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Dan Nolan is a retired US Army Colonel and he is also the CEO of Sabot 6, a company that brings Strategic Management Skills to Energy Security. His introduction to the global energy challenge came back when on an assignment relating to energy generation in the Middle East.
"It didn't take long to figure out," he recalled, "how many casualties we were taking in Iraq and Afghanistan via logistical convoys, and that 70 percent of what we driving up those roads was water and fuel." He pauses. "It comes down to this, how do we get the trucks off the road?"
"The Army and the Air Force, they're taking a measured approach, certifying equipment, with the Air Force taking the view that they are ready to buy as soon as the cost is competitive.
"But the Navy is more aggressive," Nolan explains. "They know that unless there is an alternative, they are going to continue to spend $3.5 million per day to keep carrier battle groups in the Straits of Malacca and Hormuz. They feel that they have got to do something to stimulate the commercialization of this hugely important technology."
Today, Nolan will be joining colleagues in Operation Free, a coalition of veterans working to secure America through renewable energy, who will host an educational panel featuring four retired top-level military officials from four of the armed service branches, on the military's clean energy initiatives. It's called "Fueling Our Military in the 21st Century," and the event is being sponsored by Sen. Patty Murray (D-WA).
Well, not everyone can get to Washington, so we'll look today at the opportunities in military biofuels, and especially at the hard questions.
Are biofuels as compelling for the military as their supporters say? Are they as unattractive as their detractors insist? What is the rationale?
Q. Why is the Navy buying $26 biofuels?
A. Well, for the same reason you pay $26 for a cab in DC to travel the same route that DC Metro can take you along for $3.50. It comes down to economies of scale, and being in a hurry.
The Navy has a plan to buy military biofuels, starting in 2016, at a price that is cost-competitive with conventional fuel. Since this is new technology, they know that someone is going to have to build out a commercial scale refinery that can generate the economies of scale, and will need four years for design, permitting, construction and commissioning.
So, in 2012, they need to give that clear buying signal and also demonstrate that the fuels will work in the intended ships and aircraft.
Hence, they purchased 450,000 gallons of military spec biofuels this year, for the purposes of that demonstration. Now, a commercial scale refinery produces tens of millions of gallons, if not hundreds. So, the buy was way too small (and too early) for production with economies of scale. Solazyme, for example, had to contract for production with a small, 3rd party fermenter not optimized for production of that fuel.
At scale in 2016, the fuels will be cost-competitive with conventional fuels.
Q. What do you mean by military spec fuels? Isn't this aviation and diesel fuel?
A. Ah, not quite. Naval fuel is different, primarily because ships operate at sea, obviously, and when they take on ballast they end up mixing fuels and seawater - which mostly separate, but you can see right away that the sea-based environment calls for a different and unique fuel - in this case, able to tolerate the seawater mixing.
Q. Since biofuels aren't going to be made at the front lines, fuel convoys are a fact of life. How can biofuels contribute to reducing the tactical risk to troops?
A. Good question. For remote forward operations in one-road areas, fuel convoys will continue and will continue to be vulnerable. Biofuels represent primarily a strategic route to reducing risk to troops, rather than tactical. Simply put, reducing conflict that leads to remote ops in the first place.
Q. Navy ships move around the world. How can they be a "green fleet" unless there are biofuels refueling options all over the globe, and is that possible and feasible?
A. As with oil, which also is not produced in every US military ports of call, new fuels will likely be transported to locales that do not have local production capacity capable of military spec biofuels. Having stated that, it is worth noting that biomass is found in more places, in sufficient abundamce, than oil is.
Q. Why the heck is the Department of Defense proposing to invest in making biofuels available at commercial scale? Isn't that something for the Department of Energy?
A. The Department of Defense is a unique customer - often having needs in advance of the general market. Accordingly, through the Defense Production Act of 1950, DoD has invested in hundreds of technologies so that they can be made at sufficient scale to meet military needs at affordable prices.
The DoD's Title III office oversees this - and it's a one-and-done process whereby the DoD comes in, gets you up to commercial levels usually by guaranteeing a purchase contract with enough margin to pay for the capital required to build the facility. And then they retreat back to the customer role.
(Image provided by Flickr user Official U.S. Navy Imagery.)
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