On Biofuels, Administration Says Go Big or Go Home

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!