The Role of the Military in Biofuels Development

In August of 2011, the Obama administration—as a means of speeding compliance with the Renewable Fuel Standards set by Congress in 2007—formed an interagency initiative between the Department of Defense (DoD) and the departments of Energy and Agriculture. For the DoD, the purpose of this initiative was to substitute biofuels for a significant part of its aviation, maritime, and vehicle fuel.

In March of 2012, as part of this initiative, the DoD completed its Operational Energy Strategy: Implementation Plan. One of the plan’s goals is to make sure that U.S. forces have a reliable supply of energy for 21st century military missions: “Reliance on a single energy source – petroleum – has economic, strategic, and environmental drawbacks. . . . The Department needs to diversify its energy sources and protect access to energy supplies to have a more assured supply of energy for military missions.” The long-term wisdom of these efforts can be summarized with one statistic: the military spends an extra $130 million annually every time the price oil increases by $1 per barrel.

It’s difficult to see how the DoD will reach its goal of diversification, however. As Ned Stowe, a policy associate with the Environmental and Energy Study Institute observes*:

“The budget line item for alternative fuels development is a drop in the bucket in terms of overall military spending, but it could be transformative for reducing the military's vulnerability to rising global petroleum prices and supply disruptions. It could also be game changing for fulfilling the nation's long-term commitment to developing competitively priced, domestically produced, more sustainable, renewable advanced biofuels. Yet getting this Congress to fund this Defense Department initiative is proving to be an uphill battle."

The ongoing effort to agree on military spending is a case in point. It is mid-December, and that means Congress is squabbling over a series of bills quickly approaching (or past) deadline. One of these is the 2013 defense authorization bill. Two provisions that seek to limit the Pentagon’s involvement in the development and use of biofuels have been sources of disagreement.

One of these obstacles was peeled away in November. Until the final week of that month, the Senate version of the bill contained a provision preventing the Department of Defense (DoD) from “entering into any contract to plan, design, refurbish, or construct a biofuels refinery or any other facility or infrastructure used to refine biofuels unless such planning, design, refurbishment, or construction is specifically authorized by law.”

Before the Senate voted on the final bill, however, North Carolina Senator Kay Hagan introduced an amendment removing the provision from the bill. The amendment passed 54-41. Since the DoD’s strategic plan includes specific mention of these public/private partnerships, next generation biofuels developers can breathe a sigh of relief. (Note: no similar provision exists in the House version of the authorization bill, so this issue is resolved.)

One other provision, however, remains a sticking point. The path to commercial development of new technologies almost always requires a start-up phase during which costs are high. This phase is then followed by a process of efficiency improvements that brings costs in line with market. Initially, both the House and the Senate versions of the bill included a provision intended to subvert this process. The provision would prevent the DoD from buying or investing in fuels costing more than fossil fuels.

The Senate removed that provision from its version of the bill when an amendment introduced by Senator Mark Udall of Colorado was passed 62-37 at the end of November. This provision remains in the House version of the bill, and the joint-chamber conference committee has yet to resolve the difference. If the House provision prevails, the ramifications for the biofuels industry will be significant.

Again, Ned Stowe:

“If this interagency initiative is successful in accelerating the development of a number of commercial scale, advanced, next generation biorefineries – in different regions of the country, using different types of biomass feedstocks and energy conversion technologies – this project could open the way for significant additional private investment in commercial scale biorefineries. As many as 500 new biorefineries, using many different types of biomass feedstocks (anything except corn starch), will need to be built by 2022 in order to fulfill the goals set by Congress in the 2007 Renewable Fuel Standard.”

The cost of failure then, which this provision almost gaurantees, would be 500 new biorefineries, with all the jobs and economic development they entail. After two successful votes in the Senate, the biofuels industry believes the momentum is on its side.

For more on progress in biofuels deveopment, read The Biofuels Trifecta.

*Read Stowe’s complete article, “Will the Department of Defense Help Open the Way for Next Generation Biofuels?”