Obama floats 'Energy Security Trust' in State of the Union address

President Obama proposed a program in Tuesday's State of the Union address that would divert some revenues from federal oil-and-gas drilling into research for alternative fuel technology.

In a nod to the economic challenges facing many families, Obama cast the initiative, which he called an “Energy Security Trust,” as a way to reduce household gasoline expenses.

“Let’s … free our families and businesses from the painful spikes in gas prices we’ve put up with for far too long,” Obama said.

The proposal was one of many energy items mentioned in Obama’s speech, underscoring the prominent space it occupies in his second-term agenda.

Obama also touched on employing executive action to tackle climate change, which E2-Wire’s Ben Geman has written about here.

Enacting the “trust” proposal, however, would require an act of Congress.

Currently, royalties from oil and gas drilling on onshore and offshore lands are shared amongst the federal Treasury and states.

The idea of establishing such a trust from those revenues has existed for quite some time as a way to lessen dependence on foreign oil.

Obama said the funds would do just that by sparking investment in electric vehicles, biofuels and natural gas-powered cars to “shift our cars and trucks off oil for good.”

Obama also called on Congress to green-light a network of 15 manufacturing hubs. He announced he would start three such hubs that would work with the Energy and Defense departments “to turn regions left behind by globalization into global centers of high-tech jobs.”

And Congress would be necessary to make the wind production tax credit permanent, for which Obama also pushed Tuesday.

The administration fought to keep the 2.2-cent per-kilowatt hour credit for wind power production alive for another year in the January deal to avert the "fiscal cliff." The wind industry and its congressional supporters are fighting for a longer term phase-out, though some conservative lawmakers oppose the idea.

On top of those proposals, the president floated an energy efficiency “Race to the Top” grant program that he said would alleviate financial pressure on families.

Under the arrangement, the federal government would offer competitive grants to states that implement policies that encourage energy efficiency and reduce waste.

The plan carries a goal of doubling energy efficiency by 2030, which would improve the competitive position of U.S. manufacturing by curbing energy costs, the White House said in a memo circulated Tuesday.

“Let’s cut in half the energy wasted by our homes and businesses over the next twenty years. The states with the best ideas to create jobs and lower energy bills by constructing more efficient buildings will receive federal support to help make it happen,” Obama said.

The White House said achieving those efficiency goals would also cut back on electricity blackouts and slow carbon emissions.

The program would mirror an earlier administration effort on education. Similar ideas had recently been promoted by former Michigan Gov. Jennifer Granholm (D) and a coalition co-chaired by Sen. Mark Warner (D-Va.) and National Grid President Tom King.

— This story was updated at 10:02 p.m.