President Obama proposed in his State of the Union creating an Energy Security Trust to invest in research and technology that will “shift our cars and trucks off oil for good.” Oil and gas lease revenues, estimated at $150 billion over the next decade, would fund the Trust. The idea of the Trust is more than 30 years old and was recently endorsed by the ranking Republican on the Senate Energy and Natural Resources Committee. While predicting what Congress will do is a fool’s errand, there is some reason to think that an Energy Security Trust could become a reality.
President Carter in 1979 asked Congress to pass a windfall profits tax on oil company revenues in order to establish a trust that would be used to “protect low income families from energy price increases, to build a more efficient mass transportation system, and to put American genius to work solving our long-range energy problems.” More recently, Energy Security Trust Fund bills were proposed in 2007 and 2009. The 2009 bill, entitled “America’s Energy Security Trust Fund Act of 2009,” proposed an excise tax on “carbon substances” including coal, petroleum products and natural gas. The tax would have collected $15 per ton of carbon dioxide content in taxable substances sold by manufacturers, producers or importers and would have escalated at a base rate of $10 each year. The proposed trust fund would have been used to finance research in clean energy technology, assist industries negatively affected by the bill, and provide payroll tax relief to individual taxpayers. Neither the 2007 bill nor the 2009 bill, (both proposed by Rep. John Larson (D-CT.)) passed in Congress.
Unlike these previous proposals, President Obama’s proposal does not rely on tax revenues and instead resembles a recent energy policy blueprint put forward by Sen. Lisa Murkowski (R-AK), the ranking Republican on the Energy and Natural Resources Committee. Senator Murkowski’s plan, “Energy 20/20: A Vision for America’s Energy Future,” calls for an Advanced Energy Trust Fund that would be funded by rents, royalties, bonus bids and corporate income taxes. Murkowski also advocates opening up federal lands like Arctic National Wildlife Refuge (ANWR) and other offshore resources and using those revenues to fund a trust. The Advanced Energy Trust Fund would be administered by the Department of Energy and used to pay for advances in renewable energy, energy efficiency, alternative fuels and advanced vehicles.
The White House has not released details yet on how the proposed Trust would be funded or administered. Unlike Senator Murkowski, the President is unlikely to support opening ANWR for drilling, which environmental groups have long opposed. Yet, some version of an Energy Trust has support on both sides of the aisle.© 2014 McDermott Will & Emery