New Biofuels Market to Reduce Foreign Oil Dependence

WASHINGTON, Aug. 16, 2011 — The Navy Depart­ment is pro­vid­ing the mar­ket share for the nation’s nascent bio­fu­el indus­try as part of a White House ini­tia­tive to kick-start the alter­na­tive ener­gy sec­tor, admin­is­tra­tion offi­cials announced today.

The Navy, in part­ner­ship with the depart­ments of Ener­gy and Agri­cul­ture, is work­ing with the pri­vate sec­tor to cre­ate a sus­tain­able U.S.-based alter­na­tive ener­gy indus­try as part of a plan Pres­i­dent Barack Oba­ma announced in March to reduce Amer­i­can depen­dence on for­eign oil.

Navy Sec­re­tary Ray Mabus, along with Agri­cul­ture Sec­re­tary Tom Vil­sack and Ener­gy Sec­re­tary Steven Chu, announced the lat­est part of the plan in a con­fer­ence call with reporters today.

Under the plan, the Navy, Agri­cul­ture and Ener­gy depart­ments will share equal­ly in a $510 mil­lion invest­ment over three years — esti­mat­ed at half the pri­vate sector’s cost — in the pro­duc­tion of advanced “drop-in” avi­a­tion and marine bio­fu­els, which can be used with exist­ing fuels to pow­er mil­i­tary and com­mer­cial vehi­cles, they said.

The White House’s Bio­fu­els Inter­a­gency Work Group and Rur­al Coun­cil will over­see the ini­tia­tive with the simul­ta­ne­ous goal of boost­ing America’s rur­al economies, they said.

“America’s long-term nation­al secu­ri­ty depends upon a com­mer­cial­ly viable domes­tic bio­fu­els mar­ket that will ben­e­fit tax­pay­ers while simul­ta­ne­ous­ly giv­ing sailors and Marines tac­ti­cal and strate­gic advan­tages,” Mabus said.

“Hav­ing ener­gy inde­pen­dence in the Unit­ed States is one of the most impor­tant things we can do from a secu­ri­ty stand­point,” he added.

The Unit­ed States imports more than $300 bil­lion in crude oil annu­al­ly, and “price shocks and sup­ply shocks” of the inter­na­tion­al oil mar­ket are “too much for the mil­i­tary to sus­tain,” Mabus said. Every dol­lar per bar­rel increase in oil adds $30 mil­lion annu­al­ly to the Navy bud­get, he said.

“Today’s 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,” Mabus added.

The ini­tia­tive is in line with Mabus’ goal to cut in half the Navy’s oil usage by 2025, and sup­ply its grow­ing use of bio­fu­els, which the sec­re­tary esti­mat­ed at 8 mil­lion gal­lons per year.

“The Navy can be the mar­ket,” Mabus said. “We have a big need for bio­fu­els. It will make us bet­ter warfight­ers, it will save lives, and it will reduce a vul­ner­a­bil­i­ty in our mil­i­tary that we sim­ply shouldn’t have.”

The Ener­gy Depart­ment already sup­ports 29 bio­fu­els projects in which pro­duc­ers man­u­fac­ture fuels from cel­lu­losic feed­stalks — wood, grass­es and noned­i­ble parts of plants, Chu said. Under the ini­tia­tive, there can be no neg­a­tive impact on U.S. food sup­ply, they said.

The ini­tia­tive is impor­tant, the sec­re­taries said, to diver­si­fy the nation’s ener­gy sup­ply, remove risk from the bur­geon­ing bio­fu­els indus­try, and cre­ate eco­nom­ic oppor­tu­ni­ties in reces­sion-hit parts of the coun­try.

The depart­ments plan to release a request for pro­pos­als soon from bio­fu­el man­u­fac­tur­ers, and Mabus said the Navy con­duct­ed the largest-yet bio­fu­els request of 450,000 gal­lons in a bid last spring.

“There is a mar­ket there that is real, that is sol­id,” he said of pro­duc­ers, and added that it is grow­ing enough that prices already are start­ing to decline.

The Navy will “repur­pose exist­ing funds” for its $170 mil­lion share of the invest­ment, Mabus said.

“It’s a mat­ter of set­ting pri­or­i­ties,” he added.

U.S. Depart­ment of Defense
Office of the Assis­tant Sec­re­tary of Defense (Pub­lic Affairs)