers requires the revenue come from projects on lands where drilling is now off-limits, such as the Arctic National Wildlife Refuge in Alaska. Nevertheless she said the president's proposal is a potential area for compromise in Congress, which hasn't passed a major energy bill since 2007.

The "contours" of Obama's proposal sound similar to her own, Murkowski said in an interview. "I think we're all talking about the same thing."

The idea of an energy security trust funded by royalties is backed by Securing America's Future Energy, a Washington-based group that included the proposal in a report released late last year on U.S. energy security.

"The oil boom has created a unique opportunity to have our cake and eat it too," Robbie Diamond, the CEO of the group, said in a statement.

The group, known as SAFE, includes business executives led by FedEx Corp. CEO Frederick Smith and retired military officials who want to reduce U.S. dependence on oil.

"If a non-partisan coalition of CEOs and retired generals and admirals can get behind this idea, then so can we," Obama said in his address.

Obama said his administration would work to accelerate permits to oil and gas producers to increase production, which would raise more revenue for the government in the royalties, lease sales and bonus bids.

Originally published by JIM SNYDER Bloomberg News.

http://www.energycentral.com/functional/news/news_detail.cfm?did=27600687