Obama proposes using off-shore royalty payments to fund alternative energy research

President Barack Obama is scheduled Friday to unveil his new energy proposals - including setting up a $2 billion fund from off-shore oil and gas drilling royalty payments to support research on alternative energy. The pot of money, to be made available over a 10-year period, would develop ways to develop and expand use of electrical vehicles, homegrown biofuels, fuel cells and domestic produced natural gas.

Obama administration officials say off-shore royalty payments are expected to increase in coming years based on a combination of leasing, production and price tends.

As part of his new policy, being unveiled at a speech Friday at the Argonne National Laboratory in Lemont, Ill, the president will say the United States should set a goal of cutting net oil imports in half by the end of the decade.

According to the White House, the plan calls for speedier permitting of both alternative energy products and oil and gas. It said the Interior Department will propose more diligent development of oil and gas leases through shorter primary lease terms, stricter enforcement of lease terms and monetary incentives to get leases into production quicker.

In his speech, the president is expected to commit to an "all-of-the-above energy strategy," as he did in his State of the Union Address last month. But he's also expected to say the recent spike in gas prices, which are now easing, should serve as a reminder that the United States is still too reliant on oil and that the reliance comes at a cost to American families and businesses.

Sen. Mary Landrieu, D-La., immediately cried foul over the president's proposal. She expressed disappointment he didn't link the proposal to use off-shore royalty payments to fund alternative energy research to her long-standing efforts to increase and speed revenue sharing for producing states to fund ecosystem restoration.

"The President's idea is not a new one and does indeed have some merit," Landrieu said. "But dedicating offshore oil and gas revenues toward this purpose and not at the same time acknowledging the role that coastal states play in producing these revenues for the nation is a grave oversight."

"As interested as I am in research and development for alternative fuels, I will not be able to support such a proposal without first addressing the inequity that currently exists between interior and coastal states."

Under an earlier bill Landrieu sponsored and helped pass, revenue sharing is to increase to 37.5 percent in 2017.

Under a new bill she is drafting, the increased revenue sharing would begin as soon as the bill is enacted. The royalty payments would begin being calculated immediately, and then dispensed to the states the following fiscal year.

Landrieu's bill is also expected to call for an eventual phase out of the $500 million cap on revenue sharing for the Gulf States. There is no cap on revenue sharing for oil produced from interior states.

The senator anticipates the revenue will be used in Louisiana to restore ecosystems and wetlands critical to Louisiana's seafood industry and natural flood protection.