Military Spending on Biofuels Draws Fire

Source: By DIANE CARDWELL, New York Times • Posted: Tuesday, August 28, 2012

MC3 Ryan Mayes/U.S. Navy, via Associated Press A replenishment oiler, left, delivers a blend of biofuels and traditional fuel to the U.S.S. Princeton during the Great Green Fleet demonstration.

When the Navy put a Pacific fleet through maneuvers on a $12 million cocktail of biofuels this summer, it proved that warships could actually operate on diesel from algae or chicken fat.

“It works in the engines that we have, it works in the aircraft that we have, it works in the ships that we have,” said Ray Mabus, secretary of the Navy. “It is seamless.”

The still-experimental fuels are also expensive — about $27 a gallon for the fuel used in the demonstration, compared with about $3.50 a gallon for conventional military fuels.

And that has made them a flash point in a larger political battle over government financing for new energy technologies.

“You’re not the secretary of energy,” Representative Randy Forbes, a Republican from Virginia, told Mr. Mabus as he criticized the biofuels program at a hearing in February. “You’re the secretary of the Navy.”

The House, controlled by Republicans, has already approved measures that would all but kill Pentagon spending on purchasing or investing in biofuels. A committee in the Senate, led by Democrats, has voted to save the program. The fight will heat up again when Congress takes up the Defense Department’s budget again in the fall.

The naval demonstration — known as the Great Green Fleet — was part of a $510 million three-year, multiagency program to help the military develop alternatives to conventional fuel. It is a drop in the ocean of the Pentagon’s nearly $650 billion annual budget.

But with the Defense Department facing $259 billion in budget cuts over the next five years, some lawmakers argue that the military should not be spending millions on developing new fuel markets when it is buying less equipment and considering cutting salaries.

This phase of the military’s exploration of alternative fuels began under President George W. Bush and grew out of a task force that Donald Rumsfeld, then the secretary of defense, convened in 2006 to explore ways to reduce dependence on petroleum. If the military had less need to transport and protect fuel coming from the Middle East, the thinking went, the fighting forces could become more flexible and efficient, with fewer lives put at risk.

In addition to biofuels, early efforts included developing liquid fuels from coal and natural gas for the Air Force, the largest energy user of the armed services. But the gas and coal fuels would not meet cost or environmental requirements, officials said. The Defense Department focused on advanced biofuels, which are generally made from plant and animal feedstocks that don’t compete with food uses, which is a concern with common renewable fuels like the corn-based ethanol used in cars.

The federal Renewable Fuel Standard, which sets targets for renewable fuel production and requires a certain amount to be blended into conventional gasoline and diesel, has been the main catalyst for the growth of several companies exploring new technologies

Investors, however, have been leery of the enormous amounts of cash it can take to bring the fuels from the lab to the gas tank. Industry officials say that having a large, steady customer like the military could attract other investors to help finance large refineries that would bring costs down through economies of scale. Military officials say that their purchases of small amounts for testing has already helped reduce the cost. In 2009, the Pentagon spent roughly $424 a gallon on algae oil from Solazyme.

“Finding a user like the military can rapidly help to scale technologies that then are used in the civilian marketplace — it becomes a catalyst,” said Bob Johnsen, chief executive of Primus Green Energy, which is developing fuels from biomass and natural gas. “If the military becomes a buyer, that becomes a means by which the production facilities can be financed.”

The Defense Department is always vulnerable to charges of overspending — remember the $7,600 coffee maker? — but military leaders argue that what they are putting into biofuels is a blip given the potential benefits of reducing their need for Middle Eastern oil, with all its volatilities.

“Our primary rationale is not economic,” said Sharon E. Burke, assistant secretary of defense for operational energy plans and programs. “Our job is to defend the country.”

She said biofuel spending was just 4 percent of the $1.6 billion budget the military was requesting for efforts to improve energy usage in field operations in the next fiscal year. Most of the measures are aimed at reducing the need for fuel in the first place, including using diesel electricity generators more efficiently, putting greener engines into vehicles and aircraft, and using hybrid solar generators and batteries in the field.

The Defense Department is also running several demonstration projects on its bases, testing ways to produce and distribute electricity better. And the Army recently put out a request for proposals for $7 billion in renewable energy projects, part of reaching its goal of getting a gigawatt of its electricity — enough to power roughly 250,000 American homes — from renewable sources by 2025.

In Congress, there is little apparent opposition to the overall military push toward renewable power generation or energy efficiency.

But the biofuel program has struck a nerve among Republicans who, ever since the government’s failed investment in the solar panel maker Solyndra, have been wasting few opportunities to hammer their message that the government should not risk taxpayer money to bolster favored technologies.

Representative Mike Conaway, a Texas Republican who introduced House legislation that would limit biofuel purchasing and production and has been critical of the Great Green Fleet, said Democrats were using the military to pursue an environmental agenda. “We just want to require the Department of Defense to do exactly what every other American does when they buy fuel: they try to get the best price they can,” he said.

Many of the lawmakers objecting to the biofuels program — including some Democrats who crossed the aisle to support new limits — represent coal country or take money from those in the coal and natural gas industries. Mr. Conaway, who introduced a measure that would open the door for the military to pursue alternative fuels made from coal and natural gas, gets a large share of his campaign contributions from oil and gas interests, according to

For Senator James Inhofe, who led a similar charge in the Senate, three of his top five contributors, including Koch Industries, make their money from fossil fuels. Although Mr. Inhofe, an Oklahoma Republican, has argued that the biofuels are too expensive, he has helped steer several military contracts to Syntroleum, based in Tulsa, Okla., to develop a liquid natural gas fuel for the Air Force, including one that paid the company roughly $22 a gallon. Syntroleum is still pursuing coal- and natural gas-based fuels, but is also in a partnership with Tyson Foods that supplied the Navy with biofuel made from waste animal fat for the Green Fleet demonstration.

What happens to the military biofuels program could hinge on the fall elections. The Obama administration has opened the government’s purse to provide the kinds of stable contracts and investments that companies say are necessary to raise financing to develop and build commercial biofuel production facilities.

While Mitt Romney’s position on the military biofuels program is unclear, he has signaled that the Pentagon’s emphasis on using more clean energy would not be a priority in his administration. “When the biggest announcement in his last State of the Union address on improving our military was that the Pentagon will start using more clean energy,” Mr. Romney said at the V.F.W. convention this summer, “then you know it’s time for a change.”

Should that view prevail, the industry’s already slow development could stagnate, with many of the smaller companies potentially going out of business.

“Our dream was to build a renewable fuels company,” said Jonathan Wolfson, Solazyme’s chief executive. Without the military as a guaranteed customer, he said, it will be harder to get there. “Is it going to stop us?” he added. “No.”