How Obama Should Spend a Big Green Energy Fund

By · February 20, 2013

Obama State of the Union

State of the Union: Joe Biden likes the energy trust idea, John Boehner isn't so sure.

The severe American recession in place when President Obama took office in 2009 allowed him to hit the ground running with stimulus funding that included billions for battery companies and clean energy. He was also able to allocate billions more to companies like Fisker and Tesla, under the $25 billion Advanced Technology Vehicles Manufacturing (ATVM) program enacted under George W. Bush.

Since then, the funding largely dried up. A partisan Congress was unlikely to enact any more big green energy spending programs, and the Solyndra fiasco made the administration gun shy, in the run-up to the election, about allocating any more ATVM funds—nothing’s been given out since 2011 (when the Vehicle Production Group LLC got $50 million to build wheelchair-accessible natural gas vans).

The Bully Pulpit

But that was then. Now Obama’s a lame duck, impatient to get his agenda through a still-reluctant Congress. That will mean using the power of his office to take executive actions, and coming up with new and bipartisan ideas such as the Energy Security Trust Fund (ESTF) he outlined in his State of the Union address.

It’s a good plan, but if it’s not handled well the result will be more Obama funding disasters like Solyndra (bankrupt solar company), A123 (bankrupt battery company), LG Chem (idled battery company with workers playing games on government money) and, probably, Fisker (now a candidate for sale to Chinese companies).

Fisker Karma

The Fisker Karma isn't looking like a great federal investment these days, and a possible sale to Chinese companies has led to pushback in Congress. (Jim Motavalli photo)

Oil Money Goes Green

Obama’s basic idea is to take revenues accruing to the federal government through leasing public lands for oil and natural gas production and put it into the energy trust. “I 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,” Obama said. “If a nonpartisan coalition of CEOs and retired generals and admirals can get behind this idea, then so can we. Let’s take their advice and free our families and businesses from the painful spikes in gas prices that we have put up with far too long.”

The trust could get some conservative support, because a surprising number of right-wing think tanks have been embracing the idea of a carbon tax (this is a variation) and there’d be no adding to the deficit. It’s a more politically palatable variation of a plan proposed by Congressman John Larson (C-CT), who wants to impose a tax on the carbon dioxide content of fossil fuels beginning at $15 per metric ton. The burden would fall on oil refineries, coal processing plants and other “points of import,” and though probably effective would immediately make a whole lot of enemies.

How to Spend Billions

OK, let’s assume Obama gets his ESTF. What should he do with it? I’m not keen on the idea of any more $500 million loans or grants to start-up companies. It hasn’t worked all that well, and it’s picking winners when it’s really hard to see where things are going. Should Obama throw another $500 million loan at Tesla to ensure it gets over the ramp-up hump? Should he make a huge bet on hydrogen, subsidizing a much-needed national network of $1 to $2 million hydrogen refueling stations around the country? The whole fund could be eaten up with an effort like that, and its success is far from certain.

And Obama really has to take grants and loans out of politics. For instance, the $2.5 billion he administered for battery manufacturing went disproportionately to Michigan to help that state's ailing economy. It didn't hurt that Michigan then had a very visible Democratic governor. Awards need to be made strictly on merit.

Smart Funding Starts Here

Here are a few better ways to spend the trust fund:

  • Tax credits for R&D of alternative energy tech (including better batteries, wind, solar, hydrogen, lightweight materials and more). That idea is embraced in Larson’s plan, and it makes sense.
  • Credits and loans for gas stations that become “energy stations,” adding EV charging and (maybe down the road) hydrogen dispensers.
  • Funding to turn the $7,500 federal income tax credit for EV buyers into a cash rebate that gets applied to the purchase price of the car. Not everybody can use a tax credit, and it will stimulate sales at this critical juncture.
  • Expansion of the federal ARPA-E program, which “advances high-potential, high-impact energy technologies [including lithium-ion batteries] that are too early for private-sector investment.”
  • Incentives for fleets to adopt hybrid, plug-in hybrid and battery technology.
  • There’s a few good ideas. I don’t think we’d have trouble putting the Energy Security Trust Fund money to productive use.


    · · 5 years ago

    The Vogtle nuclear power plant is (at least) 15X bigger than Solyndra:

    And oil companies get billions every year that they hardly need, seeing as they are making the largest profits in history.

    Building and improving the electricity grid would pay back many times what we invest. Repairing or replacing the 70,000 structurally deficient bridges in the US has to happen sooner, rather than later. High speed rail is far more efficient than any other way to travel.

    Renewable energy will be here for the next billion years - as long as the earth exists, and it is by definition virtually pollution free. What's not to like?


    · · 5 years ago

    The question, Neil, isn't "What's not to like?" Rather, it's "Who isn't going to like it?"

    · · 5 years ago

    Jim: Great article. I think we already have an Energy Security Trust. It is the Strategic Petroleum Reserve. In 1975, we spent $23 billion taxpayer dollars to build it and it now holds about $70 billion in taxpayer bought oil. It costs the taxpayer $20 million a year to operate. It is a prime example of a subsidy to alter market pricing and the government picking winners or losers. There should be a bipartisan push to methodically draw down the oil in the reserve to ramp up vehicles operating on domestic electricity and natural gas. With a $7,500 point of sale rebate, we could put 9.3 million vehicles on the road over ten years. This would require no taxes and would be a huge infusion of cash into our economy.

    · · 5 years ago

    "While enacting a tax for a trust fund traditionally requires the approval from Congress, the President boldly declared, 'If Congress won’t act soon to protect future generations, I will. I will direct my cabinet to come up with executive actions we can take.'”

    So in other words, to hell with democracy and the will of the people. I can't believe people elect someone like this.

    Long Live King Obama.

    · · 5 years ago

    @ I take it you are suggesting that a president who employs Executive Order privileges is anti-democratic and at opposition to the will of the people. Did you know that President Bush issued more than 80 Executive orders in the first two years of his first term?

    Do you consider his presidency to be more of a monarchy?

    And Jim Motavalli, thank you for the article. I would suggest that the fund could be further enhanced if our government actually charged more than a pittance for oil and gas leases on our public lands. If my memory serves me correctly, lease revenues (adjusted for inflation) have been on a steady decline since the 1950's as larger and larger parcels are bundled together, while at the same time oil company profits have skyrocketed. The government should be charging a fair price for access to our public lands, not leasing them out at prices that amount to a give away.

    · · 5 years ago

    Neil, regarding nukes, Duke energy has just decided the Crystal River Nuclear plant is too expensive to fix what with its delaminating Containment building. Its only run for 32 1/2 years, but now it will take in their estimation 60 years to decommission. Can you imagine future power bills paying for all the decommissioning required on our 104 old hulking worn out Nuke plants?

    It would be the height of stupidity to build anymore of these things.

    · · 5 years ago

    Bill, I absolutely agree - nuclear plants and all the waste they have created are a horrible legacy. Yucca Mountain is a farce - they faked the ground water study, and it is only 150 miles from Yosemite which is a massive super volcano that is overdue for an eruption. What could go wrong?

    Vermont Yankee is leaking and breaking apart. Pilgrim here in Massachusetts is having more frequent shutdowns lately. Yankee Rowe has started decommissioning (I think) and we'll see how it goes. The radioactive material processing plant in Tennessee (?) will be working overtime for the rest of this century, in all likelihood.

    Renewable energy is the only realistic way forward. We can have all the energy we could want - like up to 16X what we currently use, all from an intelligent mix of renewable sources. A sustainable abundance of energy is what we could have, and we need to get going.

    Germany is doing it, and they are as sunny as ... Alaska. Really. What are we waiting for?


    · · 5 years ago

    Here's an interesting recent web article on grid storage batteries. If renewables have a true Achilles Heal, it's the fact that large solar and wind arrays don't yet have an effective way to store what they produce. The batteries described here could address that problem. They're big heavy items (no need to worry about weight, as you would have to in an EV) and use simple liquid chemistries . . .


    · · 5 years ago

    OK, let's see if the link sticks this time . . .

    · · 5 years ago

    @brg2290, I don't know if you are saying "If Bush did it, then Obama can", or you are implying all Executive Orders are bad. Here's one of Bush's,

    "Section 1. Policy. It shall be the policy of the United States to conserve striped bass and red drum for the recreational, economic, and environmental benefit of the present and future generations of Americans, based on sound science and in cooperation with State, territorial, local, and tribal governments, the private sector, and others, as appropriate. "

    That doesn't sound bad.

    What I don't like from ANY President, is doing an end run around Congress. If you care about your country, you shouldn't put up with it.

    · · 5 years ago


    Boener (sp?) has all the back bone of a wet noodle. He was clapping and applauding almost everything Obama said during his STOU speech.

    Just as Obama works for Wall Street, so does Boener. I'm glad I got rid of my 401K moneys just to miss the 3.9% 'investment tax' that is going to be put on them. So much for never raising any taxes on the poor. Meanwhile 29 of the 30 biggest corporations in America get reverse income taxes (subsidies actually) GE gets 45 % on the billions or profits they make, then the Feds give them more billions.

    I'm changing my name to Verizon. They got a billion in free money also and paid no taxes, while my taxes and everyone in the lower 99.999% go up. Its not the top 1% , its the top .001%. So much for getting any representation from Congress or Obama.

    · · 5 years ago

    I like the suggestions with one exception; All research work completed with Government money should be open source available for use by all those in the Public Domain; This IP should be available to anyone who wants to use it for scaling up to production.

    I think this is especially needed for research work accomplished on better batteries because low cost, light weigh, low cost batteries are the key to moving forward in our entire energy sector. "It's The Batteries, Stupid!"

    The current idea of getting patents and control of a product that was developed using tax funding is a pure greedy capitalistic move that harkens back to the gilded age when Standard Oil controlled the country's oil assets and reminds me of the recent control of Nickle Metal Hydrate Batteries by Chevron Oil and GM. If we allow Big Oil to again control the battery business through the patent system, we deserve to keep stewing in our own polluted juices.

    New to EVs? Start here

    1. Seven Things To Know About Buying a Plug-In Car
      A few simple tips before you visit the dealership.
    2. Incentives for Plug-in Hybrids and Electric Cars
      Take advantage of credits and rebates to reduce EV costs.
    3. Buying Your First Home EV Charger
      You'll want a home charger. Here's how to buy the right one.