The U.S. Navy today announced the federal government's largest purchase of advanced biofuel, which will be used to power a carrier strike group next year during international exercises off the coast of Hawaii.

"We think that this represents a major step in energy independence for the U.S., in making the U.S. Navy a better warfighting operation, and in reducing our dependence on unstable sources of foreign energy, and also reducing the budget shocks that come with buying fuel from either potentially or actually volatile places on earth," Secretary of the Navy Ray Mabus said this morning on a call with reporters.

Dynamic Fuels LLC -- a joint venture of Tyson Foods Inc., Syntroleum Corp. and Solazyme -- won the 450,000 gallon contract for $12 million. Since the Navy's Great Green Fleet will run on a 50-50 blend of advanced biofuels and traditional military-grade fuels, the cost will average to $15 a gallon, Mabus said. He noted that this is half what the Navy paid for such fuels at this time last year.

Solazyme produces advanced biofuel from algae, and the partnership between Tyson Foods and Syntroleum produces fuel from non-food-grade animal byproducts such as beef tallow and pork and chicken fat. The military has said it will only purchase advanced biofuels that do not compete with food sources, are domestically produced and are drop-in replacements to its current fuels.

The purchase is a significant step toward the Navy's goal of getting half of its energy from alternative sources by 2020.

The service is also working with the Departments of Agriculture and Energy on a plan to encourage domestic investment in alternative fuels. The initiative is a response to a March directive from President Obama aimed at cutting imports of foreign petroleum by a third by 2025.

This initiative announced plans to invest about $500 million in a project aimed at leveraging private investment to bring commercial-scale biofuel refineries online (Greenwire, Aug. 16).

Agriculture Secretary Tom Vilsack said the commercial aviation industry is also increasingly considering biofuels as international carbon standards are scheduled to come online. He said his agency is maintaining its biofuel commitment through its Forest Service research, biomass crop assistance program and crop management and assurance programs, even as the agency has seen budget cuts.