Guest Commentary: How to jump-start the Energy Security Trust

By Gregory C. Staple and Brian A. Skretny

Gregory C. Staple, CEO of the American Clean Skies Foundation
Gregory C. Staple, CEO of the American Clean Skies Foundation

At a March trip to Argonne Labs, one of the government’s premier research sites, President Obama challenged Congress to help him “break th[e] cycle of spiking gas prices” and “shift our cars and trucks off of oil” by creating a new Energy Security Trust. Funded with royalty payments from federal oil and gas leases, the Trust would invest $2 billion over ten years on R&D for alternative transportation fuels including electric batteries, biofuels, hydrogen fuel cells, and natural gas.

Backing new technologies to reduce America’s oil dependence is likely to be a sound bet. As the President knows, however, even if Congress were to create the Trust soon, it would take several years before any new R&D program delivers breakthrough technologies, and several more years – well after the President’s term has ended — before those technologies produce significant oil savings from being integrated into large numbers of vehicles available to consumers.

In the meantime, despite rapidly rising domestic energy production, oil imports will continue to cost us dearly, and constrain the country’s domestic and foreign policy options.

There is a better way. Rather than waiting for tomorrow’s technology, the federal government should use the tens of billions of dollars it spends today on trucking and delivery services to promote the alternative fuel technologies and fleets that currently exist. When energy security is on the line, the perfect need not be the enemy of the good.

Brian A. Skretny, Director of Transportation Programs at the American Clean Skies Foundation
Brian A. Skretny, Director of Transportation Programs at the American Clean Skies Foundation

This is about smarter spending, not more spending. Additionally, the more encouragement today’s alternative fuel fleets and manufacturers receive from Uncle Sam, the stronger those alternatives are likely to become in the market, and the more able they will be to leverage any improved fuel technologies developed by a new R&D trust fund.

And let’s start with trucking, one of the largest oil users, and a place where opportunity abounds. The United States has approximately 3.2 million heavy-duty trucks and 7 million medium-duty trucks. Together they burn 35 billion gallons of diesel per year – about 22 percent of the transportation sector’s total energy use.

A growing number of commercial organizations have started transitioning their trucks and trucking services to alternative fuels, especially compressed natural gas (CNG), liquefied natural gas (LNG), hybrid-electric, and electric. For example:

  • UPS hds more than 1,900 alternative fuel vehicles in its fleet, including 1,100 LNG trucks that operate primarily in a delivery corridor between California and Salt Lake City, Utah;
  • FedEx has 330 hybrid-electric delivery vehicles, and another 43 all-electric commercial vehicles;
  • Ryder recently celebrated the opening of a facility that will deploy hundreds of heavy-duty liquefied natural gas (LNG) trucks.

Companies are switching to natural gas because the fuel is about $1.50 cheaper per diesel­ gallon-equivalent than diesel. With many heavy-duty trucks traveling 100,000 miles per year or more, annual fuel savings can top $30,000 per truck.

With federal budget deficits an ever-present concern, the President should let taxpayers enjoy the same cost savings alternative fuel trucking now offers the private sector. Trucks using alternative fuels also produce less pollution, reducing the threat to public health along major truck routes – routes that disproportionately affect poor and minority communities.

To realize these benefits – and to make a downpayment on alternative fuel R&D – the President should direct the government’s major purchasing agerit, the General Services Administration, to work with other federal agencies and the Office of Management and Budget, to buy more freight and package delivery services from vendors who rely upon alternative fuel vehicles. These carriers should receive a procurement preference, especially if they commit to expanding their alternative fuel fleets.

Last year, our nonprofit organization issued a report that pointed to a study prepared for and cited by the General Services Administration showing that the federal government spends $50 billion to buy services directly from trucking companies and other carriers, and another $100 billion on trucking services associated with the procurement of products (such as paying suppliers to deliver their goods to federal facilities). If Uncle Sam implements alternative fuel and other petroleum reducing preferences through such high volume purchasing, it will have large multiplier benefits nationwide in reducing the trucking sector’s oil consumption.

In sum, existing laws and executive orders give the Administration all the authority it needs to kick start a new generation of alternative fuel transportation services. The President merely needs to use them. That could also send a powerful message to Congress that any new royalty-based R&D program will be supported by the government’s own buying power.

Gregory C. Staple is the CEO of the American Clean Skies Foundation, a Washington D.C.-based nonprofit.  Brian A. Skretny is director of transportation programs for the foundation.