Obama’s $2bn clean energy fund to reduce US emissions

President Obama is looking to establish a US$2 billion clean energy fund using revenues from the oil and gas sector, according to White House officials.

The plan reflects the Obama Administration's ambition of reducing US dependence on petrol and developing its domestic clean technology sector.

Reports suggest that the Energy Security Trust will be funded from the licence fees from oil and gas companies looking to drill on public land and waters.

The theory of using oil and gas revenues to fund research and development in fossil fuel alternatives was first mooted in Obama's State of the Union address and the Trust could represent the President’s first climate change policy conversion of rhetoric to reality since the election.

The US Department of Energy reported that by using smaller cars, hybrids and electric vehicles, making fewer journeys and changing to biofuels, transport sector emissions could be reduced by 80% by 2050.

The sector is responsible for a third of American’s greenhouse gas emissions, making transport’s potential contribution to US climate efforts just over 26%.

Obama has also approved 1.1GW of new renewable energy projects this week including the $100m McCoy solar farm in California that will power 200,000 homes.

President Obama, like his election rival Mitt Romney, promised to expand the area of public lands available for oil and gas drilling as well as opening up new offshore licences in the Gulf of Mexico and in the Arctic.

The additional revenue from these licences as US oil and gas exploration balloons, would be ring-fenced under Obama’s new proposal.

There are currently two separate proposals tabled by various Democrat and independent Senators and members of Congress.

One proposes a $20 per tonne of CO2 levy on coal mines and oil refineries whilst the other focuses on major emitters and energy users with a range of charges between $15 and $35 being proposed.