Beltway Insiders Cast Doubts on Defense Energy Strategy
Following the June release of the Defense Department’s first-ever “operational energy strategy,” industry and government officials praised the Defense Department for setting bold goals to increase use of renewable-energy and for trying to promote a culture of fuel efficiency. But Washington insiders are casting doubts on the Pentagon’s ability to turn glossy rhetoric into ironclad policies that will reduce the military’s daily consumption of 300,000 barrels of oil. Three-fourths of that fuel supports deployed forces around the world.
An immediate concern for the Pentagon is to avert more casualties. Thousands of U.S. troops and contractors have been killed and wounded in war zones while moving and guarding fuel supplies. A longer-term objective is to increase use of renewable fuels to power weapon systems, and to design future ships, airplanes and ground vehicles to be more energy efficient.
The toughest obstacle for the Pentagon is that, despite its enormous budget and clout as the largest U.S. government agency, its influence in the energy market is negligible, making up just over 1 percent of the nation’s fuel demand. The Air Force and Navy operate hundreds of airplanes, but their fuel use is still a “drop in the bucket compared to American Airlines,” said retired Navy Adm. John Nathman, former vice chief of naval operations.
The Defense Department cannot on its own move an energy market in the United States that is far from ready to transition into renewable fuels, Nathman said July 15 at the Center for Strategic and International Studies, in Washington, D.C. An even more discouraging reality for Pentagon green-energy efforts is that the United States has no overarching policy that creates incentives to buy less oil and invest in alternatives. “It’s great that they [the Department of Defense] have a plan and money, but we don’t see any policy guidance or indication” of how the defense energy strategy plays in the bigger scheme of things, said Nathman. Defense is “operating in a vacuum in how they are going to move ahead.”
The Navy and Air Force are stepping up efforts to increase use of “drop-in” alternative fuels that are mixed with conventional jet fuel. If these projects gain traction, perhaps U.S. airlines and others will follow, Nathman said. For the foreseeable future, however, “I don’t think you’re going to see the global market change by what DoD or the Energy Department does.”
“Industry is waiting to figure out whether this [alternative fuels] is a hobby or a reality for the DoD. … Only time will tell on that,” said David Morrison, a former senior House staff member who worked on defense committees, and is now corporate vice president for government operations at The Boeing Co. “We have to see if there is institutional and resource commitments,” he said. “That is what all major defense firms are looking at: What are the adjacent markets going to be? But they won’t begin to develop products in a serious way or commit significant resources until they figure out where this is going.”
The energy goals sought by the military are unlikely to be met until the United States adopts policies that recognize energy as a “national strategic need,” said Nathman. “We need policy and legislation.”
The military services, he said, “have a lot of smart people working this problem,” but their efforts would be more wisely used if they were supporting a larger American goal to become less dependent on oil. “That’s why we need a policy,” he said. “I think this void is the real challenge” for Defense.
Congress today has no appetite for big-energy policies, and despite widespread support for most military programs, legislators don’t put energy efficiency at the top of their list, said Morrison. "Congressional committees look at the DoD strategy and say ‘Huh?’” Morrison said at CSIS during a panel discussion. The perception is that there is a “lack of strategic cohesion behind the department’s program.” A bold vision of the future is appreciated, but on Capitol Hill, defense officials face an audience that only has a “superficial understanding of the issues,” Morrison said. He said he never witnessed during defense budget deliberations any panel member ask questions about Pentagon fuel costs, or for that matter, show interest in the department's total petroleum budget request. “There is no incentive or imperative [for lawmakers] to do so,” he said.
Members of Congress typically will only become involved in energy programs if their constituents have a stake, Morrison said. His former boss, the late congressman from Pennsylvania John Murtha, worked with the Air Force for years on alternative fuels because the project — coal-to-liquids — would have been an economic boost for his district. That program later was terminated because coal was deemed too dirty a fuel source. Such parochialism is seen “across the spectrum” on Capitol Hill, Morrison said.
The operational energy strategy just introduced by the Pentagon, he said, is “welcome,” but it is only the first step on a long road. His advice to defense officials is to make a stronger case that energy dependence costs lives. “People being killed would matter to folks on Capitol Hill, it will resonate,” said Morrison. “Cost savings also matter, he said. If clean energy sources also can save money, Congress will listen, he said. “Every issue now is seen through the prism of debt reduction.”
The Pentagon, for the time being, is in a tough spot, Morrison said. To execute the energy strategy, he said, “DoD will have to commit resources upfront. … And it is hard to do on issues like this that don’t fly.”
Within the Defense Department, there also has to be an “institutional commitment” and advocacy from the top, he said. “The department for many a year has been singing off many different song sheets. You need to sing from one song sheet, and you need four stars to do it.”
Sarah O. Ladislaw, a senior fellow at CSIS who works on energy issues, agreed that the Pentagon’s initiatives could be fruitless if they are not part of a larger national effort. “Everyone who works on energy policy in the U.S. is very concerned because we don’t really have one,” she said. Institutions such as the Defense and Energy departments are taking the initiative, but their power in this area is limited. Without policies and laws that provide incentives for every industry to invest in green industry, the Pentagon is left in this “never-never land, having to be upfront defending something that folks on the Hill recognize as a waiting priority,” Ladislaw said.
Nathman suggested that the Pentagon, even in the absence of national-level guidance, could be taking a leadership role if it can tie its own interests to the country’s, as a whole. The military, for instance, takes the position that its bases should have their own electric grid to ensure supplies during crises. “They worry about the instability of the U.S. [civilian] grid,” Nathman said. Those concerns seem unfounded when the U.S. grid is the “best thing we have going … with 750,000 megawatts of power,” he said. Defense resources would be better spent if they helped strengthen the entire grid. “If we can make it more reliable, we’re all better off as a country.” The military’s preference for being “off the grid” is an example of working backwards,” said Nathman.
David J. Berteau, senior adviser and director of defense industrial Initiatives at CSIS, gives the Defense Department credit for stepping out in front of a tough issue. But for now, its best hope is to buy time until after the 2012 presidential elections, said Berteau. “DoD efforts should be aligned in the direction that would support [a national] policy,” he said. “Then, in January 2013, whoever is inaugurated can start moving forward.”
The Pentagon plans to soon unveil an “implementation plan” for how it will produce tangible results from the defense energy strategy, said Sharon Burke, assistant secretary of defense for operational energy plans and programs. By January 2012, Burke will have to certify that the military services’ budgets provide sufficient resources for fuel-efficiency and renewable energy programs. Her office also is working on renegotiating contracts with suppliers that would offer financial incentives to reduce energy consumption, she said.
Burke noted that the big money in military energy is not in research-and-development programs but in the cost savings that could materialize if all future contracts — both for new weapon systems and for services — emphasized energy efficiency. The payoff for the military will come from changes in the “requirements in the acquisition process,” Burke said. “DoD has to pay closer attention to the energy performance of what it’s buying. That’s where the big money is, not in the individual energy projects.
Berteau agreed. If Burke found a way to change the appreciation of the “time value” of money, she could go a long way toward making the military less dependent on fuel. In the Defense Department, short-term thinking drives spending choices: A dollar today is worth a dollar, but a dollar in five years is worthless, he said. For energy efficiency to become institutionalized, the key is to change the mindset that money should not be spent today even if it saves huge amounts downstream, Berteau said. “Burke has an opportunity to change the time-value of money” and to make the Pentagon less penny-wise and pound-foolish.