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National Defense > Blog > Posts > Navy to Stay the Course With Biofuels
Navy to Stay the Course With Biofuels
By Sandra I. Erwin



Green fuels command small money by Pentagon standards. But there will be a big payday for producers eventually, insist U.S. Navy officials.

The Navy needs the biofuel industry to believe this in order to achieve Secretary Ray Mabus’ goal to replace half of the Navy’s conventional fuel supply with renewables by 2020.

But with just six years to go, the industry and the government remain stuck in the proverbial chicken-or-the-egg conundrum. The Navy says it is ready to buy hundreds of millions of gallons of fuels as soon as they are price competitive with petroleum, but the industry needs massive cash infusions to scale up production and drive down cost.

Mabus says the Navy is doing its part to prop up the industry. Under a 2011 presidential directive, the Navy teamed with the Energy and Agriculture Departments and committed $510 million toward the development of a national biofuel industry. The Pentagon claimed authority to do this under the Defense Production Act, which Congress passed in 1950 as a vehicle to fund struggling industries that are considered critical to national security. Biofuels fall into that category, Mabus contends, because they allow the military to diversify its energy supply and become less exposed to volatile oil prices.

The Navy and the Air Force have experimented with biofuels for nearly a decade, and have tested their aircraft engines to run on 50-50 blends. But none of these projects has resulted in mass production. The Navy last year went a step further and awarded about $20 million worth of contracts to four companies that committed to produce 170 million gallons of drop-in military grade biofuels per year at an average price below $3.50 a gallon.

“We’re making progress,” Mabus says in a speech at the Surface Navy Association. He is emphatic that the Navy is committed to the goal set in 2009 to power aircraft and ships with biofuel blends as soon as 2016.

Mabus’ point man in the biofuels effort is Dennis McGinn, assistant secretary of the Navy for energy, installations and the environment. A retired vice admiral, McGinn recently served as president of the American Council on Renewable Energy. One of his immediate goals, he says, is to “send a strong signal that we are open for business.” For the Navy, “this is a great time to be investing in the biofuel industry,” McGinn tells an audience of supporters last week at a conference hosted by the Pew Charitable Trusts.

The next big milestone in the Navy's biofuel program will be a “great green fleet” — a carrier battle group whose ships and aircraft will deploy in 2016 with half their fuel supply coming from renewables. An early green-fleet experiment took place in 2012 during the multinational Pacific Rim exercise off Hawaii. Although the event proved that ship and aircraft engines can run safely on biofuels, it was marred by political backlash when word got out that alternative fuels can cost upwards of $26 a gallon. Republican lawmakers chided Mabus and other top leaders for indulging in feel-good expensive science experiments during a time of shrinking military budgets. They also questioned the Navy’s role in advancing green-energy initiatives that they view as partisan.

Navy officials have opted to move past the controversy. McGinn predicts the 2016 green fleet will prove the Navy can hit its 2020 target and, at the same time, help boost the U.S. economy as all biofuels will be produced domestically.

The Pentagon in 2013 selected four companies under the Defense Production Act-funded advanced biofuels project: Emerald Biofuels of Illinois, Natures BioReserve of Nebraska, Fulcrum Brighton Biofuels of California and Red Rock Biofuels of Fort Collins, Colorado. They will make fuel from woody biomass, food-processing waste, animal fat, municipal solid waste, and oil-seed crops. They are expected to supply 170 million gallons of biofuel per year starting in 2016. The $20.1 million in government funds will be matched by $22.6 million in private investments.

Even if these companies manage to reach their target production, the industry would have to scale much higher for the military to be able to draw half its fuel supply from renewables. The American Security Project, a nonpartisan think tank that is a proponent of energy independence for national security, estimates that by 2020, the military would require at least 770 million gallons per year of new advanced biofuels.

Mindful of the difficulties that the industry faces in ramping up production, the Navy and Agriculture Department launched a new “farm to fleet” effort in December to supplement the Defense Production Act program. McGinn says companies should expect a solicitation soon from the Defense Logistics Agency for purchases of biofuel blends to be delivered in 2015. “We'll take everything from 10 percent blend up to 50 percent,” he says. “We are trying to make this the new normal.”

Biofuel producers certainly hope so. The Defense Department emerged in 2009 as a champion of biofuels in the wake of steep oil price hikes that cost the Pentagon billions of dollars in unforeseen expenses. But in just the past four years, the industry has seen the political and economic climate deteriorate. Oil and gas production is booming in the United States, making biofuels less appealing. The Environmental Protection Agency dealt the industry a major blow last year when it recommended reducing the amount of ethanol in the nation’s fuel supply.

Suppliers now see the Navy as a slim ray of hope in a cloudy future. “We are encouraged by what the Navy is doing,” says Hugh C. Welsh, president of DSM North America, a materials and chemicals multinational corporation that is investing heavily in biofuels.

“The Navy sees the tactical and strategic advantages of drop-in biofuels,” Welsh says in an interview. “I am happy to see that they are continuing with their program. They seem less hamstrung by all the political nonsense that is going on. They see these fuels as aligned with their strategic objectives.”

Biofuel producers worry about a changing political climate in which the U.S. oil and gas industry are gaining strength as domestic production makes the nation less dependent on foreign suppliers. The oil and gas lobbies, Welsh says, have waged a year-long campaign to undermine the development of advanced biofuels and the renewable-fuel standard. The RFS requires oil companies to blend ethanol and biodiesel into their gasoline.

Welsh says the EPA's recommendation to weaken the RFS will dampen innovation and private investment. Corn-based or sugar-based ethanol is a low-density fuel that is mixed with gasoline. The advanced biofuels sought by the Defense Department demand additional industry investment. They must be drop-in substitutes for conventional diesel, jet fuel or gasoline. They also must be made from low-carbon, sustainable feedstocks r
ather than food product sources. Advanced biofuels such as cellulosic ethanol use biomass, including corncobs, leaves, husk and stalks for its raw material.

“Our company spent $150 million building a commercial scale cellulosic biofuel plant,” says Welsh. While the industry is discouraged by the administration’s decision on the RFS, “We are working to get the support from Washington that was promised,” he says. The military market presents an opportunity. “We'll continue to develop applications for drop-in for jet fuel,” says Welsh. Although the Pentagon only accounts for 1.5 percent of the nation’s fuel consumption, biofuel investors have looked at the Defense Department as the preferred catalyst for a massive expansion of production in the United States.

As the domestic oil and gas boom weakens the case for biofuels, proponents such as Mabus contend that the oil market is global and subject to price volatility regardless of where the oil comes from.

A similar case was made last week by a bipartisan group of retired military officers and former government officials led by Dennis Blair, who served as director of national intelligence and is a retired four-star admiral, and Michael W. Hagee, former commandant of the Marine Corps. Known as the Commission on Energy and Geopolitics, the group suggests the Obama administration should still promote alternatives to oil use such as electric and natural gas-powered cars. The commission believes that, despite increased U.S. oil production, the nation’s energy security will continue to be affected by global events. Its first report, “Oil Security 2025: U.S. National Security Policy in an Era of Domestic Oil Abundance,” says that as long as oil remains the lifeblood of the U.S. economy, the country is susceptible to unpredictable oil prices and instability in oil-producing regions like the Middle East.

Photo Credit: Thinkstock

Comments

Re: Navy to Stay the Course With Biofuels

This is more taxpayer fleecing and open fraud. "Drop-in" biofuels today are still $30-$60 a gallon.  The most recent price paid by the Air Force and Army for biofuel is $59.00 per gallon to Gevo for jet fuel.

There are hard limits of photosynthesis, thermodynamics, and critical fossil fuel dependencies in cultivated agriculture that limit liquid biofuels to always being more expensive per unit of energy delivered than fossil fuels.  Even the Department of Energy reports that corn ethanol, after 8 years of $6 billion-per-year subsidies is still 85 cents more per gallon than gasoline per unit of energy put in the gas tank and biodiesel is 61 cents more per gallon (http://www.afdc.energy.gov/publications/search/keyword/?q=alternative%20fuel%20price%20report).

It is sad how little these administration officials understand about the relationship between biofuels and fossil fuels and food agriculture.  If the price of oil or gas skyrockets, so does the price of food and biofuels because they are critically dependent upon natural gas and petroleum for fertilizer, pesticide, herbicide, equipment fuel, processing plant energy, and hydrotreatment hydrogen.  There is simply never going to be a price crossover.  The recent price paid by the US Air Force to GEVO for bio-jet fuel in March of 2013 was the same $59 a gallon it paid for two purchases in 2012, and it is higher than the $48/gal average price the US military has paid for the 1.4 million gallons of biofuel it has purchased from various vendors since 2009.  The price is not coming down and there is no looming breakthrough.

Continuing to flush taxpayer money down this drain is an unconscionable crime being perpetrated by political sycophants who are more concerned about their careers than true national security or energy security.  DoD and USDA and DoE are bound and determined to give away $510 million dollars on new biorefineries to please Obama, and all they require for the snake oil entrepreneur to get a fistful of taxpayer millions is to promise that they will produce a biofuel blend by 2016 for $4 a gallon.  Since there is no restriction on the proportion of biofuel to petroleum in the blend, this worthless promise can be satisfied today by simply blending 2% of $59.00/gal biofuel into 98% of $3.50/gal petroleum fuel.

BTW, DoE already spent $603 million on 23 new biorefineries in 2010.  How much cost-competitive biofuel have Americans gotten from that investment?  Zero.  Google "biofuel bankruptcy" to get a list of the scores of idled biorefineries currently available at fire-sale prices.  Brazil has stopped constructing new biorefineries and is running their current fleet of 442 at only 59% capacity.  There is absolutely no reason to build a single one more.
Cliff Claven at 1/20/2014 11:37 AM

Re: Navy to Stay the Course With Biofuels

This is more taxpayer fleecing and open fraud. "Drop-in" biofuels today are still $30-$60 a gallon.  The most recent price paid by the Air Force and Army for biofuel is $59.00 per gallon to Gevo for jet fuel.

$48/gal is the average price the US military has paid for the 1.4 million gallons of biofuel it has purchased from various vendors since 2009.  The price is not coming down and there is no looming breakthrough.

Cliff Claven at 1/20/2014 11:40 AM

Re: Navy to Stay the Course With Biofuels

Actually there is a breakthrough technology. The Navy just hasn't seen it yet. How about a patent-pending bio-synthetic fuel that costs the same or less than what they are paying for a regular gallon of diesel or gasoline?

How about a product that can be mixed with neat fuel at the refinery with NO additional toxic additives and treatments required to boost the cetane levels with the end result being  a bio-synthetic fuel with up to 90% less emissions (toxic variety) and increases fuel economy by an average of 10% while lowering the HFRR wear scar from an industry average of 520 microns (standard wear scar of diesel fuel) to 260 microns. Lower wear scar means longer equipment life and lower maintenance costs.

This patent-pending technology is available today. It can be added after market at the pump or, for way better results, at the refinery with neat fuel. And it's an American made product. And I should point out...this product is non-toxic, non-hazardous and non-flammable.

Of course it would cut out the gravy (pun intended) train and will probably never see the light of day.

It would free up millions...potentially billions of dollars of taxpayer money. It is a proven product and ready for market. I personally use it in my 2000 Subaru. I get 400 miles to the tank while reducing emissions and eliminating cold start problems. It's used on the largest heavy equipment fleet in Southern Utah, in the largest shuttle fleet in Utah and by many mechanics and customers from Southern Utah to California.

But...hey...why pay $3.75 a gallon when you can pay $50 right?

planetsafelubricants.com
John Barson at 1/20/2014 6:37 PM

Re: Navy to Stay the Course With Biofuels

while Cliff makes some good points, there are other syn bio-fuel alternatives that can use F/T process with municipal waste as a feedstock that can meet current traditional fuel market prices at volume. Their price is not totally dependent on the crude oil market fluctuations, however the plants are very expensive to build.
kim huntley at 1/21/2014 10:34 AM

Re: Navy to Stay the Course With Biofuels

Biofuel and synthetic fuel are two different things.  Synthetic diesel fuel from fossil fuel coal using Fischer-Tropsch synthesis has been made since the 1930s and is only fractionally more expensive than refined petroleum diesel.  Likewise, making synthetic diesel from natural gas is proven technology that is producible at a reasonable price.  The US military has purchased both for prices ranging from $3.41 to $7.00 per gallon.  And these synthetics are true hydrocarbon "drop-in" fuels, not the far inferior alcohols and lipids of corn ethanol or soy biodiesel which require further costly and energy-intensive upgrading to be usable by the airlines or military.  The proven option of synthetics is another reason why biofuels are a folly, not to mention a water footprint that is 50 to 5,000 times greater than fossil fuel, huge land use change and environmental impacts, and the inescapable competition for finite agricultural resources that drives up the cost of food, regardless of the feedstock. 
Cliff Claven at 1/21/2014 2:01 PM

Re: Navy to Stay the Course With Biofuels

I know that ethanol does not burn completely in the cylinder of a vehicle. Therefore water is left over which rusts the cylinder eventually. One cannot transport ethanol by pipeline so it goes by truck or train using fossil fuel for the transport. I am not as familiar with bio fuels, but I would wager they have other problems with incomplete combustion/
Allan Fritz at 1/21/2014 7:51 PM

Re: Navy to Stay the Course With Biofuels

This is insane.  The mission of the US military is to win wars, at the lowest cost in blood and treasure.  It has no business defining the propulsion fuels of the civilian sector.  It has almost no business in choosing between environmental goals and its basic duty, protecting our nation by force of arms.

Military brass who swap their government authority to lobby positions for an non essential industry are not loyal to anyone but themselves.  This is a disgusting use of irregular influence.
R. L. Hails Sr. P.E. at 1/21/2014 8:00 PM

Re: Navy to Stay the Course With Biofuels

Cliff has many valid points, but not the whole story. The technology is improving quickly, very quickly. Maybe not quickly enough for some, but it is. Investments in biofuels is necessary. Fossil fuels will run out someday screwing our grandchildren and their grandchildren. Fossil fuels are great and best for some applications, but we're using it for everything right now. We need to expand the fuel options to reduce the consumption of fossil fuels. We've already reached the oil peak. After this, it's all down hill. Further, for RL Halls, the military is vigorously looking for many different fuel solutions and has the charter to do so. Many of the dead in Iraq & Afghanistan was along the roads as we transported precious fuel to our various bases and outposts. If we had better, more reliable renewable energies in use at these, such as solar, wind, geothermal, etc. then we wouldn't have had to make so many convoy trips risking the lives of our service members unnecessarily. Nevada is a great place to make these massive-scale bio-fuel farms. About 90% of Nevada is already Federal land and some very large military bases. The military base at Hawthorne has only one soldier assigned to it, the commander. The rest are contractors. It takes up a massive area with its well spread out ammo bunkers. I think massive algae farms could be built in between these bunkers make great use of "unused" land. Or fill up this space with the largest solar & wind farms in the world. This would help out the Nation, the Great State of Nevada, as well as provide great jobs for people of Hawthorne.
Sid Zeller for Congress at 1/26/2014 11:32 PM

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