American Elephants

The Navy Commitment to a Green Fleet Continues by The Elephant's Child


President Obama has nominated a renewable energy advocate as the new energy chief, the Assistant Secretary of the Navy for Energy Installations and Environment. Vice Admiral Dennis V. McGinn (Ret) comes from the American Council on Renewable Energy, where he was president and chief executive.

The selection signals a continued commitment to green energy within the armed forces. The theory is that the Navy will get half its energy from nontraditional sources by 2020. The White House has promoted the Navy’s transition to biofuels to power the fleet. I guess to ensure your promotion, you have to embrace biofuels, because economically they make no sense at all.

Last year, the Navy embarked on a costly and pointless exercise — using “advanced” biofuels that cost $26 per gallon in some naval exercises. Secretary Ray Mabus claimed that it was important to spend millions on an exotic biofuel to “enhance our national security.” The exercises in the Pacific ran a fleet of warships, including the accompanying jets and helicopters, on a 50-50 mixture of conventional fuel and biofuel.

The biofuels in this case came from Dynamic Fuels LLC and Solazyme, Inc, and were made from chicken fat and algae oil respectively. The Navy claims that this protects national security by reducing our dependence on the volatile global oil market. If oil prices were around $1,000 a barrel, that might make sense, but they are hovering around $100 a barrel, whereas $26 a gallon multiplied by 42 (42 gallons in a barrel) = $1,092 a barrel of biofuel.

The Energy Independence and Security Act of 2007 mandates the production of 100 million gallons of cellulosic fuel in 2010, 250 million gallons in 2011, 865 million gallons in 2012 and 1 billion gallons in 2013. NONE was produced in 2011, and only 20,069 gallons through October of 2012. The EPA just issues mandates, but it doesn’t matter if there isn’t any fuel produced, they’ll mandate a higher amount next year, and maybe sometime the production will catch up. I don’t pretend to understand this for it makes no sense to me at all.

Biofuel is old technology. Some of the first automobiles made in the 1800s ran on ethanol and other biofuels. During World War I, a cellulosic plant was operating, but biofuel declined because it was inefficient, expensive and unsustainable. But Obama has a fascination with old technologies. Doesn’t get much older than windmills, that have been slowly grinding or pumping for centuries — inefficiently.  We may use these sources of energy in modern high technology ways, but the nature of the sources has not changed, and they are still inefficient pipe-dreams.

A federal biofuel advisory committee that serves multiple government agencies in the development of biofuels is composed of individuals that work in the industry, including the President and Vice President of Solazyme, an interesting example of cronyism.

Both the House and the Senate have produced bills restricting the purchase of alternative fuels if they cost more than conventional oil.

The Navy spent $12 million for 450,000 gallons of biofuel for the demonstration. That same $12 million would have purchased three million gallons of commercial fuel. Go figure.

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The EPA just issues mandates, but it doesn’t matter if there isn’t any fuel produced, they’ll mandate a higher amount next year, and maybe sometime the production will catch up. I don’t pretend to understand this for it makes no sense to me at all.

The mandates that the EPA has been issuing have been far lower than those originally set by Congress, but they shouldn’t be mandating any at all. However, the EPA Administrator has little choice: the President and the industry’s friends in Congress would have the Administrator’s head if he or she said, “this is all silly, and stupid, and imposing an unjustified cost on consumers.” So, instead, the EPA has to sit down with potential producers, ask them what they think they’ll produce in the year, and then set the required blending volume at that amount. If the producers fail to produce, they incur no penalty. Rather, it is the fuel blenders who do.

By the way, many of the key movers and shakers in all this are located in Washington State. They include Boeing, various biofuel producers, and of course the politicians who are in their pockets.

Outrageous? That is too weak of a word. I wish there were a stronger one.


Comment by Subsidy Eye

From what I’m reading, the EPA is setting expected amounts or mandates or whatever you want to call them that are essentially impossible to actually produce, but it sounds good on paper or something.
The EPA has been making up statistics for some time — out of whole cloth, so I would not trust them with anything. How is Boeing involved? I’ve never heard of that, nor of any biofuel producers in this state.
We are a hotbed of Greens, but I don’t know about the rest.


Comment by The Elephant's Child

As you mention above, Congress initially established targets for cellulosic biofuels. EPA has not been allowed to waive them as practical, so the formula that Congress folk and the administration will accept is to ask the potential producers what they expect to produce. It is in those folks’ interest to exaggerate how much they think they will produce, of course, particularly since they do not suffer a penalty for such exaggeration. So primary blame should be on Congress for coming up with the stupid idea in the first place and then expecting the EPA to find a way to implement it.

There are several very influential biofuel producers in Washington State, very good at extracting subsidies from the federal government. Pre-eminent is Imperium Renewables, in Grays Harbor, home to the largest biodiesel plant in the United States.

The other one is AltAir Fuels, which had big plans to produce aviation biofuels at a plant near Spokane Airport. Now it seems they will do it at a plant near LA. Oh, and AltAir got the USDA to pay farmers to convert their farms to growing feedstock for their plant.

You didn’t realize that state bonds are being used to build facilities to supply aviation biofuels in your state?

Boeing’s role has to get into bed with the USDA, FAA and the military and press for all kinds of money and regulatory favors in order to push their agenda for aviation biofuels.

This is corporate welfare at its worst.


Comment by Subsidy Eye

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