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Thursday, February 28, 2013

DOD Alternative Fuels: Policy, Initiatives and Legislative Activity

Katherine Blakeley
Analyst in Defense Policy

This report provides background information and identifies issues for Congress regarding Department of Defense (DOD) alternative fuel initiatives, a subject of debate at congressional hearings on DOD’s proposed FY2013 budget. The services (the Army, Navy, and Air Force) have spent approximately $48 million to purchase alternative fuels, and the Navy has proposed a $170 million investment in biofuel production capacity. The services have also spent funds on testing, certification and demonstrations of alternative fuels. By comparison, DOD purchases of petroleum fuels totaled approximately $17.3 billion in FY2011.

DOD officials have said that any alternative fuels for DOD operational use must:

  • be “drop-in;” that is, requiring no modification to existing engines, and
  • be cost-competitive with conventional petroleum fuels.
Other desirable characteristics include:

  • production from a non-food crop feedstock; and
  • lifecycle greenhouse gas emissions less than or equal to conventional petroleum fuels.
Each military service has different alternative fuel goals. The Army has the broad aim of increasing the use of renewable energy, but has not adopted any specific alternative fuel goals. The Air Force goals are to test and certify all aircraft and systems on a 50:50 alternative fuel blend by 2012, and to be prepared to acquire 50% of the Air Force’s domestic aviation fuel as an alternative fuel blend by 2016. The Navy’s goals are to deploy a “Great Green Fleet” strike group of ships and aircraft running entirely on alternative fuel blends by 2016 and to meet 50% of the Navy's total energy consumption from alternative sources by 2020. To meet this goal for its ships, the Navy would need to replace approximately 8 million barrels of petroleum used in its ships with unblended alternative fuels by 2020.

The Navy has also entered into a Memorandum of Understanding (MOU) with the Department of Energy and the Department of Agriculture to promote the development of a domestic advanced biofuel industry through the construction of domestic biofuel plants and refineries. Under the Defense Production Act, the Navy and the Department of Energy plan to fund this initiative with $340 million in federal funds for capital investment and production, with at least equal costsharing from industry. The Department of Agriculture intends to provide an additional $171 million through the Commodity Credit Corporation to support biofuel feedstocks.

Legislative debate in 2012 related to DOD’s alternative fuels efforts has focused on two areas: (1) proposals in the National Defense Authorization Act for FY2013 (H.R. 4310, S. 3254) to maintain or limit DOD’s ability to purchase alternative fuels and invest in biofuel production capability, and (2) appropriations related to the joint Navy, Department of Energy, and Department of Agriculture biofuel production initiative.

Additional areas for potential congressional oversight include the costs and benefits to DOD of alternative fuels, as well as the coordination of alternative fuel initiatives within the services and between DOD and other federal agencies.

Date of Report: February 11, 2013
Number of Pages: 23
Order Number: R42859
Price: $29.95

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