End the DoD's Green Energy Fuelishness

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There's a war underway over the future of biofuels for the U.S. military. Republicans are targeting Navy Secretary Ray Mabus' plans for the creation of a "great green fleet" that would power ships and planes with biofuels, and where military bases would generate half their power using renewable energy rather than conventional, fossil-fuel powered electricity. Both the U.S. House and the Senate Armed Services committee passed legislation that would halt the green fleet. The bills are probably dead on arrival in the White House, though they shouldn't be.

As the generally hawkish John McCain noted, "In a tough budget climate for the Defense Department, we need every dollar to protect our troops on the battlefield with energy technologies that reduce fuel demand and save lives...Spending $26 per gallon of biofuel is not consistent with that goal."

Representative Mike Conaway, who supports reining in the biofuel brigades agrees. "To have the military, whose sole job is to defend this country, spending extra money simply on flying their airplanes with fuel that's available at a cheaper price, again on these restraints and the resource restraints that we find ourselves in, makes no sense to me."

Green warriors make several arguments for the green fleet. First, they argue that when conventional fuel prices go up, military costs go up. Second, they argue that we are at perpetual risk of supply disruption. Third, they argue that the military could spur development of these new fuel technologies to make them cost competitive with conventional fuels. Fourth, they argue that new technologies that make ships and planes more energy efficient would enhance mobility and performance.

Virtually none of these arguments pass a laugh test. Yes, when conventional fuels rise in price, military operating costs go up. But in a global fuel market, the market value of any liquid fuel will track with the world price of oil on an energy-content basis. Simply switching to biofuels offers no price protection in a world of fuel-fungibility. Analysts at Rand put it quite succinctly in a recent report. "Alternative liquid fuels do not offer DoD a way to appreciably reduce fuel costs."

As to the risk of a supply interruption, we don't face one: Rand further observes, while the U.S. military uses a lot of fuel, when looked at in context, it uses a tiny percentage of world, or even North American production. Its consumption is less than one-half of 1 percent of global petroleum demand. The U.S. also produces over 8 million barrels a day. "we can find no credible scenario in which the military would be unable to access the 340,000 bpd of fuel it needs to defend the nation," says Rand. And, of course, there's that whole Strategic Petroleum Reserve, which can hold 727 million barrels of oil. Let's see, 727 million divided by 340,000...the SPR could power the military by itself for almost 6 years.

With regard to the early adopter idea, one would have thought that people would be wary of such arguments. Back in 2007, President Bush made this same argument when his administration implemented a requirement that the country blend in 17 million barrels of ethanol made from cellulose, the technology which did not exist at the time. And it still doesn't - 5 years later, there is no cellulosic-ethanol production at virtually any price. What we know from things like the cellulosic ethanol boondoggle, Solyndra, and other recent spectacular failures, government makes a lousy venture capitalist.

Finally, while efficiency improvements are often a good thing, it's very easy to be fooled by false economies to one's ultimate regret. As we've learned with hybrid vehicles, for example, the technology for greater efficiency is significant, it's more complex and more difficult to maintain, and, worst of all, the savings are subject to the Jevon's Paradox: if you really make it cheaper for a person to drive a mile, they drive more. As the Breakthrough Institute (a generally liberal, pro-environmental) group concluded in a comprehensive analysis of the Jevon's Paradox (or rebound effect), "Energy Emergence: Rebound and Backfire as Emergent Phenomena" finds extensive evidence and a strong expert consensus that a large amount of the energy savings from below-cost energy efficiency are eroded by demand 'rebound effects,' and that in some cases the rebound exceeds the savings, resulting in increased energy consumption from efficiency, known as backfire."

Few of the arguments for the great green fleet (Indeed few arguments that start from a standpoint of either seeking energy "independence," or energy "security) embody sound reasoning. We need to drop the unicorn-dreams of magical biofuels, and ensure that our military has access to the fuels it actually needs, at the least cost they can be obtained with in any given context.

Kenneth Green is a resident scholar at the American Enterprise Institute. 

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