Lowering Prices on Biofuels Offers Navy Hope

Senior energy officials with the Navy are optimistic about the future of biofuels and alternative fuels despite Congressional criticism, saying an emerging market for biofuel production has continued to lower prices.

Such developments are in keeping with the service's goal that up to one-half of its energy will come from alternative sources by 2020.

In fact, as part of what it calls its "Great Green Fleet" initiative, the Navy plans to deploy a carrier strike group powered by alternative fuel in 2016, said Tom Hicks, Deputy Assistant Secretary of the Navy, Energy.

It had been thought by some observers that realistic production and competitive prices for biofuels could be a decade or more away. However, progress with an emerging market is exceeding some expectations, Hicks explained.

"The alternative fuels piece is coming together more quickly than we had planned. Our partnership with the U.S. Department of Energy and U.S. Department of Agriculture is beginning to yield some promising results at this point," Hicks added.

The Navy's Great Green Fleet is named after Theodore Roosevelt's famous Great White Fleet, a Navy battle fleet ordered by President Roosevelt to circumnavigate the globe from 1907 to 1909.

As part of the Great Green Fleet, an entire USS Nimitz Carrier Group, including both ships and air assets, were successfully powered by a 50-50 blend of biofuels and traditional fuel during last-year's Rim of the Pacific, an international maritime exercise, service officials said.

Recognizing that many members of Congress have criticized biofuel efforts on the grounds of cost, Hicks explained that the costs of biofuels are already decreasing as larger quantities become available.

"Biofuels will be available by 2016 in meaningful quantities. The market is evolving very rapidly. Economies of scale will drive down the price," Hicks said.

However, critics on the Hill have consistently voiced concerns about the price of biofuels.

Senator John McCain, R-Ariz., was critical of the Navy's biofuel effort in a letter to Navy Secretary Ray Mabus in August of last year, citing the cost at $26 per gallon.

"Your decision to buy 450,000 gallons of biofuels at over $26 per gallon for a 'demonstration' using operations and maintenance funds provided by Congress to equip and train military personnel and operate and repair facilities was not authorized and is a terrible misplacement of priorities," McCain's letter states.

In an editorial written this past December, Senator James Inhofe, R-Okla., also raised questions about the value and readiness of biofuels.

"When every defense cut degrades our military's readiness, why would we want our Navy to pay four to five times more than necessary for fuel?" he wrote. "With a military budget that continues to decrease, where is the Navy going to get the funds to pay for biofuels?"

When asked about these price-related concerns from the Hill, Hicks made reference to four recent contract awards to companies slated to produce up to 170 million gallons of biofuel for under $4 per gallon in 2016.

In fact, proponents of the biofuel acquisition effort make a distinction between prices needed to acquire small amounts of biofuels for testing -- and the much lower prices associated with buying larger quantities for future operational use.

Hicks, and other proponents of the program emphasize the need to keep prices low and competitive. Overall, the Navy is optimistic in the prospects for affordable, mass producible quantities of biofuels.

The Navy uses about 1.3 billion gallons of fuel per year, Hicks explained, adding that in the future more fuels could involve a blend of conventional petroleum with "drop-in" alternative fuels such as biofuels, synthetic fuels or other bio-based products such as algae-based fuels.

There are several kinds of alternative fuels, ranging from those emerging from the Fischer-Tropsch process -- a kind of chemical reaction that can convert gas to liquid. This process can produce natural gas, biomass material and energy from municipal solid waste, Hicks explained.

"We have a degree of confidence that we could begin utilizing these fuels provided they are cost competitive with petroleum," Hicks said.

At the same time, other materials can come from a family of bio-based products called Hydroprocessed Esters and Fatty Acids, a category which includes things like sugar cane or algae.