Factsheet- DoD’s Biofuels Program

7/30/2019 Factsheet- DoDs Biofuels Program

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FactSheet

www.AmericanSecurityProject.org 1100 New York Avenue, NW Suite 710W Washington, DC

DoDs Biofuels Program

January 2013

Andrew Holland and Nick Cunningham

Introduction

Te U.S. militarys dependence on oil poses national security risks reduced readiness,strategic vulnerabilities, and budgetary strain rom its dependence on a single source oenergy. Te Department o Deense (DoD) has several initiatives to develop alternativeuels to reduce its exposure to petroleum-based uels.

Te goal is that, by the end o the decade, a signicant portion o the U.S. militarys

transportation uel will derive rom eedstocks other than oil, and obtained at prices cost-competitive to traditional petroleum-based uels, without any operational disadvantages.Tis act sheet looks at the militarys dependence on ossil uels, the risks generated becauseo this dependence, and the new initiatives underway to develop alternative sources oenergy.

DoDs Energy Use

Te US Department o Deense, taken as a single entity, is the largest singleenergy consumer in America.1

In FY 2011, DoD consumed 117 million barrels o oil at a cost o$17 billion.2

An estimated 75% of DoDs energy use is operational energy, which is denedas the energy required or training, moving, and sustaining military orces.

Te remaining25% of energy use is used for installation energy, which reersto energy used on military buildings and bases.

TeAir Force is the largest consumer of fuel out of all military branches,accounting or 53% o petroleum use. By comparison, the Navy makes up 28% ototal DoD uel consumption, the Army 18%, and the Marines and Coast Guardless than 1%.
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Risks of Oil Dependence

Te militarys overreliance on petroleum-based uel causes operational, strategic, and nancial risks.

Te DoD estimates that every 25 cent increase in the price o agallon o petroleuam-based uel costs the military $1 billion in

additional uel costs. DoDs uel costs increased 381% rom 2005 to 2011, grow-

ing rom $4.5 billion to $17.3 billion. Since uel consumptionactually declined by 4% over this period, the cost surge reectsrising oil prices.

In the shorter-term, the extreme price volatility o oil makes itvery dicult to plan, causing budget shortalls throughout boththe services and combatant commands.

For example, in FY2012 U.S. Pacic Command aced a

$200 million budget gap due to unexpected uel costs.Tese shortalls mean that there are ewer resourcesavailable to train, equip, and supply the orce.

Although biouels or alternative uels will not immedi-ately solve this problem, uel competition will reduceprice volatility.

Te strategic risks o the American economys reliance on oil areeven more dangerous.

It Creates New Missions: Because the American economy relies on an uninterrupted supply low-cost oil, the U.S. military must deend shipping lanes around the world to ensure the row o oil, which some observers estimate leads to an additional $83 billion in military cosper year.3

It Undermines American Foreign Policy: Major oil suppliers hold great leverage over the Ameican economy; they hold the key to price stability. Tis means that policymakers oten priortize stability over American values, particularly in the Middle East.

DoDs Alternative Fuels Initiatives

All uel, whether alternative or traditional, must meet mission requirements and not hinder operation

Tereore alternative uels must have a drop-in capability, which means they are able to be integratinto existing inrastructure without operational drawbacks.

Te diferent branches have diferent goals or using alternative sources o uel.

Action in Congress

In June, 2012, amendments to tFY2013 National Deense Authoriz

Act (NDAA) were added in both House and Senate Committee-passe

that would have both prohibited Drom purchasing alternative uels icost more than ossil uels and restrthe ability o the DoD to invest in

construction o biouels renerie

In November, during ull Senat

consideration o the NDAA, amendsponsored by Senator Mark Udall Senator Kay Hagen removed the

provisions rom the bill.

When signed into law by President Oon January 2, 2013, the NDAA presthe ability or the Department o Dto develop alternative sources o en


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Air Force Goals

Certiy all aircrat on a 50:50 biouel blend by 2012.

Acquire up to 50% o its domestic aviation uel re-quirements rom alternative uels by 2016.

All uel must be sourced cost competitively. Navy Goals

By 2020, the Department o the Navy will obtain 50%o the eets liquid uel rom alternative sources.

Deploy a Great Green Fleet to demonstrate operational capability o alternative uels orglobal operations by 2016.

Partner with industry and government agencies to invest in a cost competitive domestic ad-vanced biouel industry.

Feedstocks

It is important that there be an adequate and diverse supply o eedstocks or alternative uel that issustainable not ones that might afect ood markets.

Advanced biouels can be produced rom a variety o non-ood sources, including algae, biomass,switchgrass, camelina, municipal waste or vegetable oil.4

Building A New Industry

Advanced biouels are new technologies in an immature industry. Cost has not yet come down to a

level that makes them competitive to petroleum-based uels.

Tere is evidence that, with economies o scale, larger production acilities could bring costs down toan appropriate level.

o create these economies o scale, the Department o De-ense plans to invest $170 million over three years to supportadvanced biouels, with matching amounts rom both theDepartment o Agriculture and the Department o Energy.5Te DoD and DoE investment, to take place through theDeense Production Act, will be matched with equal amountso unding rom private investment.

Te Green Strike Group

In 2011, the Deense Logistics Agency procured 450,000 gal-lons o advanced drop-in biouels rom Dynamic Fuels andSolazyme Corp., the largest government procurement o bio-uels in history.6


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Te biouels were used by the Navy in 2012 RIMPAC exercise, an annual multinational military exenear Hawaii.

Te RIMPAC exercise successully demonstrated that an entire carrier battle group and its air wingoperate in an operational environment on a 50:50 blend o drop-in advanced biouels.

Alternative Fuels Can Reduce National Security Risks

Te Deense Department has a long history ocatalyzing new industries by driving innova-tion.

Drop-in Biouels are projected to be cost-com-petitive with petroleum-based uels as early as2017. Studies indicate that costs could declineto as low as $2.32 per gallon over that time-rame.7

Developing large quantities o biouels willreduce world oil demand, putting downwardpressure on prices.8

Alternative uel sources can replace petroleum-based uels, acting as a hedge against oil pricevolatility.

Freeing the nations reliance on unstable parts o the world or oil will allow the U.S. to operate a mindependent oreign policy.

DoDs biouels program will generate an estimated $9.6-$19.8 billion in economic activity by 2

while creating as many as 14,000 jobs.9

It is important that the eedstocks used to produce biouels in industrial quantities are sustainable. cymakers do not want to replace the problems o oil dependence with problems o land-use or ood-problems.

Conclusion

Te U.S. military should diversiy its energy sources in order to reduce the national security risks o relyingsingle source o uel or its operations. Early private sector innovation and investments have made initial proon developing viable drop-in uels rom advanced biouels.

It is appropriate or the government to help this industry because it would reduce energy security risks and make a better ghting orce.

Fully developing cost-competitive biouels over the next ew years will act as a hedge against volatile ossilprices, reduce U.S. vulnerability to supply disruptions, and loosen Americas reliance on vulnerable hotsaround the world.


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Further Reading

Fueling the Future? Militarys Biouels Program at Risk Andrew Holland

Investing in Biouels: Strengthening Our Militarys Energy Security LtGen John Castellaw, USMC (Ret.)

ime to Stop the Stranglehold o Oil on Our National Security LtGen Don Kerrick, USA (Ret.)

Support Biouels Now or Pay the Price Later BGen John Adams, USA (Ret.)

Te Militarys Dependence on Oil is Putting Our Forces at Risk LtGen Norman Seip, USAF (Ret.)

Andrew Holland is a Senior Fellow and Nicholas Cunningham is a Policy Analyst for Energy and Climate at theAmerican Security Project, a non-partisan think tank devoted to studying questions of Americas long-term national

security.

Endnotes

1. Warner, J., & Singer, P. (2008). Fueling the Balance: A Deense Energy Strategy Primer. Washington DC: Te BrookingsInstitution. 1.

2. Unless otherwise noted, all DoD gures on biouels sourced rom: Schwartz, M., Blakeley, K., & ORourke, R. (2012).Department o Deense Energy Initiatives: Background Issues or Congress. Washington DC: Congressional ResearchService. Summary.

3. Crane, K., Goldthau, A., oman, M., Light, ., Johnson, S., Nader, A., et al. (2009). Imported Oil and U.S. NationalSecurity. Santa Monica: RAND. 72.

4. Advanced Biouels Association. (2012). Feedstock. Retrieved November 2012, rom ABA website: http://www.advancedbiouelsassociation.com/page.php?sid=2&id=19

5. Department o Navy, Department o Energy, Department o Agriculture. (2011, June). Memorandum oUnderstanding. Retrieved November 2012, rom USDA web site: http://www.rurdev.usda.gov/SupportDocuments/DPASignedMOUEnergyNavyUSDA.pd

6. U.S. Department o Agriculture. (2011, December 5). Navy Secretary Ray Mabus and USDA Secretary om VilsackAnnounce Largest Ever Government Purchase o Biouel. Retrieved November 2012, rom USDA Press Release: http://usda.gov/wps/portal/usda/usdahome?contentid=2011/12/0500.xml&navid=NEWS_RELEASE&navtype=R&parentnav=LAES_RELEASES&edeployment_action=retrievecontent

7. Haq, & Zia. (2012). Biouels Design Cases. Washington DC: Department o Energy, Oce o Biomass Program.

8. Bartis, J., & Van Bibber, L. (2011). Alternative Fuels or Military Applications. Santa Monica: RAND Corporation. 81.

9. Yudken, J. (2012). Te Economic Benets o Military Biouels. Arlington: A report prepared by High Road Strategies or

Environmental Entrepreneurs. 17-18. http://www.e2.org/ext/doc/HRS-E2MiltaryBiouelsReporNov2012.pd
http://americansecurityproject.org/blog/2012/fueling-the-future-militarys-biofuels-program-at-risk/http://americansecurityproject.org/blog/2012/special-guest-ltgen-john-castellaw-usmc-ret-investing-in-biofuels-strengthening-our-militarys-energy-security/http://americansecurityproject.org/blog/2012/guest-post-lt-gen-don-kerrick-usa-ret-time-to-stop-the-stranglehold-of-oil-on-our-national-security/http://americansecurityproject.org/blog/2012/support-biofuels-now-or-pay-the-price-later/http://americansecurityproject.org/blog/2012/the-militarys-dependence-on-oil-is-putting-our-forces-at-risk/http://americansecurityproject.org/blog/2012/the-militarys-dependence-on-oil-is-putting-our-forces-at-risk/http://americansecurityproject.org/blog/2012/support-biofuels-now-or-pay-the-price-later/http://americansecurityproject.org/blog/2012/guest-post-lt-gen-don-kerrick-usa-ret-time-to-stop-the-stranglehold-of-oil-on-our-national-security/http://americansecurityproject.org/blog/2012/special-guest-ltgen-john-castellaw-usmc-ret-investing-in-biofuels-strengthening-our-militarys-energy-security/http://americansecurityproject.org/blog/2012/fueling-the-future-militarys-biofuels-program-at-risk/


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