Navy, RAND at odds over the value of alternative fuel

By Jared Serbu
Reporter
Federal News Radio

A study released Tuesday by a well-respected think tank said there is no military benefit to the Defense Department’s continued pursuit of alternative fuels-even though such efforts might provide a benefit to the country as a whole. The report, mandated by Congress in the 2009 Defense authorization bill, raised immediate objections from the Navy, which said the researchers at the RAND Corporation had not done their homework on the issue.

James Bartis, a senior policy researcher at RAND and the study’s lead author, said his team concluded that from a military perspective, the source of the fuel burned in aviation and naval settings-the focus of the report-made no difference.

“This fuel looks just like petroleum, it behaves just like petroleum, it’s no worse and no better,” Bartis said in an interview. “For that reason, they don’t offer any military advantage in terms of what our military does, which is fight.”

The 130-page document also concluded DoD has been overoptimistic about the prospects of the marketplace producing viable alternative fuels, and that it is overly focused on technologies that will never be able to scale up to meet the nation’s fuel needs.

But the central question, Bartis said, is whether or not venturing into the field of alternative fuel experimentation should be a function of military in the first place.

“There are some very good people in the Defense Department, some very bright people,” he said. “But we also have a very large program in the Energy Department.”

“So we’ve simply raised this to Congress that they need to look at whether this is the wisest thing to do, given the pressures on the Defense budget and the national budget in general. We don’t make a recommendation one way or the other, and in fact if we want to keep it in DoD, we do have recommendations on how they ought to manage it better than they’re managing it today.”

The Navy disagrees

At least one major component of DoD sees things very differently. “This doesn’t represent RAND’s best work,” said Tom Hicks, the Navy’s deputy undersecretary for energy. “It reads more like opinion than necessarily research based on engagement with industry and those leading the industry.”

Hicks said the Navy was leading DoD’s efforts on alternative fuel development, and his office was not consulted during the preparation of the report. Hicks spoke on a conference call with reporters just after the report’s public release, saying the RAND researchers made “factual errors” and “misrepresentations” about DoD and private industry’s efforts to turn renewables into replacements for carbon-based fuel.

“Our view in talking to the industry is that the report doesn’t seem to square with what we’re hearing, not just from the companies themselves but from their equity partners as well,” he said. “We also dialogue with other government agencies-USDA and DoE-and the information doesn’t seem to square with them.”

RAND researchers concluded that DoD was spending far too much of its time and resources investing in fuels made from seed-based replacements for fossil fuel. Bartis said that while those end products will burn just as well as petroleum from a technical perspective, they will never be realistic fossil fuel replacements in the real world.

“Our country today uses about 20 million barrels a day of oil,” he said. “If I tried to make only one percent of that oil from seeds, it would take about 10 percent of the cultivatable land of the entire country. That’s a dead end for us. You can’t take that much food land out of production simply to meet one percent of your fuel needs.”

Seed oils, however, are not the only focus of alternative energy research in DoD. Another, much-touted potential future energy source is based on algae. Bartis and his team and RAND agreed that algae shows a great deal of promise for eliminating the country’s dependence on fossil fuels, but not in the near-term.

“The view appears to be in the Defense Department seems to be that these oils are around the corner and that they’re an emerging fuel option,” he said. “Our analysis says that these fuels are well over a decade away, and will take a lot of work. That’s based not only on our careful investigation of where that technology is, but also on our experience with other emerging energy technology.”

Research misses the mark

Hicks said those conclusions are simply wrong, and that RAND arrived at them because it did not adequately consult with industry or with Navy officials at his level, the Office of the Secretariat. He said the Navy has a much more accurate view of what industry will be able to produce in the next few years, optimistic though it may be. He said venture capitalists who are funding U.S.-based alternative energy projects seem to agree with him.

“They’re putting serious capital on the line, investing and doing their due diligence,” he said. “I think that says a lot to what makes for a wise investment. We need to be broadly engaged, and I think this is an area where we are.”

Hicks said the importance of alternative fuels to the military derives in part from the notion that every gallon of fuel that’s not purchased from nations that don’t have the United States’ best interests in mind should be counted, in some sense, as a win. He also pointed out that this would not be the first instance in which America’s military led the way on developing technologies that end up serving the broader public.

“We can absolutely be the leader in the making of the market, and I think that’s the role that DoD has historically played in many other areas,” he said. “Whether it’s been the Internet, GPS, night vision goggles, you can go down the line with many different things.”

Bartis said he doesn’t disagree some of what Hicks said about being a leader in the market.

“We have a Department of Energy that does outstanding work, and they’ve learned that it takes a long time to get a commercial energy product out,” Bartis said. “DoD has a good record at meeting our defense needs and they have great expertise in that area. When it comes to energy technologies the big issue isn’t technical feasibility. We know we can make these fuels. The question is can I make them at any reasonable price and can I make them in an environmentally sustainable way. And when we looked at what the department was investing in, we found major problems when we asked those two questions.”

Those two questions also are likely to be asked by newly-elected, budget-conscious lawmakers. Hicks said his suggestion to Congress is that they treat the report they ordered as an “opinion piece.”

“It’s more of an op-ed than serious research,” he said.

Bartis accused the Navy of putting form over content in its criticisms.

“I think we’ve done our homework,” he said. “I am concerned that we’re getting complaints as to how we did the research, and I think that the important thing should be on the substance of the results. We feel very comfortable with both aspects.”

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