President Barack Obama has proposed setting up a federal energy security trust to fund development of alternative vehicle development by repealing subsidies to the oil and gas industry.

Obama made the announcement Tuesday in concert with his executive action ordering two federal agencies to develop higher fuel economy standards for medium- and heavy-duty trucks.

The trust would need approval from the U.S. Congress.

Funding for the trust would come from the $4 billion in subsidies now given to the oil and gas industry. Obama predicts the federal government could raise $2 billion by taxing oil and gas development on federal land.

Those funds would then be deployed as an investment in "cost-effective technologies — like advanced vehicles that run on electricity, homegrown biofuels, hydrogen, and domestically produced natural gas," according to a White House fact sheet.

Obama has also proposed a new $200 million tax credit to support infrastructure development of alternative fuels such as biofuels, electrification, natural gas, hydrogen, or another alternative fuel. Lastly, Obama has proposed extending the cellulostic biofuel producer tax credit that expired on Dec. 31.

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Obama Orders Higher Fuel Standards for Trucks