Remarks on the RAND Report

The US military has recently made a fundamental shift in looking at renewable energy. It has become a voluntary testing ground for renewable technology. The US Department of Defense has spent hundreds of millions of dollars for testing and certification of alternative fuels. By doing so, it expects to serve as an early customer and hence help create a commercial market. True, the US Congress has not yet required the DOD to use alternative fuels in tactical vehicles. It is an initiative taken by the DOD and its services.

On 24 January 2011 the RAND Corporation submitted a report titled “Alternative Fuels for Military Applications” to Congress. The report made a great publicity I guess because of it stood against biofuel hype of the US military.

The Rand report looks at key policy, management and technical issues associated with DOD’s alternative fuel efforts in tactical weapon systems. Alternative fuels should have some key characteristics: technical and commercial viability, environmental acceptability, and technical readiness for commercial production, among others. The Rand report examines these issues for a number alternative fuel processes and makes some strong recommendations. In this post I give my comments on the Rand report.

The Rand report is a good report but not good enough. I am not biased here. Note that I called some reports (for instance a 2009 Deloitte report) crap.

The first thing I do not understand is why the Rand report was released in January 2011? My impression is that a large part of the report was completed towards the end of 2009, and the rest before the mid 2010. Because, there is no mentioning of any new developments in the second half of 2010. If that is the case, why wait for 6 months to release it? This staying one year behind effect have big implications in the report. It makes it, well, not up-to-date. Why no mentioning of the Navy’s tests in 2010?

I believe that the authors of the report are not experts on world oil markets. They claim that it is impossible to predict where oil prices will be over the next few decades. Well, after 2020 the oil prices can only be in triple digits. Therefore the lower end of this triple digit price, which is $100, would already be a good constraint for analyzing the commerciability of alternative fuels. I also do not agree with the statement that “Increased production of alternative fuels will reduce demand for crude oil, resulting in lower world oil prices.” (P.2). By the way, the authors DLA Energy doesn’t procure all military fuels from refineries in the US.

Now let me look at some of the details in the report. I agree with many things stated in the report. Here is a short list:

“Concepts for forward-based alternative fuel production do not offer a military advantage”

“JP-8 is not a perfect diesel fuel.”

“Defense Department goals for alternative fuels in tactical weapon systems should be based on potential national benefits, since the use of alternative, rather than petroleum-derived, fuels offers no direct military benefits.”

“As long as the military is willing to pay higher prices, it is unlikely to have a problem getting the fuel it requires,” in case global oil supplies are disrupted for whatever reasons. “Despite the absence of a specific military benefit, there are nationally important benefits to be gained from the use of alternative fuels,” for instance it could lead to a commercial alternative fuels industry

“To cost-effectively promote early industrial production of alternative fuels, the Department of Defense needs extended contracting authority for fuel purchases.”

“Within the United States, the prospects for commercial production of alternative fuels that have military applications remain highly uncertain, especially over the next decade.” [I agree, but provided that there will be no substantial government subsidies]

“The military is best served by efforts directed at using energy more efficiently in weapon systems and at military installations,” i.e., demand management programs like efficiency of energy use and conservation.

“Current efforts by the services to test and certify alternative fuels are far outpacing commercial development.” [I partially agree].

Now about the parts I don’t agree and I heavily criticize:

“Algae-derived fuel is a research topic, not an emerging option that the military can use to supply its operations, and cultivating seed oils affordably without adverse effects on climate change has yet to be demonstrated. Because the prospects for appreciable domestic production of hydrotreated oils over the next decade are so uncertain, the Department of Defense should discontinue large-scale testing and certification efforts.”

“It is highly uncertain whether appreciable amounts of hydrotreated renewable oils can be affordably and cleanly produced within the United States or abroad. Jatropha and camelina are often mentioned as ideal plants to meet these requirements, but there exists little evidence to back these claims. Advanced approaches, such as those using algae as a feedstock are in the early stages of the development cycle.”

“Considering the very limited production potential for fuels derived from animal fats and waste oils, (2) the highly uncertain prospects for affordable, low greenhouse-gas fuels derived from seed crops, and (3) the early development status of algae-based concepts, hydrotreated renewable oils do not constitute a credible, climate friendly option for meeting an appreciable fraction of military fuel needs over the next decade.”

The pessimistic comment on Algea is not justified. In another part of the report pessimism about Algea extends to 2020.What is appreciable quantity? There is Algea-derived fuel production in the world.
Contrary to what is stated in the report, there is commercial jatropha production in the world. However, The jatropha is neither a profitable nor a sustainable investment, according to a new report released by Friends of the Earth “Jatropha : Money doesn't grow on trees” lists ten reasons why jatropha is neither a profitable nor a sustainable investment. (Released in January 2011).
PS: After I posted this article I have been informed about a recent article appeared in Biofueldigest which comments on the Rand report.

I do not have any intention to defend the biofuels here. But the authors simply ignored so many things and are so unscientific that it would take too long to go over all the points. Anyone who is interested in a classy report on the use of and research on alternatives/biofuels as jet fuel must read The International Air Transport Association (IATA) reports. IATA has prepared annual special reports on alternative fuels since 2006. Read the 2010 report. Also see, The growth of biofuels, Alternative Fuels Fact Sheet. The Rand report has NO reference to any IATA reports (unless I missed). Ignoring those reports and other work of IATA in the field and yet commenting on the use of alternative fuels in aircraft is something I cannot forgive.

Now, let me mention about the bulk of the Rand report.

“Fischer-Tropsch (FT) fuels are the most promising near-term options for meeting the Department of Defense’s needs cleanly and affordably. Considering economics, technical readiness, greenhouse gas emissions, and general environmental concerns, FT fuels derived from a mixture of coal and biomass (particularly 60/40 blend and preferably with carbon capture and storage) represent the most promising approach to producing amounts of alternative fuels that can meet military, as well as appreciable levels of civilian, needs by 2030.”

However, one needs to read footnote 10 carefully. The report’s bias to FT partly stems from how it handles carbon capture, transport and storage. It assumes that 90% of the FT plant’s emissions will be captured but excludes transport and storage simply because it assumes that the captured CO2 will be used for enhanced oil recovery. This is a huge assumption.

The report’s emphasis is on lifecycle greenhouse gas emissions (all greenhouse gas emissions associated with the production and use of a fuel) is understandable but the way they handle it is, well, VERY biased.

It is true that “For conventional petroleum fuels, these include greenhouse gas emissions associated with oil extraction, refining, delivery, and combustion in either a vehicle or aircraft. For coal-derived liquids, the life cycle begins with coal mining and includes emissions associated with the alternative fuel production facility, delivery, and final combustion. And for biofuels, the life cycle covers all aspects of cultivation and harvesting, delivery to a central processing facility, processing, and final combustion.” So far quite clear.

Then it continue “Most importantly, it is now evident that land-use changes—both direct and indirect—can play a dominant role in the lifecycle greenhouse gas emissions of biofuels. Our examination includes these emissions from land-use changes.” The last three words here are crucial.

Now, what lifecycle analysis methodology the Rand authors are talking about? There are several methodologies. Here is what the IATA 2010 report says on that:

“The International Organization for Standardization (ISO) provides a framework for undertaking LCA [life cycle analysis] studies. However, this framework does not prescribe a single standardized LCA methodology, therefore, the comparison of outputs from different methodologies for the same product or process is difficult. There are two main LCA approaches – attributional and consequential. The attributional approach focuses only on the environmental impacts of the product itself whereas the consequential approach also includes environmental impacts of associated products and processes. The consequential approach includes the identification and quantification of external variables such as energy, direct and indirect land-use change and food prices. In addition, the method for allocating emissions associated with biofuel co- or by-products can have an important impact on the net emissions.” See Table 7 on page 53. For much deeper analysis see PARTNER — the Partnership for AiR Transportation Noise and Emissions Reduction reports ( http://web.mit.edu/aeroastro/partner/projects/project28.html)

The question is: Did the Rand authors reach their conclusion about the superiority of the FT coal-biomass+CCS technology to other alternatives based on scientific comparison? I didn’t see anything in their report.

Then look at p.57 of the IATA report. It is reproduced from PARTNER Project 28 report.

The conclusion is this: If appropriate renewable feedstocks were used, both F-T fuels and Hydroprocessed Renewable Jet fuel could provide aviation with modest (~10%) to large (~50%) reductions in emissions that contribute to global climate change.

In sum: The Rand report has some good elements and contains several good recommendations but some of its heavy conclusions are not justified.

Rand Corporation Torpedoes the Green Fleet

In 2010, the Navy News Service staff published nearly 6,000 stories on Navy.mil. At the end of 2009 the Service complied top 10 stories. Here is top number 10:

10. The Green Navy (Green Fleet, Green Hornet, 2010 Navy Energy Forum): The Navy celebrated Earth Day April 22 by showcasing a flight test of the “Green Hornet,” an F/A-18 Super Hornet multirole fighter jet powered by a biofuel blend. Participants in the 2010 Navy Energy Forum on Oct. 12-13 focused on achieving energy security and reviewed progress toward the energy targets. The U.S. Navy conducted a full power demonstration of a Riverine Command Boat powered by alternative fuel, Oct. 22. 

The year 2010 ended well for Green Navy. Towards the end of January 2011 things were still fine.

On January 24, 2011, Secretary of the Navy Ray Mabus posted on The White House Blog a short but informative article titled “Moving the Navy and Marine Corps Off Fossil Fuels.”

He starts with his five ambitious goals of October 2009 to reduce fossil fuel consumption in the Navy and Marine Corps and increase the use of alternative energy to at least 50% of energy requirements no later than 2020.  He list the following reasons for doing so:

• Reducing reliance on foreign sources of energy makes the country more secure.

• Reducing reliance on fossil fuels makes troops safer

• Increasing energy efficiency makes ships, aircraft, and vehicles more tactically capable.

• Increasing alternative energy use helps create an alternative energy market.

• Reducing the energy footprint significantly reduces military carbon footprint.

He also lists progress made towards his goals.He concludes with a statement that the Navy and Marine Corps are leading the nation in adopting new technology to make our country more secure, and helping to create a new energy future.

One day later the bad news hit the fan.

On 24 January 2011, the RAND Corporation submitted a report titled “Alternative Fuels for Military Applications” to Congress. The report made a great publicity I guess because of it stood against biofuel hype of the US military. The most quoted sentence of the report is “the use of alternative fuels offers no direct military benefit over the use of conventional petroleum-derived fuels,” they have little military value, and the U.S. service branches are wasting millions of dollars by trying to replace their consumption of fossil fuels.

A day later, on 25 January 2011, when the New York Times spread the news (Alternative Fuels Don’t Benefit the Military) DoDLive Bloggers Roundtable with Mr. Tom Hicks, Deputy Assistant Secretary of the Navy for Energy, was discussing the Rand report. ( interview, transcript).

Main headline of his criticism are the following:
 
The Navy, based on its engagement with the alternative fuels industry, has “come to some far different conclusions than this report suggests.”

The report has “factual errors”, was based on “secondhand knowledge,” and is “more of an op-ed than serious research,” contains “misrepresentations.”

“The Rand report erroneously describes the Navy as operating a testing program for a petroleum substitute used to make low-sulfur diesel fuel, whereas the service focuses exclusively on biofuels”

He argues that the report downplays the possibility government and industry would succeed in making such fuels practical. To him the American military wields sufficient purchasing power to sometimes drive market realities, increasing the chances of developing new fuels in sufficient quantities at the right price. Though the military represents only 2% of the U.S. petroleum market, the services would likely drive market trends given the anemic finances of America’s largest oil user—the commercial aviation industry.

This ambition might be reasonable but his claim “the Navy intends to soon drive down the price of fuel to a dollar per gallon” is unreasonable. His reiteration of the usual line “new energy would allow America to regain its energy independence while stopping the transfer of wealth to oil-rich countries sometimes hostile to U.S. interests,” is nonsense. (I will tell some other time why)

At the same time while Mr. Tom Hicks was discussing the Rand report,  Secretary of  the Navy Mabus was reviewing the effects converting the Department of the Navy from fossil fuels to alternative fuels will have on the economy during the Clean Energy Summit. Chinara Lucas, Secretary of the Navy Public Affairs, reported the following about what Mabus said there:
 
Mabus said: "History has taught us the competition for resources has been one of the fundamental causes of war for centuries," …. "I am very pleased that the cost of these fuels continues to decrease," … "As more is produced – and as our demand signal grows, I am confident that price will continue to fall."
 
Maybus said the dependence on fossil fuel continued to produce bad results during the time of war by endangering Sailors and Marines charged with guarding convoys bringing energy to bases and machinery. He urged that the solution to this reliance and resulting war and loss of lives is the utilization of alternative fuels.

The use of cotton-seed by Marines in Sangi, Afghanistan, was also presented by Mabus as an example of alternative energy at its best. Through this pilot program, Mabus said Marines have reduced the amount of fossil fuel they use by 20 percent. As a consequence, Marines utilize fuel convoys less. "If this program can be expanded, it has the potential to achieve monetary savings," said Mabus. (Well, I am sure he didn’t say how much less money, and how many less convoys)

Again, at the same time (25 January) Mary Rosenthal, Executive Director of Algal Biomass Organization released a statement saying “the report is likely based on outdated information. In our opinion, basing sweeping policy recommendations on such data is misguided if not reckless. The positioning of the entire US algae industry as a “research topic” is patently false. ….. It is unclear to us whether or not any actual “green” CTL fuels have been produced or tested. We believe algae commercialization is far closer than RAND suggests.”

Steve LeVine wrote on 26 January 2011 (Isn't reducing soldier casualties a military priority?) about the Rand report, After talking to the author of the Rand report, James Bartis, he reports that “Bartis's report is misleading by omission. His report focuses solely on non-fossil fuels, as Congress requested in a 2009 appropriations bill, and leaves out alternative energy such as solar and fuel cells.”  LeVine argues that Bartis “simply laid out what we all know -- that biofuels may never be more economical than oil, and many of them will probably never be produced in commercial volumes.”

I am carefully reading the Rand report. In a separate post I will only focus on it, not who said what about it.

Interesting coincidence with the Rand report that I had concluded my previous post (Going Green and Greenbacks, posted on 18 January) with the following sentence: The US military must make the choice between "going green for greenbacks" and "going green without extra greenbacks".