Center for a New American Security

Yesterday, the Obama administration made a huge investment in U.S. energy security by announcing that the Departments of Agriculture, Energy and Navy will invest $510 million over the next three years to stimulate the biofuel industry. “Biofuels are an important part of reducing America’s dependence on foreign oil and creating jobs here at home,” said President Obama in a White House release. “But supporting biofuels cannot be the role of government alone. That’s why we’re partnering with the private sector to speed development of next-generation biofuels that will help us continue to take steps towards energy independence and strengthen communities across our country.”

According to the White House release, the administration hopes “to produce advanced drop-in aviation and marine biofuels to power military and commercial transportation” through joint cooperation between the three departments. The military has been actively testing advanced drop-in biofuels in its air fleet for several years, with the Navy in particular helping drive demand for liquid fuels derived from feed stocks such as algae.

The details of the joint cooperation are spelled out in a Memorandum of Understanding (MOU) signed by the Secretaries of Agriculture, Defense and Navy. According to the MOU, joint cooperation will include:

The construction or retrofit of multiple domestic commercial or pre-commercial scale advanced drop-in biofuel plants and refineries with the following characteristics: Capability to produce ready drop-in replacement advanced biofuels meeting military specifications at a price competitive with petroleum; Geographically diverse locations for ready market access; and No significant impact on the supply of agricultural commodities for the production of food.  

The joint plan would allow the U.S. government to invest up to $510 million while seeking at least one to one matches from private industry.

Yesterday’s announcement is a significant step forward in helping the Department of Defense achieve its strategic goal to wean itself from its dependence on conventional fossil fuels by expanding its supply options. The March 2011 Operational Energy Strategy emphasized the need to promote long-term assured access to fuel through investments in alternative fuels:

The volatility of oil prices will continue to be a budgetary challenge for the Department, and the realities of global oil markets mean a disruption of oil supplies is plausible and increasingly likely in the coming decades. The Services have already taken steps to certify aircraft, ships, tactical vehicles, and support equipment to use alternative liquid fuels, a prudent insurance policy against future oil supply disruptions and high prices.

“In the long term, alternative fuels have the potential to be an important part of the Nation’s energy landscape,” the department stated in its March strategy. Indeed, the planned investment in advanced biofuels should be a welcomed move for U.S. energy security advocates who understand the importance that a U.S. government-backed demand for advance drop-in biofuels can play in helping biofuels reach a pricing parity with petroleum, which could help speed up the commercial scalability of these fuels. This “announcement not only leverages our home-grown fuel sources to support our national security, but it also helps advance the biofuels market, which ultimately brings down the cost of biofuels for everyone,” Secretary of the Navy Ray Mabus said at a press conference yesterday. In other words: Woohoo!