President Obama today made the case for using money from oil and gas leases in the Outer Continental Shelf to fund research on alternatives to fossil fuels.

The President delivered a speech at the Argonne National Laboratory outside Chicago to argue for the creation of an Energy Security Trust, which would set aside $2 billion from new leases over 10 years for research into batteries for electric vehicles, biofuels, fuel cells, and natural gas vehicles. He first mentioned the trust proposal in the state of union earlier this year, where the president said he would use his power to act on climate change even if Congress would not. (See, “Obama Argues for Action on Climate Change” and “Energy Funding Outlook Looks Bleak as Obama Begins Second Term”.)

During his talk today, Obama gave credit for the idea of a trust fund to a nonpartisan group called Securing America’s Future Energy, which is headed by FedEx CEO Frederick Smith and includes former military leaders. “This isn’t a Democratic idea or a Republican idea. It’s just a smart idea—let’s take their advice,” he said.

The notion of funding alternative energy research with fossil fuel revenues has been endorsed in different forms by Republican politicians, including Alaskan senator Lisa Murkowsi. But the president still faces an uphill battle passing any major energy law, given how politicized programs to promote clean energy have become in the wake of high-profile failures of government-backed companies.

Having the government fund research generally receives support from politicians in all parties. But the automatic federal budget cuts known as sequestration are expected to take a significant toll on ongoing research efforts, unless a new budget that gives higher priority to scientific research is passed. (See, R&D Faces its Own Fiscal Cliff.) Given those cuts for federal research, new funding mechanism such as the Energy Security Trust Fund appear to be one of the few ways that energy research and development programs can be increased. (See, Energy R&D Faces a Cliff.) 

In his talk, Obama said the energy security trust was part of the administration’s “all of the above” energy strategy and a way to better prepare the country for the future. He specifically called out an Argonne National Labs researcher who began work two decades ago on lithium ion batteries, now used in commercial plug-in vehicles, using federal grants.

The private sector cannot undertake these sorts of risky and expensive research efforts because it would hurt their bottom line, Obama said. But the federal government can play that role in funding scientitsts who develop innovations that have an impact in the future, he said. “That has been the American story,” he said.

Separately, the Obama administration will seek to address climate change in another way by expanding on a bill signed by president Nixon, according to a report in Bloomberg. The president is expected to push federal agencies to do environmental reviews that consider the effects of climate change on all major projects, such as construction of highways and pipelines, the report said. The proposal is already meeting resistance from industry.