President Barack Obama is asking Congress to approve $2 billion in funding for advanced vehicle technologies. (Getty Images file photo)
Washington — President Barack Obama will call on Congress today to approve $2 billion in funding for advanced vehicle technologies by tapping funds generated from oil and gas exploration on federal waters, the latest in a series of proposals to boost the nascent market for alternatively powered cars and trucks.
Obama will make the proposal at an appearance at the Argonne National Laboratory in suburban Chicago, the White House said in a fact sheet released ahead of his speech.
He will call on Congress to set aside $2 billion over the next decade for research, including electric vehicles, batteries, compressed natural gas and biofuels. Obama proposed the idea in his State of the Union address last month, when he called for taking a share of revenue from oil and gas leases on federal lands and placing it in an "Energy Security Trust" fund, but didn't put a price tag on it.
The White House said the "funds would be set aside from royalty revenues generated by oil and gas development in federal waters of the Outer Continental Shelf." The administration would fund the program as "revenues are projected to increase over the next several years based on a combination of leasing, production and price trends, with additional revenues potentially generated as a result of reforms being proposed in the (Fiscal Year) 2014 Budget."
The trust "is designed to invest in breakthrough research that will make the technologies of the future cheaper and better — technologies that will protect American families from spikes in gas prices and allow us to run our cars and trucks on electricity or homegrown fuels," the White House said.
Obama faces a difficult climb convincing Congress to put more money into vehicle research in the face of disappointing sales of electric vehicles. To try to win support, Obama has broadened his proposals to include vehicles that run on compressed natural gas in a bid to win support on Capitol Hill.
For several years, Obama has urged Congress to dramatically boost funding on vehicle research, but Congress hasn't shown any interest. Last year, he called on Congress to approve $650 million in battery and vehicle research, and Congress approved only $330 million, according to the Energy Department's website. The administration has shifted course from supporting loans to individual automakers to support advanced technologies in the wake of the bankruptcy of solar panel start-up firm Solyndra LLC that went bankrupt after receiving $535 million in Energy Department loans. The administration hasn't made any new loans from a $25 billion fund to support automakers in more than two years.
The president has made boosting the fuel efficiency of the nation's cars and trucks a cornerstone of his environmental agenda — and touted it as the only long-term solution to wean the nation from imported oil. As a candidate in 2008, he called for boosting the fuel efficiency of the nation's cars and trucks to 50 miles per gallon by 2027.
In fact, Obama won agreement from major automakers to go much faster. The Obama administration finalized rules last year that will hike the fleetwide fuel efficiency of the nation's cars and trucks to 54.5 mpg by 2025.
"The Energy Security Trust builds on this historic progress, continuing to increase momentum towards to a cleaner, more efficient fleet that is good for consumers, increases energy independence, and cuts carbon pollution," the White House fact sheet said.
Obama also called for getting 1 million plug-in electric vehicles on the roads by 2015. But sales have lagged far behind estimates, and analysts think it is almost impossible, in part because only about 50,000 plug-in vehicles have been sold in the United States since 2011, and all major automakers have scaled back forecasts of EV production. Obama has shifted his efforts on electric vehicles and now embraces subsidies for a broader range of advanced vehicles. He has proposed boosting the tax credit for electric vehicles to as much as $10,000, up from the current $7,500, but the proposal hasn't been approved.
The new fuel rules will raise the price of a truck $2,059 on average; the price of a car will rise $1,726, according to the Obama administration. Including the 2012-16 rules, the costs for a new light duty truck will rise nearly $3,000.
The National Highway Traffic Safety Administration said last year the 2017-25 requirements will cost the industry between $144 billion and $150 billion. Including the $52 billion for the 2012-16 rules, which the Obama administration finalized in 2010, the total costs are around $200 billion.
But the government estimates the benefits will outweigh the costs. The administration estimates over the lifetime of vehicles sold between 2017-25, 4 billion barrels of oil will be saved and greenhouse gas emissions reduced by 2 billion metric tons, with net benefits to society in the range of $326 billion to $451 billion. Including all the increases from 2012-25, Americans are expected to save $1.7 trillion in fuel costs and reduce U.S. dependence on oil by more than 2 million barrels per day in 2025.
The White House said the EPA is releasing a report Friday that says from 2007 to 2012, carbon dioxide emissions decreased by 13 percent and fuel economy increased by 16 percent.
Obama will resurrect a proposal he made in March 2012 to boost the sale of trucks that run on compressed natural gas. Obama has called for a new tax incentive for commercial trucks that provides a credit for 50 percent of the incremental cost of a dedicated alternative-fuel truck, including trucks powered by natural gas or electricity, for a five-year period.
Obama is not talking about another proposal he made last year. He called on Congress for a $1 billion National Community Deployment Challenge to spur deployment of clean, advanced vehicles in communities around the country. Obama wanted to fund 10-15 model communities to invest in infrastructure, remove regulatory barriers and create local incentives to support deployment of advanced vehicles like EVs. But it would have been "fuel neutral," allowing communities to determine if electrification, natural gas or other alternative fuels would be the best fit.