Alt-fuel trust is new approach to energy r&d

WASHINGTON -- The White House has a new idea to encourage electric vehicles: a government trust fund that would support r&d for alternatives to oil.

During his State of the Union address last week, President Obama called for an "energy security trust," saying it could "drive new research and technology to shift our cars and trucks off oil for good."

The proposal marked a shift by the White House, which steered $11 billion in grants and loans to EVs and other clean high-tech vehicles during President Obama's first term. Sales of plug-in hybrids and battery-electric vehicles tripled in 2012 to about 53,000, but they remain likely to fall short of President Obama's initial goal of 1 million aggregate sales by 2015.

With the stimulus money for battery plants, biofuel refineries and advanced vehicle assembly plants out the door -- and congressional Republicans unwilling to spend more -- the administration hopes a trust funded by oil drilling revenue would keep the money flowing to encourage EVs and other alternatives to oil.

It could be similar to the Highway Trust Fund, which uses money from gasoline taxes to fund transportation projects around the United States.

"If a nonpartisan coalition of CEOs and retired generals and admirals can get behind this idea, then so can we," Obama said during his address. "Let's take their advice and free our families and businesses from the painful spikes in gas prices we've put up with for far too long."

Obama was referring to the Energy Security Leadership Council, a group led by FedEx Corp. CEO Frederick Smith and General P.X. Kelley, a former member of the Joint Chiefs of Staff. In a December report, the group proposed taking up to $500 million annually from oil and gas drilling revenue and using it to fund alternatives to oil.

Republicans in Congress long have called for more leasing of federal lands and coastlines for oil and gas drilling. With bills working their way through Congress to achieve that goal, the White House could use the trust fund idea as a bargaining chip.

The White House has not released a detailed proposal, but a memo released before President Obama's speech said the money would fund "a range of cost-effective technologies -- like advanced vehicles that run on electricity, homegrown biofuels and vehicles that run on domestically produced natural gas."

President Obama will propose giving the trust $200 million annually for the next decade, the Capitol Hill publication Greenwire quoted a White House aide as saying last week. Other details remain unclear.

The energy security group has called for other steps, such as picking six to eight small and mid-sized cities as "deployment communities" in which the government would help fund fueling stations to let new types of vehicles compete for buyers' favor.

According to the energy security group's report, spending on advanced vehicle technology r&d has totaled $2.4 billion since 2000, compared with $11 billion in stimulus spending, most of which funded construction of manufacturing plants.

Some projects have fallen short of expectations, either going out of business or hiring fewer workers than expected. For instance, an LG Chem battery plant in Holland, Mich., that received $150 million from the Department of Energy has yet to sell batteries and occasionally used government money to pay employees who watched movies or did community service, the DOE's auditor found last week.

The White House stands behind the broader effort. By funding these plants, "We have positioned ourselves to compete for advanced batteries and the auto jobs of the future," Gene Sperling, director of the National Economic Council, told reporters during a teleconference last week.

Research tends to win broader political support than loans and grants.

And that idea appeals to advocates of electric vehicles, who want to make sure the industry will have government support after Obama leaves office.

Genevieve Cullen, vice president of the Electric Drive Transportation Association, said during an interview: "The goal is to have a predictable stream of resources going toward advanced vehicle technology -- one that is presumably less vulnerable to the political whims of any budget year."