Friday, August 24, 2012

DOD Needs to be More Transparent on its Energy Initiatives

Back in February 2008, Defense Science Board Task Force on DoD Energy Strategy released a report entitled More Fight - Less Fuel. In it the Task Force recommends the DoD “invest in basic research to develop new fuels technologies that are too risky for private investments and to partner with private sector fuel users to leverage efforts and share burdens.”

The Defense Department went even further; it wishes to create an industry. As I mentioned in my previous post, the real reason is the escalating oil prices since the early 2000s ( DOD’s Oil Use and Its Costs).

This focus on energy prices in the past decade has missed a point: declining energy consumption of the Defense Department since the end of the cold war, until the start of the global war on terror. (see the chart below). It went down about 40%.
This was mainly due to reduction in oil consumption over the mentioned period. (see the chart below).

But, increasing oil prices and to a lesser extent the “war on terror” have overshadowed this trend.

Instead of finding ways of increasing oil production from conventional sources as well as proven commercial unconventional ones (such as coal to liquids or gas to liquids technologies) the DOD has picked biofuels.

The Defense Science Board Task Force report I mentioned above went so far to argue that “Synfuel production  technologies that can be adapted to forward deployed locations using local materials (such as bio-waste) would be valuable because it would directly reduce the amount of fuel that would have to be moved and protected in theater.” In simple terms this means, the DOD should find ways to produce alternative fuels where it fights. Add to this all the other proclaimed benefits of biofuels (see any speech of the Secretary of the Navy where he mentions energy. In fact he mentions it almost all the time).

I am not against biofuels or biofuels technologies. I am against picking specific winners in energy technology instead of leaving the decision to the market, pushing to create an industry with taxpayer guaranteed loan, and prematurely spending millions of dollars to bring unworkable and uneconomic programs.

In my opinion, instead of “More Fight - Less Fuel” the DoD should better try “Less Fight-Less Fuel”,  get rid of its obsession with biofuels, and be more transparent.

And when talking about alternatives, especially on biofuels, instead of empty rhetoric the DOD should start talking with numbers. With numbers I particularly mean the costs. Look at the following table (incomplete but not bad).
So far CRS, GAO, several NGOs and private companies as well as individuals produced numerous reports on the DODs biofuels initiatives but unfortunately none has provided any complete table with total and unit costs. Please do let me know if you know of any. I would be happy if you could at least (this is a question to the DOD officials) tell me total cost of the awards to “PM Group” in Sept 2009 and “Sasol Oil” in June 2008.


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