Murkowski's U.S. Energy Trust Fund deserves support

LONDON, July 30 (Reuters) - In a small, specialist corner of the U.S. Senate, lawmakers are demonstrating how much can be achieved with a more bipartisan approach to policy. Lisa Murkowski, the senior senator from Alaska and highest-ranking Republican on the Energy and Natural Resources Committee, has published a discussion draft for a law that would establish an Advanced Energy Trust Fund.

The draft ³American Energy Innovation and Production Act² would create a Trust Fund to pay for basic and applied research on the most promising energy technologies. It would be financed with a share of the revenues from leases, development and production activities on federal lands currently off-limits to energy development.

The explicit intention is to tie opening up federal lands for more oil and gas production (a Republican priority) with more federal funding for advanced technologies (a priority Republicans share with Democrats and the White House).

The idea for an Advanced Energy Trust Fund was set out in a February 4 report Murkowski published: ³Energy 20/20: A Vision for America¹s Energy Future.² It received a big boost when the president included a similar idea in his State of the Union address a few weeks later. ³I propose we use some of our oil and gas revenues to fund an Energy Security Trust that will drive new research and technology to shift our cars and trucks off oil for good,² the president said on February 16.


The Energy and Natural Resources Committee is responsible for legislation and oversight on some of the most divisive issues in contemporary U.S. politics, including domestic oil and gas production and subsidies for alternative energy systems. But Chairman Ron Wyden, a liberal Democrat from Oregon, and Murkowski have struck up an effective working relationship. The two senators represent very different strands of thinking in the energy and environment debate, but the committee has stressed respect and cooperation rather than confrontation and division.

As a result, the committee has managed a brisk programme of legislation, hearings and confirmations since the start of the year. ³You don¹t get these kinds of bipartisan measures passed unless people are willing to work together. They¹re not going to happen by osmosis,² Wyden told the press last month. ³I appreciate the cooperation shown by my colleagues on both sides of the aisle ... Now it¹s time to translate this bipartisanship to the Senate floor.²

In this context, Murkowski has emerged as a highly influential and effective leader on energy issues, despite her party being in the minority. Murkowski has been successful in reaching out to congressional Democrats, the administration and federal agencies to search for areas of agreement and offering creative solutions, while continuing to push her own state¹s priorities.


The Trust Fund concept remains a work in progress, with many details still to be worked out. Murkowski¹s staff is seeking comments until early September before finalising the draft and introducing it as a bill. It remains unclear whether it will attract Democrats as co-sponsors. Nonetheless, it is a clever piece of compromise and consensus building.

Congressional Democrats and the White House are keen on federal funding to support experimental technologies that could shift the economy away from fossil fuels. But while the administration proclaims its support for an ³all of the above² strategy, it remains reluctant to sanction large-scale oil and gas development on public lands, for fear of alienating the environmental movement, which contains some of its most passionate supporters.

Murkowski¹s legislation ties the two issues together. In effect, it says ³the more drilling you permit, the more revenues you get for alternative technologies.² It gives environmentalists and clean-energy supporters a clear financial incentive not to block drilling on public lands.

³If production-related activities are obstructed, the Trust Fund would receive no money, and therefore be unable to fund new research,² according to the draft.

Crucially, the Trust Fund would only receive revenues from newly opened federal lands, not oil and gas fields already under development or in operation, so it would give environmentalists and the administration a strong incentive to permit more drilling.

Many environmentalists and clean technology proponents are so fiercely opposed to all oil and gas development that even the prospects of extra funding will not persuade them to change their minds. At the margin, however, it could help shift the balance of policymaking.

Depending on your point of view, the link between production and funding is either a sweetener or a cruel dilemma. But it reflects the essence of all compromises -- allowing each side to secure their most important objectives in exchange for giving ground on less important ones.


Murkowski¹s proposals contain a number of promising features. The suggestion that at least 50 percent of Trust Fund awards should be devoted to transport-related technologies ³because much of the Trust Fund¹s revenues are likely to derive from oil production, which is used almost exclusively for transportation² is not one of them. It is a sop to the highway lobby and motor manufacturers, though perhaps necessary to broaden the bill¹s support base.

Other aspects are more sound. In particular, the requirement for awards to be made on a cost-sharing and merit-reviewed basis should help screen out weaker projects and ensure the private sector and other funders have money at stake.

The other worthwhile feature is the insistence on capping the maximum award size at $25 million. Capping would ³ensure multiple projects are selected each year² and promote a sensible portfolio-driven approach to innovation.

Like a venture capitalist, the federal government would be supporting a broad range of technologies, in the knowledge many, if not most, will fail, but a few could have transformative potential. The aim is not to identify certain winners, but to spread innovation risk.

Hardline environmentalists will be appalled at the link between fossil fuel production and alternative energy innovation. But the bill is a sensible and thoughtful piece of policymaking, and deserves widespread support.

Source: By John Kemp, Reuters