DOD Alternative Fuels: Policy, Initiatives and
Legislative Activity
Katherine Blakeley
Analyst in Defense Policy
December 14, 2012
Congressional Research Service
7-5700
www.crs.gov
R42859
CRS Report for Congress
Pr
epared for Members and Committees of Congress
DOD Alternative Fuels: Policy, Initiatives and Legislative Activity
Summary
This report provides background information and identifies issues for Congress regarding
Department of Defense (DOD) alternative fuel initiatives, a subject of debate at congressional
hearings on DOD’s proposed FY2013 budget. The services (the Army, Navy, and Air Force) have
spent approximately $48 million on alternative fuels, and the Navy has proposed a $170 million
investment in biofuel production capacity. By comparison, DOD purchases of petroleum fuels
totaled approximately $17.3 billion in FY2011.
DOD officials have said that any alternative fuels for DOD operational use must:
• be “drop-in;” that is, requiring no modification to existing engines;
• be cost-competitive with conventional petroleum fuels;
• be derived from a non-food crop feedstock; and
• have lifecycle greenhouse gas emissions less than or equal to conventional
petroleum fuels.
Each military service has different alternative fuel goals. The Army has the broad aim of
increasing the use of renewable energy, but has not adopted any specific alternative fuel goals.
The Air Force goals are to test and certify all aircraft and systems on a 50:50 alternative fuel
blend by 2012, and to be prepared to acquire 50% of the Air Force’s domestic aviation fuel as an
alternative fuel blend by 2016. The Navy’s goals are to deploy a “Great Green Fleet” strike group
of ships and aircraft running entirely on alternative fuel blends by 2016 and to meet 50% of the
Navy's total energy consumption from alternative sources by 2020. To meet this goal for its
ships, the Navy would need to replace approximately 8 million barrels of petroleum used in its
ships with unblended alternative fuels by 2020.
Under the authority of the Defense Production Act, the Navy has also entered into a
Memorandum of Understanding (MOU) with the Department of Energy and the Department of
Agriculture to promote the development of a domestic advanced biofuel industry through the
construction of domestic biofuel plants and refineries. The Navy, the Department of Energy, and
the Department of Agriculture plan to fund this initiative with $510 million in federal funds for
capital investment and production, with at least equal cost-sharing from industry.
Legislative debate in 2012 related to DOD’s alternative fuels efforts has focused on two areas:
(1) proposals in the National Defense Authorization Act for FY2013 (H.R. 4310, S. 3254) to
maintain or limit DOD’s ability to purchase alternative fuels and invest in biofuel production
capability, and (2) appropriations related to the joint Navy, Department of Energy, and
Department of Agriculture biofuel production initiative.
Additional areas for potential congressional oversight include the costs and benefits to DOD of
alternative fuels, as well as the coordination of alternative fuel initiatives within the services and
between DOD and other federal agencies.
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DOD Alternative Fuels: Policy, Initiatives and Legislative Activity
Contents
Introduction ...................................................................................................................................... 1
DOD Alternative Fuels Policy ................................................................................................... 1
Policy Goals ........................................................................................................................ 2
Investments in Alternative Fuels ......................................................................................... 2
Service Goals for Use of Alternative Fuels ............................................................................... 3
DOD Alternative Fuel Purchases ..................................................................................................... 4
Alternative Fuels Testing and Evaluation ........................................................................................ 5
Army .......................................................................................................................................... 5
Air Force .................................................................................................................................... 6
Navy .......................................................................................................................................... 6
Navy Biofuel Production Under the Defense Production Act ......................................................... 6
Funding Opportunity Announcement ........................................................................................ 7
Legislative Activity in 2012 ............................................................................................................. 9
Exempting DOD from Section 526 of EISA 2007 .................................................................. 10
Prohibition on Procuring or Producing Alternative Fuel that is more Costly than
Conventional Fuel ................................................................................................................ 10
Prohibition on DOD Investment in Biofuel Refineries ........................................................... 10
DOD and DOE Appropriations for Biofuels Production Initiative ......................................... 11
Questions for Congress .................................................................................................................. 11
Benefits and Costs of Alternative Fuels .................................................................................. 11
Navy Role in Developing Advanced Biofuels ......................................................................... 12
DOD Coordination of Service Alternative Fuel Initiatives ..................................................... 12
Coordination of Alternative Fuel Initiatives between DOD and Other Federal
Agencies ............................................................................................................................... 12
Tables
Table 1. Alternative Fuels Purchases by Service, 2007-November 2012 ........................................ 4
Table 2. Alternative Fuel Purchases by Fuel Type, 2007-November 2012 ...................................... 5
Table 3. Funding Sources for the Navy, DOE and USDA Biofuel Production Initiative ................ 8
Table A-1. DOD Alternative Fuel Contracts, 2007-November 2012 ............................................. 13
Appendixes
Appendix A. DOD Alternative Fuel Contracts to Date .................................................................. 13
Appendix B. Recent Legislative Action ........................................................................................ 15
Contacts
Author Contact Information........................................................................................................... 19
Congressional Research Service
DOD Alternative Fuels: Policy, Initiatives and Legislative Activity
Introduction
This report provides background information and identifies issues for Congress regarding Department of
Defense (DOD) alternative fuel initiatives, an issue of considerable attention during hearings in 2012 on
DOD’s FY2013 budget. Ongoing alternative fuel efforts of the DOD and the military services include
purchases of alternative fuels for testing and evaluation, as well as the certification of alternative fuels for
use in service fleets. In addition, the Navy, in coordination with the Department of Energy and the
Department of Agriculture, intends to spur domestic advanced biofuel production at a commercial scale
using the authority of the Defense Production Act. The services (Army, Navy, and Air Force) have spent
approximately $48 million on alternative fuels, and the Navy has proposed a $170 million investment in
biofuel production capacity. By comparison, DOD purchases of petroleum fuels totaled approximately
$17.3 billion in FY2011.
This report provides a brief overview of DOD alternative fuels policy and data on DOD’s alternative fuels
purchases to date, as well as the status of testing platforms on alternative fuel blends and the certification
of those blends for fleet-wide use within the services. This report also discusses the current status of the
Navy’s biofuel production initiative under the Defense Production Act, in conjunction with the
Department of Energy and Agriculture, including appropriated funding. It also provides the status of
recent legislative actions related to DOD alternative fuels efforts.
For further discussion of the Navy’s biofuel production efforts under the Defense Production Act,
including previous defense-related fuel programs and the statutory authority of the DPA for energy
initiatives, please see CRS Report R42568, The Navy Biofuel Initiative Under the Defense Production
Act, by Anthony Andrews et al. For a comprehensive overview of the Department of Defense’s
operational energy efforts, including biofuels, please see CRS Report R42558, Department of Defense
Energy Initiatives: Background and Issues for Congress.
DOD Alternative Fuels Policy
Section 314 of the FY2012 National Defense Authorization Act1 gave responsibility for and oversight of
DOD’s alternative fuels initiatives and policy to the Assistant Secretary of Defense for Operational
Energy Plans and Programs.2 Previously, there was no specific responsibility or oversight of alternative
fuel policy and initiatives at the DOD-wide level. The statute requires that the Assistant Secretary of
Defense for Operational Plans and Programs
• lead DOD’s alternative fuel activities;
• oversee DOD’s alternative fuel investments;
• make recommendations regarding the development of alternative fuels by the military
departments and the Office of the Secretary of Defense;
1 P.L. 112-81
2 §902 of the FY2009 Duncan Hunter National Defense Authorization Act established the position of Director of Operational
Energy Plans and Programs (OEPP). The FY2011 Ike Skelton National Defense Authorization Act redesignated the position as
an Assistant Secretary of Defense. The position is now codified at 10 U.S.C. 138c
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• issue guidelines and prescribe policy to streamline alternative fuels investments across
DOD; and
• encourage collaboration and leverage the investments in alternative fuel development
made by the Department of Energy, the Department of Agriculture, and other federal
agencies to the benefit of DOD.
Policy Goals
On July 5, 2012, Assistant Secretary of Defense for Operational Energy Plans and Programs Sharon
Burke issued a memorandum articulating the goals of DOD alternative fuels policy, which are to “ensure
operational military readiness, improve battlespace effectiveness,” and increase “the ability to use
multiple, reliable fuel sources.” Specific considerations for DOD investments in alternative fuels
initiatives include “increased resilience against strategic supply disruptions; dampened effect[s] of
petroleum price volatility, increased fuel options for operational commanders and ultimately increased
expeditionary effectiveness.”3
Pursuant to these goals, DOD officials have said that any alternative fuels for DOD operational use must:
• be “drop-in,” that is, requiring no modification to existing engines;
• be cost-competitive with conventional petroleum fuels;
• be available in sufficient quantities;
• be derived from a non-food crop feedstock; and
• have lifecycle greenhouse gas emissions less than or equal to conventional petroleum
fuels.4
Investments in Alternative Fuels
By statute,5 DOD investments in alternative fuel activities must be certified as part of the annual
operational energy budget certification process. The Assistant Secretary of Defense for Operational
Energy Plans and Programs must review the services’ proposed budgets, and certify whether these
budgets are adequate to implement the operational energy strategy.6 The annual operational energy
report7 must now incorporate alternative fuels initiatives, including descriptions, funding, and
expenditures. Per the July 5, 2012, memorandum, future investments in alternative fuels will be subject
to a “rigorous, merit-based evaluation.” DOD alternative fuels development initiatives will generally
follow three phases:
3 Office of the Assistant Secretary of Defense, Operational Energy Plans and Programs. “Alternative Fuels Policy for Operational
Platforms,” July 5, 2012. http://energy.defense.gov/2012-7-5_DoD_Alternative_Fuels_Policy_for_Operational_Platforms.pdf
For more information about how lifecycle greenhouse gas emissions of fuels are calculated, please see CRS Report R40460,
Calculation of Lifecycle Greenhouse Gas Emissions for the Renewable Fuel Standard (RFS), by Brent D. Yacobucci and Kelsi
Bracmort.
4 As required by §526 of the Energy Independence and Security Act (EISA) of 2007, P.L. 110-140.
5 §314 of the FY2012 National Defense Authorization Act, P.L. 112-81.
6 Created by §902 of the FY2009 National Defense Authorization Act, P.L. 110-417. For more details about the operational
energy budget certification process, please see CRS Report R42558, Department of Defense Energy Initiatives: Background and
Issues for Congress, by Moshe Schwartz, Katherine Blakeley, and Ronald O'Rourke.
7 Required by §331 of the FY2009 National Defense Authorization Act, P.L. 110-417.
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Phase 1: Certification: A cross-services fuels working group is required to submit an annual plan that
identifies promising alternative fuels and coordinates certification efforts by the services.
Phase 2: Field Demonstration: The services may propose a field demonstration of a new fuel.
Depending on the funding source the proposal will be reviewed by the Office of the Assistant Secretary of
Defense for Operational Energy Plans and Programs during the annual operational energy budget
certification process, or jointly by that office and the Office of the Secretary of Defense Comptroller,
Logistics and Materiel Readiness.
Phase 3: Ongoing Purchases: For purchases of operational quantities of fuels, alternative fuels will
compete with petroleum products, and awards will be based on “the ability to meet requirements at best
value to the government, including cost.”8
Service Goals for Use of Alternative Fuels
Each of the military services has set goals regarding alternative fuels.
The Army has not adopted any specific alternative fuel goals. However, the Army does have the broad
goal of increasing the use of renewable/alternative energy, set out in the Army Energy Security
Implementation Strategy. The Army’s Tactical Fuel and Energy Implementation Plan study, released in
2010, recommended the following goals in order to meet this aim of increased renewable/alternative
energy: by 2028, at least 25% of energy used for tactical level power generation derived from alternative
and renewable sources, and by 2028, 50% of the fuel requirement in the training base for the tactical
mobility fleet (surface and air) met by alternative fuel blends.9
The Air Force has set a goal of being prepared to “cost-competitively acquire 50% of the Air Force’s
domestic aviation fuel requirements via an alternative fuel blend in which the alternative component is
derived from domestic sources produced in a manner that is greener than fuels produced from
conventional petroleum” by 2016.10 In order to be prepared to use alternative fuels, should they become
cost competitive, the Air Force has an additional goal of testing and certifying all aircraft and systems on
a 50:50 alternative fuel blend11 by 2012.12 (See the Air Force portion of the section “Alternative Fuels
Testing and Evaluation” for more details.)
The Navy has set more ambitious goals related to alternative fuels, as part of the Navy’s five energy
goals.13 One goal is to deploy a “Great Green Fleet” strike group of ships and aircraft running entirely on
alternative fuel blends by 2016. This “Great Green Fleet,” demonstrated during the July 2012 RIMPAC
8 Office of the Assistant Secretary of Defense, Operational Energy Plans and Programs. “Alternative Fuels Policy for
Operational Platforms,” July 5, 2012.
9 AR 5-5 Study, “Tactical Fuel and Energy Implementation Plan,” prepared on behalf of the U.S. Army Sustainment Center for
Excellence by Expeditionary Logistics, Inc. and sponsored by the U.S. Army Combined Arms Support Command. September
24, 2010. Available at http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA529051
10 Air Force HQ. “Air Force Energy Plan 2030.”
11 A 50:50 alternative fuel blend is fuel that consists of 50% conventional (i.e., petroleum-based) fuel and 50% alternative (i.e.,
non-petroleum-based) fuel.
12 U.S. Air Force Briefing, “Air Force Energy Consumption,” March 6, 2012. The original target date for completing testing and
certifying had been 2011. U.S. Air Force, “Air Force Energy Plan 2010,” December 9, 2009, p. 8.
13 The Department of the Navy. “The Department of the Navy’s Energy Goals.”
http://www.navy.mil/features/Navy_EnergySecurity.pdf
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naval exercises, is a carrier strike group composed of nuclear-powered ships, ships running on a biofuel
blend, and aircraft flying on a biofuel blend.
A second Navy goal is meeting 50% of the Navy's total energy consumption from alternative sources by
2020. To meet this goal for the Navy’s use of energy afloat, the Navy plans to reduce its liquid fuel usage
afloat to 38 million barrels of oil equivalent per year. Nuclear power is projected to provide 11 million
barrels of oil equivalent in 2020. Therefore, to meet the goal of 50% alternative energy (18 million
barrels of oil equivalent in 2020), approximately 8 million barrels of petroleum used afloat would need to
be replaced by unblended alternative fuels by 2020.
DOD Alternative Fuel Purchases
Since 2007, DLA Energy has procured approximately 1.9 million gallons of various types of alternative
fuels on behalf of the Army, Navy, and Air Force using funds provided by the services. DOD purchases
of alternative fuels in order to test engine performance and certify alternative fuels for use in service fleets
have totaled about $48 million to date. Table 1 provides an overview of each service’s alternative fuels
purchases from 2007 through the present.
Table 1. Alternative Fuels Purchases by Service, 2007-November 2012
Service
Total Gallons Purchased
Total Cost
Average Cost Per Gallon
Army 49,950
$1,632,120
$
37.14
Navy 676,500
$20,618,450
$
30.15
Air Force
1,166,000
$25,719,650
$ 22.06
Total 1,888,450
$47,970,220
$
25.43
Source: Data from DLA-E, November 9, 2012.
Notes: The average cost per gallon was calculated by dividing the total spending of each service on alternative fuels by
number of gal ons purchased. Values are not adjusted for inflation.
As of November 26, 2012, the Navy has not exercised its two options to purchase an additional 50,000 gal ons of DSH
fuel at a cost of $25.73 per gallon from Amyris, for a total cost of $1,286,500.
The services have purchased various types of alternative fuels, including Fischer-Tropsch fuels14 derived
from coal and natural gas, and three types of biofuels (hydrotreated jet and diesel biofuels,15 alcohol-to-jet
fuels, and direct-sugar-to-hydrocarbons fuels).16 All services have purchased various types of
hydrotreated jet and diesel biofuels. The Air Force has also purchased alcohol-to-jet fuels derived from
both petroleum and biomass feedstocks. The Navy has purchased some direct-sugar-to-hydrocarbons
fuel, derived from bio-based feedstocks. The Air Force has also purchased fuels created via the Fischer-
14 The Fischer-Tropsch process is a series of chemical reactions can be used to create liquid fuels from coal, natural gas, or
biomass feedstocks.
15 Hydrotreated jet and diesel biofuels are the more common terms for HEFA (Hydroprocessed Esters, waste oil feedstocks and
Fatty Acids) fuels. These fuels can be created from feedstocks that produce natural oils, such as algae, jatropha and camelina , or
from waste animal fats.
16 For discussion of different types of alternative fuels, please see CRS Report R41460, Cellulosic Ethanol: Feedstocks,
Conversion Technologies, Economics, and Policy Options, by Randy Schnepf; CRS Report R41282, Agriculture-Based Biofuels:
Overview and Emerging Issues, by Randy Schnepf; or CRS Report R42122, Algae’s Potential as a Transportation Biofuel, by
Kelsi Bracmort.
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Tropsch process from coal and natural gas. Table 2 provides an overview of DOD alternative fuel
purchases by fuel type.
Table 2. Alternative Fuel Purchases by Fuel Type, 2007-November 2012
Average cost Total
Fuel Type
Gallons
per gallon
Spending
Hydrotreated Renewable Jet (HRJ)/Hydrotreated Renewable Diesel (HRD)
both Hydroprocessed Esters and Fatty Acids (HEFA) fuels
1,085,450 $38.26
$41,534,620
Fischer-Tropsch (FT)
730,000
$3.76
$2,745,650
Alcohol-to-Jet (ATJ)
56,000
$59.00
$3,304,000
Direct Sugar to Hydrocarbon (DSH)
15,000
$25.73
$385,950
Total 1,606,450
$47,970,220
Source: DLA-E, November 9, 2012.
Notes: It is difficult to compare the costs per gallon of various purchases, even within the same type of fuel, as purchases
may use different feedstocks or production pathways. Additional y, the contracts may include R&D costs in addition to
the production costs of the fuel.
The Energy Independence and Security Act of 200717 prohibits federal agencies, including DOD, from
procuring alternative fuels that have lifecycle greenhouse gas emissions greater than or equal to the
emissions from the equivalent conventional petroleum fuel, except for research or testing purposes. As
such, coal-to-liquid fuels, which have lifecycle greenhouse gas emissions of approximately 2.5 times
those of petroleum fuels, would likely not be able to be purchased in operational quantities.
An overview of DOD’s alternative fuel purchases to date is in Table A-1 in Appendix A.
Alternative Fuels Testing and Evaluation
As part of their alternative fuels initiatives, the Army, Navy, and Air Force have been testing various
alternative fuel blends in their equipment, for the potential certification of alternative fuels for fleet-wide
use.
Army
The Army is currently testing 50:50 blends of Fischer-Tropsch synthetic paraffinic kerosene and
hydrotreated renewable jet with JP-8 for use in all Army ground systems and field generators, with the
goal of certifying these fuels by 2014.18 The Army is also working to obtain Air Force certification for H-
60 Black Hawk helicopters to fly on the 50:50 FT-SPK: JP-8 blend.
As part of the Army’s 2009 Army Energy Security Implementation Strategy, the Army intends to
complete testing of tactical ground equipment systems for which alternative or renewable fuels and
synthetic fuel blend evaluations are completed by the end of FY2014. For Army engine and aviation
17 P.L. 110-140.
18 Department of Defense, Opportunities for DOD use of Alternative and Renewable Fuels: FY10 NDAA Section 334
Congressional Study, July 18, 2011. p. 4-10.
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systems for which alternative or renewable fuels and synthetic fuel blend evaluations are completed, the
Army intends to complete 50% of testing by the end of FY2014 and 100% by the end of FY2016.19
Air Force
The Air Force has certified Fischer-Tropsch fuel blends for use in its manned and unmanned fleets.
Testing has been completed on biofuels, such as the HEFA fuels described above, and fleet-wide
certification is expected shortly. The Air Force has also begun testing alcohol-to-jet fuels, with the
inaugural flight of an A-10 Thunderbolt II jet on an ATJ-conventional fuel blend on June 28, 2012.
According to the Air Force, this test flight was the first flight powered by an ATJ-conventional fuel
blend.20
Navy
In April 2010, the “Green Hornet” F/A-18 was the first Navy jet to fly on a biofuel blend. The Navy has
tested HEFA 50:50 biofuel blends (also known as hydrotreated renewable jet [HRJ]) for use in all manned
and unmanned aircraft. Testing of 50:50 HEFA fuel blends for ships (also known as HRD, or
hydrotreated renewable diesel) is complete except for one type of diesel generator. The Navy anticipates
certification for all HEFA fuels in early 2013. Testing and certification of Fischer-Tropsch fuels is
expected to be completed by the end of 2013. Testing of other alternative fuels, such as alcohol-to-jet,
pyrolysis oils, and direct sugar to hydrocarbon, will continue in the future.21
Navy Biofuel Production Under the Defense Production
Act
Under the authority of the Defense Production Act, in June 2011, the Departments of the Navy, Energy,
and Agriculture signed a Memorandum of Understanding (MOU) to "assist the development and support
of a sustainable commercial biofuels industry."22 The MOU argues that because of the current economic
environment, start-up risks, and competitive barriers posed by the established crude oil market, without
government investment, adequate domestic production capacity of advanced drop-in biofuels will not be
achieved in a timely manner.23
The MOU calls for the Navy, the Department of Energy, and the Department of Agriculture to support
advanced drop-in biofuel plants and refineries to produce advanced biofuels that
19 Department of Defense, Opportunities for DOD use of Alternative and Renewable Fuels: FY10 NDAA Section 334
Congressional Study, July 18, 2011. p. 4-10.
20 Minty Knighton, "A-10 first aircraft to use alcohol-based fuel," Air Force Print News Today, July 2, 2012,
http://www.af.mil/news/story_print.asp?id=123308337.
21 Discussion with Navy energy official, October 2, 2012.
22 Memorandum of Understanding Between the Department of the Navy and the Department of Energy and the Department of
Agriculture, June 2011, p. 1. Available at
http://www.rurdev.usda.gov/SupportDocuments/DPASignedMOUEnergyNavyUSDA.pdf
23 Memorandum of Understanding Between the Department of the Navy and the Department of Energy and the Department of
Agriculture, June 2011, p. 2. Available at
http://www.rurdev.usda.gov/SupportDocuments/DPASignedMOUEnergyNavyUSDA.pdf
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• meet military specifications;
• are price competitive with petroleum;
• are at geographically diverse locations with ready market access; and
• have no significant impact on the food supply.24
According to the MOU, total government funding for this project is anticipated at $510 million over a
period of three years, with $170 million each from the Navy, the Department of Energy, and the
Department of Agriculture.25 For discussion of the authority of the Defense Production Act as it relates to
energy and biofuels, please see CRS Report R42568, The Navy Biofuel Initiative Under the Defense
Production Act, by Anthony Andrews et al.
Funding Opportunity Announcement
The Funding Opportunity Announcement (FOA-12-15-PKM) for this biofuels production initiative under
this MOU was initially released on June 27, 2012, with an announced government funding amount of
$210 million. Awards for biofuels production facilities are planned to occur in two phases:
Phase 1: approximately five awards of up to $6 million each for planning and preliminary designs for
biofuel production facilities. Phase 1 awards are expected to be announced in March 2013.
Phase 2: up to three awards of up to $70 million each for construction, commissioning, and performance
testing of biofuel production facilities.
Requirements for a successful proposal include
• at least 50% cost share for both Phase 1 and Phase 2;
• domestic production of advanced biofuels, including domestic sourcing of feedstocks;
• compliance with Section 527 of the Energy Security and Independence Act of 2007;26
• use of an acceptable renewable feedstock;
• production of a drop-in fuel; and
• a production capacity of at least 10 million gallons a year.
The stated FOA funding level of $210 million includes
• $100 million from DOD, funded via the $150 million appropriated for the DPA Fund in
the FY2012 Department of Defense Appropriations Act;27
24 Memorandum of Understanding Between the Department of the Navy and the Department of Energy and the Department of
Agriculture, June 2011, p. 2. Available at
http://www.rurdev.usda.gov/SupportDocuments/DPASignedMOUEnergyNavyUSDA.pdf
25 Memorandum of Understanding Between the Department of the Navy and the Department of Energy and the Department of
Agriculture, June 2011, pp. 2-3. Available at
http://www.rurdev.usda.gov/SupportDocuments/DPASignedMOUEnergyNavyUSDA.pdf
26 P.L. 100-140.
27 Enacted as the Consolidated Appropriations Act, 2012, P.L. 112-74.
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• $70 million of requested funding for the Navy’s drop-in biofuels production initiative as
part of the $89 million request for the DPA fund in the DOD’s FY2013 budget request;28
and
• $40 million from DOE following the receipt of the authority, requested in DOE’s FY2013
budget request,29 to transfer monies from DOE Energy Efficiency and Renewable Energy
appropriated funds into the DPA Fund to support the MOU between the Navy, DOE, and
USDA.
It does not include $171 million of USDA funding via the Commodity Credit Corporation to subsidize the
production of bio-based jet fuel,30 under the broader authority granted to USDA and the Commodity
Credit Corporation to increase the use of agricultural commodities under the Commodity Credit
Corporation Charter Act.31 The Corporation has the authority to borrow up to $30 billion directly from
the Treasury or from private lenders, to be repaid, with interest, through appropriations from Congress.
This borrowing authority does not require specific congressional appropriations.
Table 3. Funding Sources for the Navy, DOE and USDA Biofuel Production Initiative
Commodity
Defense Production Act Fund
Credit
Total
Corporation
FY2012 FY2013 FY2014
FY2015
Subtotal
DOD/Navy $100m $70m
(requested) --
--
$170m --
$170m
28 Office of the Secretary of Defense, “Department of Defense Fiscal Year (FY) 2013 President's Budget Submission,
Justification Book Defense: Production Act Purchases,” February 2012, p. 2.
http://comptroller.defense.gov/defbudget/fy2013/budget_justification/pdfs/02_Procurement/Office_of_Defense_Production_Act_
PB_2013.pdf
29 Department of Energy, “FY2013 Congressional Budget Request.,” Vol. 3. Office of the Chief Financial Officer, February
2012. Energy Efficiency and Renewable Energy: Biomass and Biorefinery Systems Program. p. 40.
30 U.S. Department of Agriculture, U.S. Department of Agriculture, USDA FY2013 Budget Summary and Annual Performance
Plan, February 2012. The Commodity Credit Corporation is the funding mechanism for the mandatory farm commodity
program payments that farmers receive from the USDA Farm Service Agency, and some of the conservation payments from the
Natural Resources Conservation Service and the Farm Service Agency. The Commodity Credit Corporation also is or has been
the funding source for a relatively small subset of USDA programs for foreign trade, bioenergy, rural development, agricultural
research, and other programs. The Commodity Credit Corporation has the authority to borrow up to $30b directly from the
Treasury or from private lenders, to be repaid, with interest, through appropriations from Congress. This borrowing authority
does not require specific congressional appropriations. For more information about the CCC, please see CRS Report R41245,
Reductions in Mandatory Agriculture Program Spending, by Jim Monke and Megan Stubbs.
http://www.obpa.usda.gov/budsum/FY13budsum.pdf. p. 21.
31 P.L. 80-806. From the USDA FY2013 Budget Summary and Annual Performance Plan, “Section 4(e) of the CCC Charter Act
authorizes CCC to take action to increase the use of agricultural commodities by “…aiding in the development of new and
additional markets, marketing facilities, and uses for such commodities.” Under this authority, CCC will make available up to
$171 million to subsidize the production of bio-based jet fuel. Because there is no existing viable commercial source for the
large-scale production of such fuel, CCC has entered into an agreement with the Department of Energy and the Navy to assist in
the development of this product.” p. 23. For more information regarding USDA’s authority to engage in renewable energy
programs, please see CRS Report R41985, Renewable Energy Programs and the Farm Bill: Status and Issues, by Randy
Schnepf.
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Commodity
Defense Production Act Fund
Credit
Total
Corporation
FY2012 FY2013 FY2014
FY2015
Subtotal
Department
--
$40m (requested)
total of $130m across
$170m --
$170m
of Energy
FY2014 and FY2015
(to be requested)
Department
-- --
-- -- -- $171m $171m
of
Agriculture
Total
$210m
$511m
Funding to
(anticipated)
date:
(anticipated, as per
the Funding
Opportunity
Announcement)
Source: Navy energy officials, October 2012.
Notes: DOD and DOE funding requests and amounts for FY2013 can be found in their respective annual budget requests
and appropriations bills. The Commodity Credit Corporation has the authority to borrow up to $30 billion directly from
the Treasury or from private lenders, to be repaid, with interest, through appropriations from Congress. This borrowing
authority does not require specific congressional appropriations. According to Navy officials, the appropriations requests
for the balance of the DOE’s $170 million funding share after FY2013, $130 million, will be divided between FY2014 and
FY2015 requests. The amounts to be requested in each year are not yet known.
Legislative Activity in 2012
Legislative activity in 2012 related to DOD’s alternative fuels efforts has focused on two areas: (1)
proposals to expand or limit DOD’s ability to purchase alternative fuels and invest in alternative fuel
production capability, and (2) appropriations related to the Navy’s biofuel production efforts under the
DPA.
H.R. 4310 as passed by the House on May 28, 2012, contains two provisions (Section 313 and Section
314) that would exempt DOD from Section 526 of EISA (which requires all alternative fuels purchased
by the federal government for operational use to have lifecycle greenhouse gas emissions less than or
equal to those from conventional fuels) and limit its ability to purchase alternative fuels that are more
expensive than comparable petroleum fuels, respectively.
S. 3254, as passed by the Senate on December 4, 2012, does not contain any provisions that would restrict
DOD’s abilities to purchase alternative fuels or invest in biofuels production capability. Two restrictive
provisions added via amendments during the Senate Armed Services Committee markup (Section 314 and
Section 2823, as reported June 4, 2012) were removed by S.Amdt. 2985 and S.Amdt. 3095 during floor
debate.
The Departments of Defense and Energy have also requested $70 million and $40 million in
appropriations for FY2013 to fund the joint Departments of Defense, Energy, and Agriculture biofuels
production initiative under the Defense Production Act.
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Exempting DOD from Section 526 of EISA 2007
Section 313 of the House version of the FY2013 NDAA, H.R. 4310, would exempt DOD from Section
526 of EISA 2007, which requires all alternative fuels purchased by the federal government for
operational use to have lifecycle greenhouse gas emissions less than or equal to those from conventional
fuels.32
The Senate version (S. 3254, as reported to the Senate Armed Services Committee), did not contain this
provision. A similar amendment to exempt DOD from Section 526 of EISA 2007, sponsored by Senator
Inhofe, failed in the Senate Armed Services Committee markup of S. 3254 on a 13-13 vote.
Prohibition on Procuring or Producing Alternative Fuel that is more
Costly than Conventional Fuel
Section 314 of H.R. 4310 would prohibit DOD from procuring or producing alternative fuel with FY2013
funds where the cost of the alternative fuel exceeds the comparable conventional fuel. This section
exempts 50:50 alternative fuel blends purchased to complete engine or fleet certification of alternative
fuel blends from this requirement.
S. 3254, as reported by the Senate Armed Services Committee, contained an identical provision to Section
313 of H.R. 4310, Section 314. This section was the result of an amendment sponsored by Senator Inhofe
and passed by the Senate Armed Services Committee 13-12.
This section was struck during floor debate of the National Defense Authorization Act, following the
passage of S.Amdt. 2985, sponsored by Senator Mark Udall. This amendment passed 62-37.
Prohibition on DOD Investment in Biofuel Refineries
Section 2823 of S. 3254, as reported by the Senate Armed Services Committee, would prohibit DOD from
“enter[ing] into a contract to plan, design, refurbish, or construct a biofuels refinery or any other facility
or infrastructure used to refine biofuels unless ... specifically authorized by law.” This section was an
amendment sponsored by Senator McCain and passed 13-12 by the Senate Armed Services committee.
DOD reportedly opposed this provision. In a letter from late October, the DOD stated that it “opposes the
Senate provision because it would restrict the department's ability to contribute to the development of a
domestic capability to produce cost-competitive advanced drop-in biofuels on a commercial scale, which
is vitally important to our long-term national security.... Such a capability could increase the department's
resilience against potential supply disruptions and price volatility of petroleum products."33
This provision was struck from S. 3254 by S.Amdt. 3095, sponsored by Senator Hagan, which passed 54-
41.
32 §526, Energy Independence and Security Act of 2007, P.L. 100-140.
33 Jason Sherman, "Pentagon Seeks Repeal of Senate Provision that Threatens DOD’s Biofuel Plan," Inside Defense, November
12, 2012. http://insidedefense.com/201211122415934/Inside-Defense-Daily-News/DefenseAlert/pentagon-seeks-repeal-of-
senate-provision-that-threatens-dods-biofuels-plan/menu-id-61.html
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DOD and DOE Appropriations for Biofuels Production Initiative
The Navy and the Department of Energy shares of the MOU with the Department of Agriculture to assist
the development of a commercial-scale domestic advanced biofuel industry rely on appropriated funds.
The USDA portion of the funds would be provided through the Commodity Credit Corporation.
For FY2013, the Navy requested $70 million for advanced drop-in biofuels production, as part of the $89
million total requested appropriations to the Defense Production Act Fund.34 The House Appropriations
Committee report on FY2013 Department of Defense Appropriations Act (H.R. 5856, H.Rept. 112-493)
declined to fund the $70 million requested for the joint biofuel production initiative as part of the DPA
Fund. As passed by the House on July 19, 2012, H.R. 5856 contains $63.5 million in DPA funding to
remain available until expended. The corresponding Senate Appropriations Committee report (S.Rept.
112-196) recommends funding the overall DPA Fund at $100 million over the amount requested in the
budget submission, for a total of $189 million, with no specific mention of biofuel production.
For FY2013, DOE requested the authority to transfer $40 million from its Energy Efficiency and
Renewable Energy appropriations into the Defense Production Act Fund. The House-passed version of
the FY2013 Energy and Water Development and Related Agencies Appropriations Act (H.R. 5325, as
passed on June 6, 2012) does not include any language authorizing the Department of Energy to transfer
money into the Defense Production Act Fund, while the Senate version (S. 2465, as reported on April 26,
2012) allows the Department of Energy to transfer up to $100 million of Energy Efficiency and
Renewable Energy funds into the Defense Production Act Fund.
For a more detailed history of recent legislative action, please see Appendix B.
Questions for Congress
DOD and the services’ alternative fuels initiatives raise several potential oversight questions and issues
for Congress, including the following:
Benefits and Costs of Alternative Fuels
• What benefits for the services do alternative fuels offer over conventional petroleum
fuels? Are there alternative ways to achieve these benefits?
• Should these alternative fuel efforts be viewed in terms of their potential benefits to the
services, or in terms of their potential benefits to the nation?
• How much funding should be invested in the services’ alternative fuels testing and
certification efforts?
• To what extent are the services coordinating their alternative fuels testing and
certification efforts to prevent duplication of effort?
34 Department of Defense, FY2013 President’s Budget Submission. “Defense Production Act Purchases Justification Book.”
February 2012. pg. iv. Available at
http://comptroller.defense.gov/defbudget/fy2013/budget_justification/pdfs/02_Procurement/Office_of_Defense_Production_Act_
PB_2013.pdf
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Navy Role in Developing Advanced Biofuels
• What analysis by the Navy, DOE and USDA supports the Navy’s conclusion that this
$510 million investment would positively impact the domestic advanced biofuel
industry?
• Should biofuel investment be left to private industry (e.g., commercial aviation) or other
government agencies such as the Department of Energy or the Department of
Agriculture?
• Why is the DOD effort to jumpstart a domestic advanced biofuels industry being led by
the Navy?
DOD Coordination of Service Alternative Fuel Initiatives
• How well is the office of the Assistant Secretary of Defense for Operational Energy Plans
and Programs (ASD(OEPP))35 coordinating the alternative fuel goals of the military
services?
• How is ASD(OEPP) overseeing current investments by the military services in alternative
fuels testing and certification? Is ASD(OEPP)’s oversight authority, including the
required budget certification process, adequate?
• Has ASD(OEPP)’s coordination activities or alternative fuels guidance and policy
affected the alternative fuel goals and initiatives of the military services? If so, what have
been these changes?
Coordination of Alternative Fuel Initiatives between DOD and Other
Federal Agencies
• Is there overlap or duplication between DOD's alternative fuel initiatives and the
alternative fuel initiatives being pursued by other federal agencies?
• Does the executive branch use a process to coordinate alternative fuel and other energy
initiatives across all federal agencies? If so, what are the steps of this process and what
criteria are used to determine whether an initiative should be pursued by DOD or some
other federal agency?
35 This office was created as the Director of Operational Energy Plans and Programs via §902 of the FY2009 NDAA (P.L. 110-
417. §902 of the FY2011 NDAA (P.L. 111-383) designated the position as an Assistant Secretary of Defense. This office was
given the responsibility of leading and overseeing DOD’s alternative fuel activities, issuing guidelines and policy to streamline
alternative fuels investment across DOD and making recommendations regarding the development of alternative fuels by the
military departments and the Office of the Secretary of Defense by §314 of the FY2012 NDAA (P.L. 112-81).
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Appendix A. DOD Alternative Fuel Contracts to Date
Table A-1. DOD Alternative Fuel Contracts, 2007-November 2012
Contract
Award Data
Contract
or Option
Cost per
Funding
Number
Company Product Date
Gallons
Gallon
Total Cost
Feedstock
Service
Source
07-D-0486 Shell
FT
Iso
6-Jun-07
315,000
$3.41
$1,074,150
Natural Gas
Air Force
Air Force
Paraffinic
RDT&E
Kerosene
08-D-0496 SASOL
FT
Iso
26-Jun-08 60,000
$3.75
$225,000 Coal
Air
Force Air
Force
Paraffinic
RDT&E
Kerosene
08-D-0497 SASOL
FT
Iso
3-Jul-08
335,000
$3.90
$1,306,500
Coal
Air Force
Air Force
Paraffinic
RDT&E
Kerosene
09-D-0519 Sustainable HRJ5 31-Aug-09
40,000
$66.60
$2,664,000
Camelina
Navy Navy
&
DLA
Oils
ARRA
RDT&Ea
09-D-0518
Solazyme HRJ5
1-Sep-09 1,500
$149.00 $223,500 Algal
Oil Navy
DLA
ARRA
RDT&E
09-D-0520 Sustainable HRJ8
15-Sep-09
100,000
$66.80
$6,680,000
Camelina
Air Force
Air Force
Oils
RDT&E
09-D-0517 UOP
HRJ8
15-Sep-09
100,000
$64.00
$6,400,000
Tal ow
Air Force
Air Force
RDT&E
09-D-0523 PM
Group FT F76
30-Sep-09
20,000
$7.00
$140,000
Nat Gas
Navy
Navy RDT&E
Int'l
10-D-0489 Sustainable HRJ8 26-Jul-10
34,950
$38.60
$1,349,070
Camelina
Army DLA
ARRA
Oils
RDT&E
Option Sustainable
HRJ5 29-Jun-10
150,000
$34.45
$5,167,500
Camelina
Navy Navy
RDT&E;
Oils
DLA ARRA
RDT&E
Option Sustainable
HRJ8
31-Aug-10
100,000
$34.90
$3,490,000
Camelina
Air Force
Air Force
Oils
RDT&E
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DOD Alternative Fuels: Policy, Initiatives and Legislative Activity
Contract
Award Data
Contract
or Option
Cost per
Funding
Number Company Product
Date Gallons Gallon Total
Cost
Feedstock Service Source
Option
UOP
HRJ8
31-Aug-10
100,000
$32.40
$3,240,000
Tal ow
Air Force
Air Force
RDT&E
11-D-0526
Gevo ATJ8 23-Sep-11
7,000 $59.00 $413,000
Alcohols
Air
Force
Air
Force
RDT&E
Option
Gevo ATJ8 28-Sep-11
4,000 $59.00 $236,000
Alcohols
Air
Force
Air
Force
RDT&E
11-D-0530 UOP
HRJ8
30-Sep-11 4,500
$33.00
$148,500 Camelina Army
Army
RDT&E
12-D-0549 Dynamic HRD76 30-Nov-11
350,000 $26.75 $9,362,500 UCO/Algal Navy
Navy
OM&N
12-D-0549 Dynamic HRJ5 30-Nov-11
100,000
$26.75
$2,675,000 UCO/Algal Navy
Navy
OM&N
12-D-0559
UOP
HRJ8
2-May-12
4,500
$29.90
$ 134,550
UCO/ICO
Army
Army RDT&E
12-D-0560
Amyris
DSH76
27-Sep-12
15,000
$25.73
$ 385,950
Ferm. Sugar
Navy
Navy RDT&E
Option
Amyris
DSH76
TBD
25,000
$25.73
$ 643,250
Ferm. Sugar
Navy
Navy RDT&E
Option
Amyris
DSH76
TBD
25,000
$25.73
$ 643,250
Ferm. Sugar
Navy
Navy RDT&E
12-D-0561
Gevo
ATJ8
27-Sep-12
30,000
$59.00
$ 1,770,000
Alcohols
Air Force
Air Force
RDT&E
Option
Gevo
ATJ8
27-Sep-12
15,000
$59.00
$ 885,000
Alcohols
Air Force
Air Force
RDT&E
TOTAL:
1,886,450
$47,970,220
Source: Data from DLA-E, November 9, 2012.
Note: As of November 26, 2012, the Navy has not exercised its two options to purchase a total of 50,000 additional gallons of DSH fuel at a cost of $25.73 per gal on
from Amyris, for a total cost of $1,286,500. If the Navy exercises these options, DOD purchases of biofuels to date will total 1,936,450 gallons at a total cost of
$49,256,720.
a. DLA ARRA RDT&E refers to funds from the American Recovery and Reinvestment Act of 2009 (P.L. 111-5).
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DOD Alternative Fuels: Policy, Initiatives and Legislative Activity
Appendix B. Recent Legislative Action
FY2012 Department of Defense Appropriations Act (P.L. 112-74)
The FY2012 Department of Defense Appropriations Act (combined into the Consolidated
Appropriations Act of FY2012 [H.R. 2055/P.L. 112-74 ]) included $150 million in appropriated
funds to support DPA Title III funding. While not specifically directing this additional $150
million of DPA Title III funding to biofuels production, both the House and Senate accompanying
reports were supportive of DOD biofuels initiatives and encouraged longer contract terms for
biofuels procurement. The Senate Appropriations Committee report (S.Rept. 112-77 of September
15, 2011, accompanying H.R. 2219) stated:
Long-term Contracts.—The Committee is encouraged by the Department’s biofuels
initiatives such as the Green Fleet program; however, the Committee is concerned that the
Department lacks the long-term contracting ability to ensure that adequate biofuels are
produced. To address this issue, the Department may fund multi-year contracts with purchase
periods up to 15 years for biofuels products in order to maximize efficiencies of scale for the
best purchase price. (page 160).
The House Appropriations Committee report (H.Rept. 112-331 of December 15, 2011,
accompanying H.R. 2055), stated:
LONG TERM CONTRACTS
The conferees believe that the time and money being invested by the Department of Defense
in biofuels and alternative energy will reap dividends not only for the Nation’s armed forces,
but eventually for the Nation itself. The conferees want the Department to be in the best
position possible to take advantage of the expected breakthroughs in this area and encourage
the Department to eventually pursue extended multi-year contracts, pursuant to the Financial
Management Regulation, for biofuel products in order to maximize efficiencies of scale for
the best purchase price. (p. 671)
FY2013 Department of Energy Appropriations Act (H.R. 5325/S.
2465)
In its FY2013 Congressional Budget Request, the Department of Energy (DOE) requested
authority to transfer funds to the DPA Fund, offering the justification that it will support the MOU
with the technical expertise to move pilot-scale demonstration projects to larger-scale
production.36
The House-passed version of the Energy and Water Development and Related Agencies
Appropriations Act, FY2013, (H.R. 5325, as passed on June 6, 2012 ) did not include any
language authorizing DOE to transfer money into the Defense Production Act Fund. The House
Appropriations Committee, in its accompanying report (H.Rept. 112-462 of May 2, 2012),
36 Department of Energy, “FY2013 Congressional Budget Request.,” Vol. 3. Office of the Chief Financial Officer,
February 2012. Energy Efficiency and Renewable Energy: Biomass and Biorefinery Systems Program. p. 40.
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declined to fund and authorize the Department of Energy’s portion of this joint initiative. The
report states:
Biomass and Biorefinery Systems R&D. — ... The Committee recommends $203,000,000 for
Biomass and Biorefinery Systems R&D, $3,000,000 above fiscal year 2012 and $67,000,000
below the budget request. The Department is directed to continue conducting only research,
development, and demonstration activities advancing technologies that can produce fuels and
electricity from biomass and crops that could not otherwise be used as food. The budget
request proposed funding and legislative language for a joint initiative with the Navy and the
Department of Agriculture to develop commercial diesel and jet biofuels production capacity
for defense purposes. The Department has not adequately justified why the Department of
Energy should fund this Defense initiative, and whether the proposed investments can
successfully lower costs to competitive levels in several years or will only serve to sink costs
into a product that is too immature to compete without federal support. The recommendation
includes no funding for the proposed initiative and does not include the requested legislative
language. (p. 85-86)
In FY2013, the Senate Appropriations Committee Energy and Water Development and Related
Agencies Appropriations Act (S. 2465, as reported on April 26, 2012) provides that, of the funds
appropriated for Energy Efficiency and Renewable Energy, “the Secretary may transfer up to
$100,000,000 to the Defense Production Act Fund for activities of the Department of Energy
pursuant to the Defense Production Act of 1950 (50 U.S.C. App. 2061, et seq.).”
The accompanying report (S.Rept. 112-164 of April 26, 2012) includes language supportive of
the DOD, DOE, and USDA joint biofuel production initiative. The report states:
Biomass and Biorefinery Systems R&D.— The Committee recognizes that quality and
reliability of supplies will be key in acceptance of advanced drop-in biofuels into the supply
chain once they are demonstrated at a convincing scale. To that end, the Committee is
supportive of the collaboration between the Navy, Department of Agriculture and DOE to
develop innovative technologies for jet and diesel fuels for military uses. With the
Department of Defense as an early adopter of these alternative fuels, the wider marketplace
will be more likely to follow.
FY2013 National Defense Authorization Act (H.R. 4310/S. 3254)
H.R. 4310
Two provisions of H.R. 4310, as reported by the House Armed Services Committee (H.Rept. 112-
479 of May 11, 2012), affect the Department of Defense’s procurement and production of
biofuels:
SEC. 313. EXEMPTION OF DEPARTMENT OF DEFENSE FROM ALTERNATIVE
FUEL PROCUREMENT REQUIREMENT.
Section 526 of the Energy Independence and Security Act of 2007 (P.L. 110-140; 42 U.S.C.
17142) is amended by adding at the end the following: `This section shall not apply to the
Department of Defense.'
SEC. 314. LIMITATION ON AVAILABILITY OF FUNDS FOR PROCUREMENT OF
ALTERNATIVE FUEL.
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(a) Limitation- Except as provided in subsection (b), none of the funds authorized to be
appropriated by this Act or otherwise made available during fiscal year 2013 for the
Department of Defense may be obligated or expended for the production or purchase of any
alternative fuel if the cost of producing or purchasing the alternative fuel exceeds the cost of
producing or purchasing a traditional fossil fuel that would be used for the same purpose as
the alternative fuel.
(b) Exception- Notwithstanding subsection (a), the Secretary of Defense may purchase such
limited quantities of alternative fuels as are necessary to complete fleet certification for 50/50
blends. In such instances, the Secretary shall purchase such alternative fuel using competitive
procedures and ensure the best purchase price for the fuel.
S. 3254
As passed by the Senate on December 4, 2012, S. 3254 does not contain any provisions that
would restrict the ability of the Department of Defense to procure or produce biofuels.
Two provisions in S. 3254, as reported by the Senate Armed Services Committee (S.Rept. 112-
173 of June 4, 2012), would have affected the Department of Defense’s procurement and
production of biofuels. Via floor amendments, both of these provisions were stricken from the
version of S. 3254 that was passed by the Senate.
S.Amdt. 2985 was sponsored by Senator Mark Udall and co-sponsored by Senators Murray,
Shaheen, Bingaman, Hagan, Kerry, Begich, and Tom Udall. This amendment, which passed 62-
37, struck Section 313 from the version of S. 3254 as reported by the Senate Armed Services
Committee. Section 313 would have limited the ability of the Department of Defense to purchase
alternative fuels whose costs exceeds that of an equivalent traditional fossil fuel.
S.Amdt. 3095 was sponsored by Senator Hagan, and co-sponsored by Senators Johnson (SD),
Murray, Shaheen, Collins, Schumer, Stabenow, Whitehouse, Coons, Udall (NM), Tester, and
Udall (CO). This amendment, which passed 54-41, struck Section 2823 from the version of S.
3254 as reported by the Senate Armed Services Committee. Section 2823 would have prohibited
the Department of Defense from entering into a contract to plan, design, refurbish, or construct
biofuels refinery infrastructure unless specifically authorized by law.
These stricken sections were adopted by the Senate Armed Services Committee as amendments
sponsored by Senator Inhofe and Senator McCain, respectively. These amendments were each
approved in votes of 13-12. A third amendment, sponsored by Senator Inhofe, failed in the
Senate Armed Services Committee on a tie vote of 13-13. This amendment would have exempted
the Department of Defense from Section 526 of the Energy Independence and Security Act of
2007 (P.L. 110-140), which prohibits federal agencies from purchasing alternative fuels whose
lifecycle greenhouse gas emissions exceed those of conventional fuels. This amendment was
similar to Section 313 in H.R. 4310 as reported by the House Armed Services Committee on May
11, 2012, and passed by the House.
These two stricken sections, as they appeared in the version of S. 3254 that was reported by the
Senate Armed Services Committee on June 4, 2012, are as follows:
SEC. 313. LIMITATION ON AVAILABILITY OF FUNDS FOR PROCUREMENT OF
ALTERNATIVE FUEL.
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(a) Limitation- Except as provided in subsection (b), none of the funds authorized to be
appropriated by this Act or otherwise made available during fiscal year 2013 for the
Department of Defense may be obligated or expended for the production or sole purchase of
an alternative fuel if the cost of producing or purchasing the alternative fuel exceeds the cost
of producing or purchasing a traditional fossil fuel that would be used for the same purpose
as the alternative fuel.
(b) Exception- Notwithstanding subsection (a), the Secretary of Defense may purchase such
limited quantities of alternative fuels as are necessary to complete engine or fleet
certification for 50/50 blends. In such instances, the Secretary shall purchase such alternative
fuel using amounts authorized for research, development, test, and evaluation using
competitive procedures and shall ensure the best purchase price for the fuel.
SEC. 2823. PROHIBITION ON BIOFUEL REFINERY CONSTRUCTION.
Notwithstanding any other provision of law, neither the Secretary of Defense nor any other
official of the Department of Defense may enter into a contract to plan, design, refurbish, or
construct a biofuels refinery or any other facility or infrastructure used to refine biofuels
unless such planning, design, refurbishment, or construction is specifically authorized by
law.
Regarding Section 313, S.Rept. 112-173 states:
Limitation on availability of funds for procurement of alternative fuel (sec. 313)
The committee recommends a provision that would prohibit the use of funds authorized to be
appropriated to the Department of Defense in fiscal year 2013 from being obligated or
expended for the production or sole purchase of an alternative fuel if the cost exceeds the
cost of traditional fossil fuels used for the same purpose, except for continued testing
purposes.
The committee notes that in December 2011, the Defense Logistics Agency, on behalf of the
Department of the Navy, purchased 450,000 gallons of biofuels for $12.0 million, which
equates to $26.66 a gallon. According to the Department of the Navy it was the single largest
purchase of biofuel in government history and was carried out in order to "demonstrate the
capability of a Carrier Strike Group and its air wing to burn alternative fuels." The
Department of the Navy noted that, despite the use of operation and maintenance funds for
the purchase, the demonstration is deemed a research, development, test, and evaluation
(RDTE) initiative as justification for the higher cost per gallon.
The committee also notes that the Vice Chief of Naval Operations testified before the
Subcommittee on Readiness and Management Support on May 10, 2012, regarding pressure
on readiness accounts from increased fuel prices that "every $1 increase in the price per
barrel of fuel results in approximately $31M of additional cost annually above our budgeted
level." Therefore, the high cost of fuel has direct and detrimental impact on other readiness
accounts.
The committee strongly supports initiatives undertaken by the Department of Defense to
reduce the fuel demand of the operational forces through affordable new technologies that
increase fuel efficiency and offer alternative sources of power. But given the pressure placed
on current and future defense budgets, the committee is concerned about the use of operation
and maintenance funds to pay significantly higher costs for biofuels being used for RDTE
efforts. Therefore, the committee directs the Secretary of Defense to develop and promulgate
guidance to the military services and defense agencies on the difference between the
operational use of alternative fuels versus continued RDTE initiatives. (Pages 80-81)
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FY2013 Department of Defense Appropriations Act (H.R. 5856)
For the 2013 fiscal year, The House Appropriations Committee, in its report (H.Rept. 112-493 of
May 25, 2012, on H.R. 5856), states:
ADVANCED DROP-IN BIOFUEL PRODUCTION
The request [for Defense Production Act purchases] includes $70,000,000 for the
construction or retrofit of domestic commercial (or pre-commercial) scale advanced drop-in
biofuel plants and refineries. The Committee understands that the Department has allocated
$100,000,000 of the $150,000,000 program addition to the fiscal year 2012 Defense
Production Act account for this effort and that $70,000,000 of this funding likely will not
execute until well into fiscal year 2013 or even into fiscal year 2014. While the Committee is
supportive of alternative energy development, in these times of decreasing budgets, it does
not seem prudent to stockpile funds so far ahead of need. Accordingly the recommendation
provides no funding for this effort in fiscal year 2013. The Committee urges the Secretary of
Defense to request this funding in future years when it can execute in a timely manner. (Page
203)
For the FY2013 fiscal year, the Senate Appropriations Committee, in its report (S.Rept. 112-196
of August 2, 2012, on H.R. 5856), provides for an additional $100 million for the DPA fund over
the amount requested in the FY2013 budget request. The report states:
Additional Funding - The Committee recognizes the critical role that the DPA title III
program serves in strengthening the U.S. defense industrial base and believes that this work
is in the national interest. Therefore, the Committee increases funding for DPA by
$100,000,000 over the budget request. The Committee directs that the additional funding be
competitively awarded to new initiatives and priority consideration should be given to
completion of DPA projects initiated in prior years. Furthermore, the Committee directs the
Under Secretary of Defense for Acquisition, Technology, and Logistics to inform the
congressional defense committees 30 days prior to any obligation or expenditure of these
funds. (Page 164)
Author Contact Information
Katherine Blakeley
Analyst in Defense Policy
kblakeley@crs.loc.gov, 7-7314
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