(A F/A-18 Super Hornet from will be testing  drop-in replacement biofuel made from camelina  in an effort to certify alternative fuels for naval aviation use. (U.S. Navy photo by Noel Hepp/Released)

As previously discussed in “The Military’s Dependence on Petroleum Must be Mitigated,” the US military’s reliance on petroleum for all of its liquid fuel needs poses long term national security risks. The Navy has outlined plans to mitigate these risks by investing in domestic biofuels producers.

Concerns over the cost effectiveness of biofuels have led the House and Senate Armed Services Committees to block the Navy’s $200 million plan to invest in biofuels. As part of the Department of Defense’s budget review, the two committees have moved to ban the military from spending on alternative fuels priced higher than fossil fuels. If the military’s budget is passed in Congress, as is, this effort will bring an end to needed investment in an industry that could advance our nation’s economic competitiveness in the long run.

The Armed Services Committee’s greatest issue of concern is that biofuel are too expensive. Biofuels are currently more expensive than petroleum fuels by any measure. Yet, paying the high cost of biofuels today is an investment in a developing industry that will produce cost effective fuel in the near future.

Declining Biofuel Prices

The Navy has already spent $42 million to purchase 1.1 million gallons of biofuels for testing purposes. This includes $12 million on 450,000 gallons of biofuel that was used to successfully power a carrier strike group off the coast of Hawaii earlier this year.

This relatively small amount of funding for research and development has already dramatically reduced the price of biofuels. The Secretary of the Navy Ray Mabus reported in 2011 the most recent $12 million purchase of Navy biofuels was 94% cheaper than it was in 2009 at $424 a gallon.

Biofuel prices are anticipated to drop even further in coming years. A recent report by the Department of Energy’s Biomass Program (seen below) anticipates that the cost of producing biofuels could drop as low as $2.32 per gallon by 2017. In comparison, the US Energy Information Administration forecasts that the production cost of motor gasoline will be $3.65 per gallon by 2017 (both figures are not-weighed for inflation). Although these figures are subject to great variation by many confounding variables, it is probable that biofuels will be cost competitive within the decade.

 A New Industry  

As numerous reports have shown, Biofuels will continue to become cheaper through advances in technology, but investment is needed to bring prices down. In order to make biofuels a cost competitive global industry, the military should be purchasing large quantities of biofuels on a commercial scale.

By investing in biofuels, the DoD also has the opportunity to create a leading technology industry, something the DoD has done before.

The Defense Production Act (DPA) of 1950 established the mechanism needed for the military to provide seed money to develop new technologies. In the1980’s the DoD used the DPA to invest in silicon carbide, semiconductors, microwave power tubes and superconducting wire. These investments created American jobs in leading industries in Silicon Valley and elsewhere.

The Navy is attempting to use the same DPA provisions to secure the same future for the biofuels industry.

Congress should understand that an investment in biofuels would prepare our economy for long term shifts in energy consumption The DoD is the largest organizational consumer of petroleum based fuels in the world.  A small investment in biofuels today would have great payoffs for our military’s energy security and our nation’s economic competitiveness in the long run.

As Secretary Mabus has argued “I think that we cannot afford not to do this.”

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