GOP Amendments Could Derail Military Biofuels Plan

Proposed amendments to the fiscal year 2013 National Defense Authorization Act could dash the Pentagon’s hopes of a green future.
 
Last week, the House Armed Services Committee voted to prohibit the Defense Department from buying pricey alternative fuels and to repeal part of the Energy Independence and Security Act of 2007 that has been the catalyst for efforts to wean the country off petroleum.
 
One amendment would ban the Pentagon from buying alternative fuels that cost more than traditional fossil fuels. The other would exempt the Defense Department from legislation that requires the government purchase only alternative fuels that are less polluting than conventional fuels.
 
The amendments, offered by Rep. Mike Conaway (R-TX), have the potential to stunt the momentum the Defense Department has been gaining in its exploration of alternative fuels.
 
Fast on the heels of the committee’s votes, the Navy on May 14 officially announced the assets it would use for a two-day demonstration this summer of its Great Green Fleet. The demo will feature a carrier strike group powered by biofuels. It will include a Nimitz-class carrier, guided missile cruiser, two destroyers, a fleet replenishment oiler, MH-60 helicopters, F/A-18 fighter jets, and E-2 early warning aircraft. The demo is a step toward the service’s goal of a full deployment of such a fleet in 2016.
 
Navy Secretary Ray Mabus has been criticized by Republicans lawmakers for the service’s pursuit of renewable energy. In a well-publicized February incident, House Armed Services Committee member Rep. Randy Forbes (R-VA) told Mabus, “You’re not the secretary of energy. You’re the secretary of the Navy.”
 
The biofuels industry has been counting on the military, especially the Navy, to be an early adopter of its products. But legislation like that proposed in the Housed Armed Services Committee could shift much of the responsibility for creating a market for biofuels to the fragile airline industry, which doesn’t have the capacity for making large investments, said Phyllis Cuttino, director of the Pew Charitable Trusts clean energy program.
 
“They really have to deal with the day-to-day and becoming a healthier industry,” she said. “We cannot depend upon them to make the investments necessary to commercialize biofuels.”
 
Proponents have said that the biofuels industry is at a critical juncture and needs consistent policy to help it over the commercial hump. The proposed legislation would provide the opposite, Cuttino said.
 
“If you remove Section 526, it really sends the signal to investors that the market may not be emerging as quickly and they might go elsewhere to invest,” Cuttino said, adding that having the measure in place has never impacted the Pentagon’s ability to acquire any of the fuels it needs.
 
“If it doesn’t impede DoD’s or [the Navy’s] ability to get what they need, why would you send this very uncertain signal to investors?” she said.
 
The proposed ban on alternative fuel purchases would provide an exemption for the Defense Department to buy limited quantities to complete fleet certification. But analysts predict that some biofuels would remain far more expensive than traditional fuel until at least 2018.
 
One of the most recent purchases had the Pentagon spending $12 million for 450,000 gallons to power the Great Green Fleet demo. That comes to about $26.6 per gallon. Though the price of biofuel has dropped considerably over the past couple of years, it still is a great deal more than the $2.50 per gallon the department pays for petroleum.
 
Proponents of alternative fuels say that costs will come down with the right mix of policy and partnership. They cite the effort by the departments of Agriculture, Energy and the Navy to invest up to $510 million over three years to produce biofuels for military and commercial aviation. The proposed purchasing ban seems directed at this initiative, which proponents say would be bolstered by additional investment in the private sector and would lead to more competitive costs.
 
It remains to be seen what kind of support the amendments receive in the Senate. Some lawmakers may support one but oppose the other. Regardless, the recent opposition to alternative fuels has confused proponents.
 
Nearly everyone agrees that the country is too dependent on foreign oil, Cuttino said. There is no reason efforts to find alternative fuel sources should be stymied, she said.
 
“It ought to move forward,” she said. “It’s not controversial. Or at least it shouldn’t be.”
 
Industry is rallying behind the $510 million initiative. The Advanced Biofuels Association, Airlines for America, the Algal Biomass Organization, Biotechnology Industry Organization and the National Farm Bureau Federation on May 7 sent letters to leaders of the House and Senate Armed Services Committees asking them to support the departments of Agriculture, Energy and the Navy in their efforts.
 
Those three departments are scheduled to participate in a May 18 roundtable in Washington, D.C. to sort through some of these issues. The roundtable follows a matchmaking event held in March to bring together agricultural producers of energy feedstocks and biorefineries.

Topics: Business Trends, Defense Department, DOD Budget, Energy, Alternative Energy