White House holds ‘pep talk’ on biofuels

Source: By Zack Colman, TheHill.com • Posted: Sunday, July 15, 2012

Sensing increasing resistance to a Navy biofuels testing program, the White House on Wednesday convened biofuels proponents for a strategy session about the energy source.

Ex-military, agriculture, industry and government officials all met in the Roosevelt Room for the talk, retired U.S. Marine Brig. Gen. Stephen A. Cheney said Thursday at a Washington, D.C., event hosted by The Truman Project.

Though the Pentagon, including Defense Secretary Leon Panetta, has said the Armed Forces need biofuels for energy security, lawmakers have made it more difficult for the DoD to procure biofuels.

“When they cut it out of the NDAA (defense authorization bill), that caught people’s attention,” Cheney said of biofuels in an interview with The Hill after the event. “It was kind of like saying, ‘Well, we don’t care about this anymore.’ And we do.”

The meeting, which Cheney called a “pep talk,” reflects a growing malaise regarding biofuels, which have attracted criticism from fiscal hawks. Reports of a $26-per-gallon biofuel and petroleum mix being tested by the Navy’s “Great Green Fleet” aircraft carrier strike group through a $12 million Navy biofuels program riled lawmakers, pushing the Senate Armed Services Committee to pass amendments from Republican Sens. James Inhofe (Okla.) and John McCain (Ariz.) that limit the Defense Department’s ability to buy biofuels.

Michael Breen, vice president of The Truman Project, said lawmakers ignored that the $26-per-gallon fuel purchase was only meant for testing. The price would have been lower if it were an operational buy, he said. That $26-per-gallon price tag was also for the biofuel alone. Once blended with traditional petroleum, that figure comes down to $15 per gallon.

The defense establishment sees biofuels through a security lens. More options, especially domestically produced ones, mean less dependence both tactically and strategically on foreign nations, they said. Retired U.S. Air Force Lt. Gen. Norman Seip commented Thursday that unbudgeted fuel costs diverted $2 billion last year from military operations.

The military relies on oil as its major fuel source, leaving it exposed to market volatility, he said.

The administration has stood behind biofuels on national security grounds. It combined with the Energy, Defense and Agriculture departments to propose a $510 million investment in biofuels with a private sector match through the Defense Production Act, which couches the need for biofuels on a national security logic.

The White House sent Heather Zichal, the administration’s deputy assistant for energy and climate change, to the Energy Department’s annual biomass conference Wednesday in Washington, D.C., with a message that Congress “needs to get beyond short-sightism” on biofuels. She touted Panetta’s views on biofuels during that speech.

The administration also announced $62 million in new biofuels funding earlier this month.

Lawmakers are treating the Navy biofuels testing program as a “political football” for uncertain reasons, a White House official told The Hill on Friday.

Some lawmakers, mostly Republicans, have pushed against biofuels. They say cheaper domestic fuel options that do not require government support, such as natural gas, can supply a good portion of U.S. energy needs. That could spin off into transportation fuel, they say.

Citigroup predicts U.S. oil self-sufficiency by 2020 as a result of those new natural gas supplies, and once Canadian imports are factored in, Ed Morse, managing director and global head of commodities research at Citigroup, said Thursday at a D.C. event hosted by the New America Foundation.

Some people accept natural gas as an alternative fuel source, Michael McAdams, president of the Advanced Biofuels Association, said Friday. Part of that interest is based on cost, but politics is another reason, he said, explaining that Republicans are trying to make renewable fuels a wedge issue in an election year.

Though natural gas vehicles are not currently available at scale, some believe the long-term prospects of cheap natural gas fuel could drive a market for those vehicles without much federal backing.

Some states have begun investing in natural gas fueling infrastructure, and firms such as FedEx have started converting their truck fleets to that fuel source. Morse said converting trucks to use natural gas would cost $7,000 per vehicle, an expense that could be recouped in about one year.

The administration supports natural gas as one option for transportation fuel, but that it should not come at the expense of biofuels, the White House official said. It announced $30 million of funding for natural gas vehicle technology research Thursday through the Advanced Research Projects Agency-Energy.

But what is lost on some lawmakers is that natural gas does little good for the military, said Cheney, who is now CEO of the American Security Project. Compressed natural gas vehicles are explosions waiting to happen in war zones, he said. The aviation industry likely will need dense liquid drop-in fuels, which is something natural gas cannot provide, he said.

Andrew Holland, senior fellow for energy and climate at the American Security Project, said ex-military at the White House meeting said natural gas was not a serious option for the military.

“Natural gas may make it seem like we can take our eye off the ball, but the message was that they are different things,” he said.

No one has a firm estimate on how long those natural gas reserves will last, retired U.S. Army Col. Dan Nolan said Thursday. Investments now in biofuels could produce a sustained energy source, he said.

Cellulosic biofuels, which are considered “next generation” and preferred to corn-based ethanol, are expected to reach commercialization stage in 2013, Holland said.

Senate and House efforts to handcuff the Defense Department from purchasing biofuels could stall that progress, he said.

But some lawmakers feel the military has no business propping up industries, especially during tough financial times. McCain and Inhofe both oppose using the military as a capacity building enterprise, McAdams said. Therefore, their push against biofuels in the Defense authorization bill should not come as a surprise, he said.

Congressional impatience with cellulosic biofuels is understandable, Holland said.

The renewable fuel standard put in place in 2007 that required 36 billion gallons of production by 2022 promised commercialization by 2012. But the global recession cooled credit for biofuels projects, he said.

“There really is no alternative source of energy other than oil. It’s a single source dependency for the military,” Holland said. “In civilian energy there are alternatives. You could electrify your transportation, you could do natural gas transportation. But for the military right now, it’s just oil.”