Greener US Navy Dealt a Setback in Congress

MILWAUKEE - The U.S. Navy's energy security plan for a greener fleet that relies less on imported oil and more on domestic renewable biofuels has been dealt a setback in Congress, as Republican senators voiced concern about the price of biofuels not being competitive with petroleum.

The move doesn't stall the program completely but could delay efforts to speed development of commercial-scale biorefineries.

The Navy, Energy and Agriculture departments had announced a more than $500 million initiative last year that would help clean-tech firms such as Madison, Wis.-based Virent Inc. raise private capital to build major biorefineries to produce renewable jet fuel for Navy aircraft.

But a vote last week could stall the effort. Republican Sens. John McCain of Arizona and James Inhofe of Oklahoma worked to keep biofuels funding out of the legislation.

The vote in the Senate last week follows a similar vote in a committee of the Republican-controlled U.S. House of Representatives last month.

McCain said investment in biofuels represented a case of "misplaced priorities" for the Pentagon at a time when it's being asked to cut costs in line with the spending controls Congress enacted last year.

Department of Defense "funds should not be used to invigorate a commercial industry that cannot provide an affordable product without heavy government subsidies," McCain said in a statement. "This is not a core defense need and should be left to the Department of Energy, which received over $4 billion last year for energy research and development and related programs, or to the private sector to take the lead."

The Navy considers energy an important national security challenge, given the significance of petroleum to the military. The Navy has set a goal of providing half of its energy from non-fossil fuel sources by 2020, or 8 million barrels of biofuels a year. Every $1 increase in the price of a barrel of oil adds $30 million to the Navy's fuel bill, Secretary Ray Mabus has said.

In Madison, 10-year-old Virent has moved from the lab toward commercial development, using a chemical conversion process that enables fuels and chemicals to be produced from the sugars in a variety of plants.

The company, which has built a pilot biorefinery on Madison's east side, has grown to more than 120 employees and has announced plans to build a commercial scale biorefinery in 2015.

Virent executives have expressed interest in submitting a proposal for the program, which company chief executive Lee Edwards said last year "plays into the strong suit" for the Madison firm's technology. U.S. Agriculture Secretary Tom Vilsack recently toured Virent's lab and biorefinery and discussed the military biofuels procurement program.

The Senate vote could stall attempts for a rapid acceleration of biofuels deployment, said David Hitchcock, Virent vice president of government affairs.

"Virent and the biofuels industry, especially the advanced drop-in replacement biofuels industry, would really love to see strong government support to help it get off the ground," he said. "For the industry this was seen as a way to help pull it forward faster. Not having it there, it's going to slow down things a little bit for the industry."

Virent continues on its own path toward opening a commercial-scale biorefinery in the next few years, he added, noting the company has an agreement with Coca-Cola to supply renewable chemicals from plants, to help plants replace petroleum as a source of plastic for beverage bottles.

During a conference call with reporters last week, Vilsack said plans to implement the program will proceed.

"We're going to move forward. It's the right policy for the country," he said.

The three-agency approach was structured to move the industry more quickly toward cost competitiveness with fossil fuels, Vilsack said.

"The Navy would purchase the fuel, the (Department of Energy) would help finance construction of the facilities, and the USDA would help buy down the cost of the fuel so it was cost-competitive."

Vilsack said the votes in Congress represent another attempt by the oil industry to undermine incentives for a sector that is competing for a slice of the energy economy.

"Even the oil industry gets support from the government, so it's beyond me why we wouldn't want to help industry that would increase farm income and create jobs and satisfy demand for our commercial airlines that are faced with regulations in other parts of the world on greenhouse gases," Vilsack said.

The cost of key enzymes for biofuels has come down 90 percent in recent years, said Adam Monroe, president of Novozymes North America, which opened a biofuel enzyme factory in Nebraska last week.

The narrow 13-12 committee vote in the Senate was definitely a surprise but not the final decision on the issue, noted Ben Kallo, clean-tech analyst at Robert W. Baird & Co., in an email.

The White House has indicated it may veto the measure, and it's likely the military would continue to lobby for the funding.

Helping their cause: new information from Air Force researchers in Ohio. They found that because biofuels don't weigh as much as petroleum, that lighter weight on military aircraft could lead to faster flight times or an ability to carry more payload, Kallo said.

"That being said, election year politicking is frantic," he added.

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