How to Jump-Start the Energy Security Trust | Commentary

Posted May 6, 2013 at 4:00am

During a March trip to Argonne Labs, one of the government’s premier research sites, President Barack 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 10 years on research and development 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. 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 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 to constrain the country’s domestic and foreign policy options.

So why wait? Why not jump-start this oil-savings program by having the federal government use the tens of billions of dollars it spends annually on trucking and delivery services to promote the alternative-fuel technologies and fleets we already have. Either the president or the Congress could take the lead.

For example, the president could direct the government’s major purchasing agent, 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 on alternative-fuel vehicles. These carriers could receive a procurement preference, especially if they commit to expanding their alternative-fuel fleets and upgrade them with the latest technologies. Congress could do the same thing by directing each individual agency, through the appropriations process, to implement procurement preferences for alternative-fuel freight and package delivery services.

As detailed in the Oil Shift report that our nonprofit organization issued last year, based on GSA data, the federal government spends about $50 billion each year 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 loading docks). That means if Uncle Sam implemented alternative fuel and other petroleum-reducing preferences, its high-volume purchasing programs would have large multiplier benefits nationwide in reducing the trucking sector’s oil consumption.

This is about smarter spending, not more spending, as the private sector has shown.

A growing number of commercial organizations are already transitioning their trucks and trucking services to alternative fuels, especially compressed natural gas, liquefied natural gas, hybrid-electric and electric. For example:

• UPS has 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;

• 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 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.

Given that federal budget deficits are an ever-present concern, taxpayers should enjoy the same cost savings that 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.

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

In sum, our leaders in Washington have all the authority they need to jump-start a new generation of alternative fuel transportation services. They just need to use that authority to send a message to the marketplace that switching to alternative fuels will be supported by the government’s own buying power.

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