Defense-Funded Biofuels Program Can Spur Production and Lower Risk to U.S. Government

By McDonald, Taite; Beehler, Alex | National Defense, March 2012 | Go to article overview

Defense-Funded Biofuels Program Can Spur Production and Lower Risk to U.S. Government


McDonald, Taite, Beehler, Alex, National Defense


In the wake of failed federal loan guarantees for green companies such as Solyndra and Range Fuels, the alternative-energy industry needs solutions that decrease government risk and elicit bipartisan support.

A Defense Department initiative, under the Defense Production Act, is one example of a useful role the government can play to expedite development and remove market barriers.

A March 2011 memorandum of understanding among the Navy, the Department of Energy and the Department of Agriculture establishes an interagency initiative to invest up to $510 million in the development of advanced fuels. The effort comes under the broad authority of the Defense Production Act, so investments that result from the MOU not only serve to meet the objectives of the military services, but also have the potential to play a significant role in encouraging market growth and boost energy independence from the Middle East.

The commercialization of first-generation biofuels relied heavily upon government programs such as Renewable Fuels Standard 2, biofuels tax credits, Agriculture research and rural development programs, and biomass initiatives. They bolstered ethanol and fatty acid methyl ether-based biodiesel. Many of these programs, however, are no longer available or have lost funding.

Of concern to the Defense Department is that diminishing government support for green-energy sources could delay the commercialization of second generation or "drop-in" biofuels that the military services are seeking as alternatives to conventional jet fuel. "The MOU should help facilitate partnerships to drive the advanced biofuels market forward," said Renewable Energy Group President and CEO Daniel Oh, who is a West Point graduate and former Army infantry officer.

Even during times of political gridlock, both parties tend to agree that government funding is most beneficial when directed toward areas that can have the broadest impact on innovation and help emerging industries overcome market barriers.

Extensive government support was provided to first-generation fuels--i.e. ethanol--that will not be required to commercialize second-generation products such as bio-based jet fuel and renewable biodiesel.

A number of technologies are ready for use, yet struggling to commercialize in the United States. The DPA initiative is the program with the potential to help advanced fuels come to market in a timely and cost-competitive manner.

There are also broader benefits of the program beyond facilitating the commercialization of advanced biofuels.

Retired Navy Adm. Dennis McGinn, president of the American Council on Renewable Energy, said biofuels are "essential in both reducing our dependence on oil and improving our transportation system. They are being actively pursued by all of our military services."

NuElement is an alternative energy engineering services firm that submitted a response to the DPA "request for information" in a teaming arrangement with Washington State University and contract support from Boeing researchers. "There are much broader benefits of the program as it can help to ensure national security from volatile energy supply and may offer commercial airlines some price stability," said Karen Fleckner, CEO of NuElement.

"This becomes increasingly valuable against the threat of looming carbon taxes on aviation in the European Union that will increase cost of airplane travel and can impact the 20-year forecast of aircraft sales. The use of drop-in bio-aviation fuels will actually serve to help maintain US. competitiveness in this trillion-dollar market."

President Obama officially announced the DPA effort Aug. 16. Shortly following the announcement, the three agencies released a request for information that set forth the anticipated requirements, broad objectives, and an expected timeline that was later amended.

The goals are to reduce foreign oil dependency help meet the statutory renewable requirements of the Defense Department and create jobs in the United States. …

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