DEFENSE:

Alt fuels won't solve military energy problems -- study

Alternative fuels are likely to remain more expensive than their petroleum counterparts and offer the military little advantage as it seeks to secure its access to energy supplies, according to government-sponsored studies released today.

The 340,000 barrels of fuel that the military uses each day may sound like a lot, but it's not enough to influence world oil prices, the RAND Corporation report says. To protect itself from high prices, the report says, the Defense Department should focus on energy efficiency and conservation and aim to promote security in oil producing regions and along key transportation routes.

The findings are likely to stoke already intense controversy engulfing the Navy's efforts to promote a commercial-scale domestic biofuels market that would allow the service to convert its fleet of ships and aircraft to a 50-50 blend by the end of the decade.

Arguing that biofuels would give the military an alternative to volatile global oil prices, Navy Secretary Ray Mabus has aimed to send a demand signal for the fuels with the goal of making them cost-competitive with petroleum by 2016. The service has purchased 450,000 gallons of advanced biofuels at a cost of about $26 a gallon for use during international exercises next month and has joined a $510 million interagency program to invest in commercial-scale biofuel refineries.

But conservatives have called the programs a waste of money during tough fiscal times and are moving to block them. The House passed its defense authorization bill last month with a provision that would prevent the military from purchasing operational quantities of alternative fuels for more than it would pay for petroleum. Similar language has made its way into the Senate bill, but supporters of the program have promised a floor fight.

The new report argues there is "no credible scenario in which the military would be unable to access the 340,000 [barrels per day] of fuel it needs to defend the nation."

One of the report's lead authors, James Bartis, was also behind a controversial report on the military's biofuel efforts last year that found alternative fuels offer no meaningful benefit for the armed forces (ClimateWire, Jan. 25, 2011).

"There is no military capability here," Bartis says. "The ship doesn't sail any faster, doesn't sail any farther, you don't end up saving any transportation to the field, you don't save any lives using alternative fuels."

Alternative fuels could play a role in bringing down world oil prices, Bartis agrees, but if that is the Navy's aim, he says, the department is investing in the wrong things.

Bartis contends that the Navy's investments in seed oils such as camelina are not viable because if they were produced at scale, they would interfere with food supplies. In the 2011 report, he argued that producing enough seed oil to provide 1 percent of current U.S. fuel consumption would require the equivalent of 10 percent of U.S. cropland.

"The money needs to go into research and development," he says, suggesting that algae-based fuels offer the greatest promise. "I haven't seen a single analysis that says spending a massive amount of money on fuel purchases is the right way to bring forward a technology that is as far away as algae."

The Navy, however, says it is not committed to any single source.

"Seed oil is just one potential source," said Tom Hicks, the service's deputy assistant secretary for energy. "The Navy does not pick favorites; any biofuel that is 'drop-in' -- has no impact on performance and has no impact on food supplies -- is a viable option."

High fuel prices drive military interest

The Air Force commissioned the new studies in 2009 after a major oil price spike the previous year. The Air Force is responsible for the lion's share of military's energy consumption and this year expects to see its fuel bill top $10 billion. Last week, the service's top energy official said he expects a $1.5 billion budget shortfall because of higher-than-expected fuel costs.

High and volatile fuel prices are a major problem for the military. In recent years the Defense Department has been able to include additional funding for fuel in supplemental war spending bills, but in a period of fiscal austerity, Congress' appetite for such measures is waning.

"That $1.5 billion is going to come out of our hide," Terry Yonkers, the Air Force's assistant secretary for installations, environment and logistics, told reporters last week. "We're going to have to figure out how to make up the delta."

In arguing for alternative fuels, Mabus has said that such budget shortfalls mean the Navy will be forced to steam and sail less, ultimately reducing readiness.

Some members of Congress have expressed an interest in allowing the military to enter into long-term fuel contracts -- essentially betting that it can lock in a lower price for fuel now than it will in the future -- as a way of preventing budget shortfalls.

DOD is currently limited to five-year contracts, but because the full price of such contracts registers to the budget in the first year, the military rarely signs deals for longer than a year. Proponents of biofuels have also pushed for extending the department's authority for longer-term contracts, but those efforts, too, have been hamstrung by budgetary accounting.

Although the military's renewable energy measures receive most of the attention, the department is in fact far more deeply invested in energy conservation measures. Of the more than $1 billion worth of energy measures proposed by the Obama administration in its budget blueprint, more than $900 million is for measures to reduce energy use.

As ships come in for maintenance, the Navy is retrofitting them with stern flaps and hull coatings that reduce energy consumption. The Air Force, meanwhile, is adjusting cargo on aircraft and planning more efficient routes and flight patterns (Greenwire, Sept. 15, 2011).

The new RAND reports also emphasize the military's role in securing energy supplies around the globe. Most notably, the Navy secures global maritime trade routes that are key for bringing oil to markets, such as those through the Strait of Hormuz.

Three-quarters of the petroleum produced in the Persian Gulf goes to Asia, Bartis writes, but security efforts in Asia have not kept pace with the region's growing importance.

He argues for more fully engaging other nations in the region in protecting sea lanes -- a move that DOD has turned toward in its most recent strategy, which emphasizes partnership in the Asia Pacific.

"It's not about getting oil today to Asia," he says. "It's about preventing conflict in the future by having better cooperation between all entities that have a stake, including China."

Click here to see the report.