Why the US Navy is betting on biofuel

15 October 2012

Tom Hicks, US Deputy Assistant Secretary of the Navy for Energy, talks to DMJ editor Anthony Hall about the US Navy's controversial use of biofuels…

The Rim of the Pacific (RIMPAC) Exercise, hosted by the US Pacific Fleet, has been held biennially since 1971. This year's exercise off the Hawaiian Islands, held between 2nd July and 3rd August, featured 42 surface vessels, six submarines, 200 aircraft and 25,000 personnel from 22 nations, in what is acknowledged to be the biggest maritime exercise in the world.

It was at RIMPAC 2012 that the US Navy chose to showcase its use of alternative fuels for the first time in an operational Carrier Group. Known as the Great Green Fleet demonstration, for two days from 17th July the carrier USS Nimitz, with a Carrier Air Wing, accompanied by the guided missile cruiser USS Princeton, two destroyers and a fleet tanker, took part in operational exercises all partly fuelled by 900,000 gallons of 50/50 petrochemical/biofuel blend.

RIMPAC was certainly the right place to make a point. Secretary of the Navy Ray Mabus has been advocating for months that the US Navy has to develop alternative energy sources to secure its future: "the only way we can afford to get the number of ships [and] the number of aircraft that we need is to change the way we get fuel," he said at Norfolk, Virginia in March.

But Mabus has a lot of political opposition to contend with. Not only are the biofuels the navy wants to use currently over seven times more expensive than the traditional petroleum-based fuels – the 450,000 gallons of biofuel used in the RIMPAC demonstration cost over US$12m – but the navy department has also taken the step of becoming actively involved in developing a domestic biofuel industry. In partnership with the Department of Energy and the Department of Agriculture the US Navy is investing up to $500m in research and plant over the next three years.

It is a situation that has driven Republican Representative Randy Forbes of the House Armed Services Committee to question Mabus' priorities: "I understand that alternative fuels may help you guys in the field, but wouldn't you agree that the thing they'd be more concerned about is having more ships, more planes, more prepositioned stocks?" he asked at a hearing in March. "Shouldn't we refocus our priorities and make those things our priorities instead of advancing a biofuels market? You're not the Secretary of Energy. You're Secretary of the Navy."

There's no doubt that politics is playing a part in this debate. The navy's investment – of up to $170m – is part of the Obama administration's programme to promote alternative energy. Yet the controversy surrounding the navy's use of biofuel is symptomatic of a wider question that all Western defence establishments must now wrestle with. Can defence be both cost-effective and fully capable? What is the bottom line?

Speaking to DMJ, Tom Hicks, Deputy Assistant Secretary of the Navy for Energy, reveals that as far as the Department of the Navy is concerned biofuels are the way to both control costs and ensure that capabilities are maintained, not least because the volatile price of fuel works against sound financial planning and operational readiness. "In any given year we use 30 million barrels of fuel to power the fleet. In financial terms that's $4-5bn per year." A price spike over the past year ramped the price up by a billion dollars. It has since come down to about half that figure, but such a hike still represents an unplanned fuel bill that the navy has to find a way to offset, which according to Hicks "can involve reducing our flying and steaming hours and limiting our training".

The Great Green Fleet initiative is no aberration, Hicks insists. The US Navy has a long history of leadership in energy innovation. "We went from wind to coal-powered steam in the middle of the 19th Century, from coal to oil in the 20th Century, and we pioneered nuclear power in the middle of the 20th Century. So, we see alternative fuels as really that next evolutionary step."

Hicks explains that this direct investment in the biofuel industry enables the navy to both have a greater say in how those fuels are produced domestically, and to work with allies around the world who may be able to produce such fuels. Investment also ensures that the biofuels the navy intends to use fulfil essential criteria – that they are competitively priced and fully compatible with all the navy's systems. "What we are looking for are fuels that we are able to 'drop-in'," he says. "Fuels that are not only compatible with our existing technology, but that do not require any changes to our platforms – our engines, our ships, our infrastructure or our storage – in any way."

The search for compatibility has led the navy to develop its own analysis programme, with testing and certification of fuels taking place since 2003. The work is being carried out by the Naval Air Systems Command (NAVAIR), which has established a sequential process to ensure that engines undergo static tests before they ever reach an operational stage. For example, controlled tests have been carried out on the biofuel blends on all of the engines associated with the RIMPAC demonstration.

"We have also tested all of our manned and unmanned aircraft on 50/50 blends of alternative fuels, and we've tested the overwhelming majority of our surface combatants," says Hicks.

In contrast to what some in Washington are characterising as an insistence on exchanging sense for sustainability, Hicks is adamant that the navy's view on biofuels is a practical application of a new resource, not the wholesale abandonment of petrochemicals. "If it's available, if it's competitively priced then we can use biofuel. If it's not available, if the price is not in line with our expectations, then we can use conventional fuel seamlessly."

There are biofuels already available that meet the navy's present requirements, he continues. "I don't say that we are necessarily sourcing them, but there are a number of fuels out there that come from things such as agricultural waste oils, algae, and from plants like Camelina [a variation of the mustard seed]. We are interested in those in so far as they are not derived from food sources. We are not looking to solve a problem and create or exacerbate another one."

One of the benefits of taking an active role in engaging – and investing – in the biofuel industry at its genesis is an early awareness of the challenges involved on a commercial scale, Hicks explains. "One of the things we have done over the last 18 months is realise what those challenges are – and they are multifaceted.

From sourcing the feedstock needed to produce the fuel, to getting the plant, as well as securing the agreements and the long-term contracts to be able to finance the refineries."

Matching private investment with the $500m already committed by the navy and other federal agencies will bring the total investment funds up to the US$1bn mark – a target that Hicks believes will prove a game-changer, and "a way to accelerate the timeline for competitiveness". Current analysis suggests a biofuel industry operating at a fully competitive level by 2018-2025. But with a billion dollars behind it that could be brought dramatically forward. "We're looking to accelerate that to perhaps as early as 2015, and have a greater certainty that it will be competitive sooner than those projections," Hicks confirms.

The industry also needs a clear, consistent demand signal, and that is what the navy feels it can help provide. "If you look at the navy," says Hicks, "we have 285 ships and 3,700 aircraft, and the ones we have today are likely to be the ones that we are going to have in decades to come. So we are going to be needing liquid fuels for the foreseeable future."

Criticism concerning cost of the navy's biofuel - described by one Senate Committee member as 'outrageous' - will not go away, and at $26 a gallon, compared to an equivalent cost of around $3.60 for traditional petrochemical fuels, it is a mark-up that no one can ignore. Hicks is eager to highlight, however, that these costs are more a reflection of the biofuel testing and certification process than where the biofuel industry is headed and what it is currently capable of delivering in terms of fuel price for large volume purchases. Alternative fuel for the testing and certification being done today is necessarily more expensive for two reasons. Firstly, he says, "we buy fuels for testing and certification in very small quantities: we are not getting the economy of scale in making those purchases". Then there are the special requirements the navy places on the fuels as part of the testing and certification process. Until these fuels "graduate" from the testing and certification process and are qualified as "fit for use" this process requires what Hicks refers to as a "temporary redundant infrastructure", in the form of trucks and storage tanks, to support it. In the not too distant future, as the testing and certification of various alternative fuels is completed and the fuel can be purchased large volumes with no temporary redundant infrastructure, the navy believes these fuels will quickly become cost competitive with their traditional counterparts.

The testing and evaluation process "will be continuing into the foreseeable future until we are at the point where we feel it is no longer necessary," according to Hicks. The focus of the work is likely to turn to alcohol or jet fuels that are derived from wood waste. "From our perspective," he continues, "we are absolutely focused on getting the fuels we have tested to date to be competitive with petroleum as quickly as possible, because if we do so it provides us with options and the flexibility needed to mitigate the ongoing challenges we face with conventional fuel.

"Our ultimate goal," Hicks concludes, "is that by 2020 half the energy that we use to support the fleet will come from alternatives – including alternative fuels."