Defense funds for advanced fuels will provide long-term benefits, say supporters

Source: Julia Pyper and Tiffany Stecker, E&E reporters • Posted: Friday, November 30, 2012

The biofuels industry enjoyed its second victory in a week yesterday as senators voted to repeal a section of the National Defense Authorization Act that would have hindered military investment in advanced fuels.

Led by Sen. Mark Udall (D-Colo.), a member of the Senate Armed Forces Committee and supporter of renewable energy, 62 senators voted for an amendment that would repeal a section requiring the Department of Defense to forgo advanced biofuels if the cost were higher than that of conventional fossil fuels (E&ENews PM, Nov. 28).

Despite vocal opposition to the amendment from Sens. James Inhofe (R-Okla.) and John McCain (R-Ariz.), who said biofuels would be a waste of military money, 11 Republicans crossed the line and voted for the repeal of Section 313.

“I think it’s incredibly significant that we had 11 Republicans join and pass in a bipartisan manner the repeal of the 313 language,” said Michael Wu, advocacy policy director with the Truman National Security Project and a spokesman for its clean energy campaign, Operation Free. “It demonstrates clear congressional support for the military’s biofuels programs and a lot of momentum heading into the conference for these biofuels programs.”

The Truman National Security Project has been a linchpin in a coalition of government, industry and agricultural groups to promote the military’s use of biofuels. Many veterans involved with the project have seen how dangerous it is to be dependent on a single source of fuel, said Wu

“Biofuels offer both tactical benefits, and the veterans of Operation Free really understand firsthand how dangerous our reliance on oil is,” he said. “A lot of them have been deployed to places in order to protect supply chains for fossil fuels in strategic choke points like the Strait of Hormuz.”

The military has pushed to develop advanced, drop-in biofuels in order to avoid price shocks and reduce imports from politically volatile regions. The Air Force announced an ambitious goal of fueling jets with a 50-50 blend of drop-in biofuel by 2016, and the Navy has set out to do the same by 2020. Unlike first-generation biofuels like corn ethanol and biodiesel, drop-in biofuels have a molecular structure similar to that of fossil fuels and can be used in existing engines.

Feeding the 800-pound gorilla

Since June, the Truman Project, the Advanced Biofuels Association, the American Farm Bureau Federation, the Biotechnology Industry Organization, Growth Energy and the National Biodiesel Board have pushed to block deterrents to military investment in biofuels. The groups met extensively with lawmakers on Capitol Hill and in constituencies and launched full-page ads in newspapers.

The Senate vote sets the tone for a more welcoming atmosphere for advanced biofuels, said Michael McAdams, president of the Advanced Biofuels Association.

“I think the days of people willy-nilly saying ‘We’re going to walk away from advanced biofuels’ are over,” said McAdams, adding, “We have a return to a little less ideology.”

Last week, the industry celebrated a U.S. EPA decision not to waive the federal renewable fuel standard (RFS). The agency responded to concerns from the livestock industry that the ethanol mandate was driving up the price of corn and, subsequently, animal feed in the midst of this summer’s drought.

“Between the EPA decision on the RFS and today’s vote, there’s momentum in Washington on bioenergy,” said Adam Monroe, president of Novozymes North America, a company that makes enzymes to process plant matter into fuels. “Bioenergy is a chance for Congress to come together and help America — our economy, national security and environment.”

McAdams said EPA’s decision on the RFS is only marginally linked to yesterday’s Senate vote. While the waiver decision concerned primarily ethanol producers, the defense act vote maintains a market that could make or break the future of more sustainable, more versatile and less carbon-emitting fuels.

“Getting the military industry in there is huge,” said Mark Riedy, a partner with Mintz Levin Cohn Ferris Glovsky and Popeo. “It’s the second of the 800-pound gorillas, the first being the oil industry.”

More debate may hit floor this week

With less military demand, the biofuels companies would need to rely on contracts on the less financially secure airlines industry, Riedy said.

“It still would have proceeded in the commercial airline side, but a lot of the companies are not investment-grade,” he said.

Language written by McCain that would bar the U.S. Navy from participating in a cross-agency effort to build drop-in biofuel refineries remains part of the Senate defense bill. Efforts to remove that language may see floor time this week, or the amendment will have to be hashed out in conference.

Conferees may also have to take up an effort in the House version of the National Defense Authorization Act to repeal Section 526 of the Energy Independence and Security Act of 2007, which prevents the government from purchasing dirty fuels.

“We of course would like to see none of it adopted, because we feel strongly it’s important,” said Phyllis Cuttino, director of the Pew Project on National Security, Energy and Climate. “[Biofuels are] a small investment to make in our national security, and this kind of on-again, off-again policy is not good for private investors” in the biofuels industry.