The initiative has bipartisan support and would appear to be an easy win despite the gridlock in Washington. Of course, in the current partisan environment, there’s no such thing. The real climate change that will need to happen for this idea to become reality is the warming of the political climate. In other words, unless the White House and House Republicans develop trust, there will be no room to place energy security in one.
The basic premise is not new; it’s been discussed for decades with the general notion proposed as far back as the Carter administration. In the Obama edition, $2 billion of revenue over ten years collected from land leases and royalties paid by oil and gas companies would go into the trust. The proceeds would then go to research facilities, academic institutions, and private companies in the form of loan guarantees to further progress towards economically viable and environmentally safe energy technologies.
According to the Office of Natural Resource Revenue, reported income from these payments totaled nearly $12 billion dollars last year. After disbursements are made to the states, Native Americans, and towards things such as the preservation of historic landmarks and protected wildlife, the federal take into the Treasury is just over $6.5 billion. Unless the outlays are restructured by Congress, about 3% of the federal share – the $200 million a year figure proposed by Obama – will be diverted to the Energy Security Trust.
Proponents argue that the increase in revenue resulting from increased drilling on federal lands and advancements in techniques, such as the employment of hydraulic fracturing, or fracking, to get at hard-to-reach natural gas plays, will more than offset the money going into this new trust. The data proves their claim true. In the last ten years, lease and royalty payments have increased 50% resulting in an additional $4 billion dollars annually. At this rate, profit increases in the out-years will more than cover the trust investment.
So what’s the problem? Accounting is the easy part of the deal; getting a congressional solution is more liberal arts than mathematics. In order for the president to get his initiative enacted, he will need to make concessions to Senate and House Republicans. The most likely Republican bargaining chips are opening up more of the Arctic National Wildlife Reserve, an action Senator Lisa Murkowski of Alaska heavily favors, or perhaps requesting that establishing the energy trust be contingent on approving the Keystone XL pipeline. What we’d be witnessing here is the bartering of congressional action for executive action, a novel concept in 2013.
The calculus in such a compromise would anger the base of both parties. Environmentalists would argue that in the pursuit of reduced carbon emissions and less reliance on dirty oil and coal, Obama is actually encouraging the two by opening up federal land. The fossil fuel crowd would argue that Republicans accepted another Obama tax hike – and make no mistake, that is exactly how the trust fund will be couched – to power the renewable energy movement and throw away more taxpayer money after failed investments in green tech companies, like Solyndra.
As such, the only way this deal happens, then, is if congressional Republicans grant the president his wish, or if both parties agree to lose face with a part of their ideological bases. If the nation has learned nothing else over the last four years, it’s that former is not going to happen. And the latter, put another way, means that for everyone to win, everyone has to lose. That logic may seem a bit twisted, but it can also be understood as negotiation, something most Americans badly want from both sides.
Compromise is the word that simply cannot be avoided. If the Energy Security Trust is to see the light of day, a renewed sense of cooperation will have to be the country’s biggest energy play.
Johnson is an opinion columnist, 2011-2012 White House Fellow and naval officer. The views expressed in this article are his own and do not reflect those of the U.S. government.