The U.S. Navy and Biofuels – Part I
On Tuesday, October 19, 2010 I conducted an interview with Tom Hicks, who is the Deputy Assistant Secretary to the Navy (Energy). The idea for the interview originated from my recent essays on Solazyme (here and here) in which the Navy’s investments in biofuels were discussed. After the Solazyme essays were published, Consumer Energy Report editor Sam Avro contacted the Navy for comment, and they offered to set up an interview with Mr. Hicks.
I was joined by Sam, and our questions below will be denoted as “RR” or “SA”. Mr. Hick’s responses are “TH”. The goal of the interview was simply to distill down for a general audience what the Navy is trying to accomplish. The interview went on for over 40 minutes, so it will be broken down into multiple parts.
RR: Can you tell me a little bit about yourself? What brought you to this job?
TH: Shortly after college I began working for the Navy as a civilian. I started the energy program for what was then Navy Public Works Center – Washington. That was really doing energy efficiency efforts in the tens of millions of dollars throughout the region. That was kind of early 90’s. From there I went to the EPA, where I created Energy Star for Buildings. Instead of Energy Star for Computers and many other things that you are probably familiar with – I created the application for buildings while there. I implemented that and ran it for a number of years and then went on to the U.S. Green Building Council, where among other things I headed up the Leadership in Energy and Environmental Design (LEED) rating system for a couple of years, and I also started and ran the international program there as well. From there, this opportunity came back, and it was a way for me to in many ways come home, back to Navy, and kind of apply both my energy and green building roots to what the Navy’s aspirations were.
RR: In talking to people, I think a lot of people don’t really understand the relationship between the Navy and the companies you work with. For example, are you doing your own research, or only funding outside research? So what exactly is your scope, particularly as it relates to biofuels?
TH: As you probably know, the Navy, as with the Army and Air Force – we purchase our fuel through what used to be called DESC (Defense Energy Support Center) and is now DLA – Energy (Defense Logistics Agency). So we all purchase our fuel from them to power the fleet. For us it’s mostly JP-5 and F-76 and a little bit of JP-8 through DLA Energy. In terms of research, what we are doing – and this stems from the Secretary’s vision and goals that he laid out in October 2009. What he laid out was what the Navy is going to do going forward in the future. There are goals about energy efficient acquisitions, but the two that are the most relevant here are sailing the “Great Green Fleet” which is an idea that hearkens back to the “Great White Fleet” around the turn of the last century that Teddy Roosevelt sailed; this idea that in 2012 we will put a carrier strike group in local operations entirely on alternative fuels and then in 2016 we are going to deploy that strike group on all alternative fuels. So that’s one marker. The other is that by 2020, 50% of all of the Navy’s energy consumption will come from alternative sources. Those are the kinds of guideposts, the vision that we are working toward. In terms of the research, what we are doing today is doing the research, testing, and certification on all the engines in our inventory. That includes all of our surface vessels, as well as all of our aircraft, and testing them to use a 50:50 blend of biofuels, and whatever the case may be; JP-5, JP-8, or F-76.
RR: So you are testing fuels, but not actually trying to produce any yourselves?
TH: No, that’s really not our role to play in this market. There are many other entities that are in that space, and we are looking to utilize those fuels in the blends I mentioned before.
RR: Thanks, that helps clarify one point. So, what are the primary drivers for this, and what is driving the timelines? Is this coming from policy, where they are saying “We really need this”, or from scientists saying “We can do this?”
TH: I think what’s driving it for us is that we see it as enhancing our war-fighting capabilities. It is about becoming more energy independent, more energy secure, and playing what we consider a leading role, not only in the Department of Defense, but in the Federal Government in seeing the realization of an energy efficient economy. That’s what’s really driving us, and that’s consistent with the President’s objectives for the Federal Government, and we see ourselves playing a leading role in that. Having more homegrown, secure, independent sources of fuel is going to be critical to us to be able to complete our mission going forward.
RR: The U.S. Joint Forces released a report earlier in the year (see this story) that warned of the potential for a 10 million barrel a day shortfall by 2015. I am wondering about your opinion on that. Oil supplies, short and long-term; do you think that’s going to be an issue?
TH: I am not an expert in those areas. I can probably point you to some people who are. I was at a conference yesterday, and I understand we currently have about a 500,000 barrel per day surplus, which is pretty tight, but I can’t really comment on that. But of course as we pursue this effort, what we are looking to do is to decrease our dependence on fossil fuels. By going for these alternative fuels and biofuels, we can find more independent, secure sources.
SA: Sam here. If I could go back to the original question posed by Robert, where he asked what is driving the changeover towards alternative fuels and greener energy; is it more of a policy thing, which you explained to us and obviously we understand the importance from a security aspect, and about that no one is going to argue about, but I think Robert’s question was more about whether it was wishful thinking. More like “We would love to be in a position to be less reliant on crude oil and the sources we are getting the crude oil from” – or is it the scientists telling you “This is something we can do?” So the question is really, “Is this something we can do, or something we hope we can do?”
TH: Certainly from a technical perspective, as we are proving out through our testing and certification program, the fuel works just as well as other fuels. The blend, the fuel; is transparent to the operator. These are drop-in, so from that perspective it works. So I am not sure if that answers your question from a scientific perspective.
RR: I think the question is, “Can they deliver?” I agree with you that these are drop-in fuels (we are specifically talking about synthetic fuel replacements, not biodiesel or ethanol), as I have seen lots of testing on them. But are the companies realistic about the timelines in which they can deliver?
TH: Well, I think that’s one of the key things we are sending out is a demand signal to the market. So what we are saying is that by 2012, to test the fleet and do the local ops that I mentioned with the Great Green Fleet, we need 8,000 barrels of biofuel. To deploy that in 2016, we need 80,000 barrels. Those are certainly quantities that – we have talked to industry – and they will have no problem with delivering. By 2020, we go from 8,000 to 80,000 to 8 million barrels, is what our need is to meet that goal of 50% alternative fuel. So if we were to sit passively back and not send out the demand signal, perhaps we would have a different outcome. We choose a leadership position, and part of that position is sending out a strong demand signal to the market, that if you can deliver this; if you establish this; if you can meet it at a competitive cost long-term, then this is something we are going to commit to. So again, we are going through the entire certification and testing of every engine in our fleet, including the diesel back-up generators on our carriers.
SA: I just want to clarify one point. So you are telling me, obviously I understand your strategy for getting there, but you are confident that this strategy will take you to a point, where I have seen the Secretary of the Navy say that they want to be sure that 50% of total energy consumption will come from alternative energy sources by 2020, and reducing the use of petroleum by 50% in the commercial fleet by 2015; so you think those are viable goals?
TH: Those are viable goals, and those are goals that are driving our strategies, and driving our budget to make those goals a reality. And again, it’s not just the Navy; we send I think an important demand signal, but if you look at us relative to commercial aviation we are very small, but at the same time I think we represent a very powerful part; and we are also doing this through partnerships with others; whether it’s USDA in trying to create a vibrant biofuel market in Hawaii, or it’s working with DLA Energy to make sure they understand what our needs are, and when we will have those; it’s also working with DOE, through their loan guarantee program and other investment programs into biofuels; we are working all those groups to really make sure that a market takes off on biofuels. We are doing everything within our control to do that.
The next installment will begin by discussing the reasons that the Navy can’t use fuel produced from coal.
Robert Rapier is a chemical engineer with 20 years of international engineering experience in the energy business. He holds several patents related to his work. Robert is the author of Power Plays: Energy Options in the Age of Peak Oil. He is also the author of the R-Squared Energy Column and is Chief Investment Strategist for Investing Daily’s Energy Strategist service. Robert has appeared ...
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