DoD report concludes use of renewable fuels contributes to national security interests, but at a price penalty
Increased use of renewable fuels by the US Department of Defense (DoD) contributes to US national security interests, achieves Service energy security goals, and offers some limited military utility, according to a new report released by DoD.
However, the report also finds that the projected supply of drop-in renewable fuels will not be sufficient to meet anticipated DoD demand for renewable jet fuel products, and that price premiums for drop-in renewable fuels and the budgetary implications associated with meeting renewable fuel goals may be considerable. Further action by DoD and Congress could help to promote renewable jet fuel production and address the price premiums necessary for the Services to achieve their renewable fuel goals, it concludes.
The report, “Opportunities for DoD Use of Alternative and Renewable Fuels: FY10 NDAA Section 334 Congressional Study,” is a congressionally mandated assessment of the use of renewable fuels in non-tactical and tactical aviation, maritime, and ground transportation fleets. The report also investigates whether establishing a DoD commodity class for renewable fuels distinct from petroleum-based products would be beneficial.
LMI’s Energy & Environment group, a leader in alternative fuels and energy security analysis, provided analytic support and principal drafting of the report.
According to the report, DoD’s largest opportunity for renewable fuel use is in its tactical systems and weapons platforms, which constitute 90%t of its petroleum fuel demand.
The major findings of the report are:
Increased DoD renewable fuel use helps advance US strategic energy security interests, achieve the Services’ goals, and gain some limited military utility, such as lower freeze points, cleaner combustion, and potential for designer fuels.
At present, these fuels command a price premium, but it is anticipated to decline significantly as the market develops over the next decade. Despite this reduced premium, the Services’ renewable fuel goals could still impose $2.2 billion in additional estimated annual fuel costs by 2020.
There also are questions of renewable drop-in fuel availability relative to demand. DoD would require more than 40% of the total projected US drop-in renewable fuel supply (regardless of fuel type) in 2020, just to meet the military Services’ stated demand for 745 million gallons.
Drop-in renewable jet fuel production is not likely to meet the Services’ goal-based demand for more than 570 million gallons in 2020.
EISA’s RFS2 excludes jet fuel, DoD’s primary operational fuel, from volumetric production mandates, reducing private-sector incentive to produce renewable alternatives to conventional jet fuel.
Camelina appears to be a promising renewable feedstock for producing hydrotreated renewable jet (HRJ) fuel, but annual production capacity for camelina-based HRJ is projected at only 68–98 million gallons by 2020.
Third generation renewable fuels production systems, such as photosynthetic algae, are unlikely to supply significant quantities of feedstock oil by 2020 and may involve consideration of the water requirement tradeoffs.
The additional costs and potential adverse effects of creating a new DoD commodity class outweigh the potential benefits.