Navy Initiative Seeks Biofuel Companies With 'Drop-In' Technology, Some Dispute Program Spending

The U.S. Navy announced earlier this week it is requesting for proposals for a biofuel initiative that would provide $210 million in funds to be matched by private capital, according to Reuters. The spending on the initiative has been criticized by some as "misplaced priorities," while others believe not investing in alternative fuel technology is short-sighted.

The program was specifically started to help develop the biofuel industry that, unlike ethanol, makes products that can be used without engine modifications or changes to existing fueling infrastructure.

A Wisconsin-based company, Virent, is one that is interested in meeting the military's alternative fuel needs. "The Energy Report" (via Business Insider) recently described Virent as "[blowing] ethanol out of the water":

The process is a quantum-leap improvement on how ethanol gets made. While it uses similar materials like corn starch, sugar cane and wood, the end product has a much higher energy content than regular ethanol.

Virent says its products, unlike ethanol, can literally be "dropped in" to existing fuel supply chains, meaning manufacturing facilities, pipelines, tanks and fueling stations would not need to change anything about the way they currently operate.

Virent technology boasts having the ability to replace "90 percent of products made from petroleum" by converting plant-based sugars into products with similar energy outputs.

According to the Wisconsin Journal-Sentinel, this is exactly what the Navy is looking for. National Defense Magazine reported Navy Secretary Ray Mabus as saying "It’s like the F/A-18. It’s using the same engine no matter what fuel we burn. You’ll see an RFP for biofuels but you won’t see a change in the engine."

The Journal-Sentinel explains more on the phases of the Navy's program, which has been criticized by some as not necessarily being the place of the Pentagon to institute:

Companies that participate in the first phase will be selected this fall, and from that pool a second round of expanded funding will be announced later, Secretary of the Navy Ray Mabus said during a conference call with reporters.

Private industry will be required to match the $30 million investment, made under the federal Defense Production Act, Mabus said.

In the program's first phase, companies will be asked to submit a business plan for a commercial-scale biorefinery that would identify potential project sites.

Vendors invited to the second phase would be required to submit additional information for the construction or retrofit of a biorefinery.

The agencies also announced that they will allocate $20 million toward pilot-scale and demonstration projects that tap nonfood crops as biofuels sources.

National Defense Magazine explains that the Navy is positioning the program as not only a method to "wean itself off oil" but also as a safer fuel:

One of the most quoted statistics in the military world today is that one soldier or marine is killed or wounded for every 25 fuel convoys undertaken by U.S. troops in Afghanistan.

“That is simply too high a human price to pay for imported energy,” Navy Secretary Ray Mabus said. The reasons for investing in alternative fuels have become crystal clear, he said, “and the strategic and tactical implications of failing to do these things have become even more stark.”

The Journal-Sentinel makes note of Sen. John McCain saying he considers this program a case of "misplaced priorities," thinking it is not the Pentagon's responsibility to fund business or sponsor new energy technology. It also notes this funding was a point of contention for Republicans in the 2013 budget. Reuters has more on the disagreement on the spending for the initiative:

[Rep.] Mike Conaway said he was not opposed to the Navy buying alternative fuels so long as the price was not greater than that of fossil fuels, but paying $27 a gallon versus $4 a gallon for petroleum "makes no sense."

"It's not about proving the technology. It's Mabus wanting to waste money ... on a publicity stunt for his green fleet," he said.

Conaway said he thought biofuels should be developed in the private sector, not with the Pentagon in the lead. But he said there was not as much support in Congress for trying to block the latest Navy project with the Energy and Agriculture departments because it involved research and development funds.

Still, Defense Logistics Agency Energy Lead Rear Adm. Kurt Kunkel said to National Defense Magazine that the market for biofuels will not be dependent on the U.S. Military's involvement:

[Navy fuel lead Rick] Kamin added that the Navy’s fuel use is not significant enough to power an industry, but its role as an “early adopter” can help work out initial technical and production kinks.

Either way, Virent and similar companies, according to the Journal-Sentinel, are on board with the program as it would help them create larger biorefineries.

According to Virent, technology uses many different types of feedstock -- "customers can choose the plant sugar source that makes the most sense for their situation."

CEO Lee Edwards said in The Energy Report that he expects Virent to have a commercial refinery built within the decade.