Obama Pushes Research Fund, Seeks Common Ground On Energy Policy

President Barack Obama tried to move past partisan fights over U.S. energy policy on Friday with a modest proposal to fund research into cars that run on anything but gasoline.

* In research plan, some common ground on energy policy

* Would put $2 bln over 10 years to alternative transport research

* Money would come from royalties from offshore drilling

* Drilling would not expand, and leases may be tightened (Refiles to add dropped word 'to' in first paragraph; Recasts with comments from president, adds comments from analyst)

President Barack Obama tried to move past partisan fights over U.S. energy policy on Friday with a modest proposal to fund research into cars that run on anything but gasoline.

Obama toured the Argonne National Laboratory outside of Chicago, known for its research into advanced batteries used in electric cars, before his speech highlighting the need to find more ways to wean vehicles off of oil.

The United States has a newfound wealth of oil and natural gas resources made possible by hydraulic fracturing and other drilling advancements, but consumers still face high prices at the pumps because gasoline prices are tied to world markets.

"The only way to break this cycle of spiking gas prices for good is to shift our car and trucks entirely off oil," Obama said in Argonne's advanced photon facility, the brightest source of X-rays in the Western Hemisphere.

The Democratic president proposed a fund that will draw $2 billion over 10 years from royalties the government receives from offshore drilling in the Outer Continental Shelf.

The research would be aimed at new ways to lower the cost of vehicles that run on electricity, biofuels, natural gas or other non-oil fuel sources.

Obama first mentioned the Energy Security Trust fund in his State of the Union address last month.

The White House touted the idea as bipartisan, saying it came from retired military and business leaders, including some Republicans.

"This is not a Democratic idea or a Republican idea," Obama said, standing in front of three cars designed to run on alternative fuels. "This is just a smart idea."

But Republican approval was far from assured.

"For this proposal to even be plausible, oil and gas leasing on federal land would need to increase dramatically," said Brendan Buck, a spokesman for Republican House Speaker John Boehner. "Unfortunately, this administration has consistently slowed, delayed, and blocked American energy production."

By choosing to focus his first energy speech on research - an issue that appeals equally to Republicans and Democrats, industry and environmental groups - Obama is seeking to build common ground on energy, which has been a divisive policy issue.

"In order for something like this to pass the Hill, it will need votes from both sides," said Michael Levi, an energy fellow at the Council on Foreign Relations. "That makes it wise for president to start with something that Congress can work from."



The research trust fund will require consent from Congress, which is grappling with federal budget cuts. Lisa Murkowski, the top Republican on the Senate Energy Committee, had proposed a similar idea. But her version called for expanded drilling, which Obama's proposal does not include.

A Murkowski spokesman said the president's plan relied on royalties that have already been factored into the budget.

"The inevitable result is either deficit spending or the goring of someone's proverbial ox, such as the Land and Water Conservation Fund," said Murkowski spokesman Robert Dillon.

White House officials said the president's plan would not add to the deficit because they expect leasing revenues to grow in coming years for several reasons, including changes the administration plans to make to leasing policy.

White House spokesman Josh Earnest said the administration is willing to work with Congress on the research fund plan.

"If there are different ideas people want to offer up, we'll certainly have a conversation with them about that," he said.

In his first term, Obama pushed for laws that would use market forces to reduce climate-changing carbon pollution, but the "cap and trade" bill was opposed by industry and failed in Congress.

His administration pumped $90 billion in economic stimulus funds into clean energy and "green jobs" projects, helping to dramatically expand renewable energy production in America.

But some projects failed, including a California solar panel maker called Solyndra that had received $527 million in a government loan. Critics excoriated his administration for that failure, as well as for delaying approval of the Keystone XL crude oil pipeline from Canada.

In his second term, Obama has earned plaudits from environmental groups for making climate change a top priority. He warned lawmakers he would look for ways to take action, if they don't.

Green groups want him to push for new regulations on coal-fired power plants. They also are urging him to reject the Keystone pipeline in a final decision due later this year.

About 20 protesters held up signs against the pipeline outside the lab's grounds during Obama's visit.