by Jim Lane (Biofuels Digest)  The military would like, affordable, domestically-produced, drop-in, renewable fuels.  Drop-in fuel producers would like long-term, stable fuel sale and feedstock purchase contracts.   Why not put those needs together?

According to a Defense Department report, the US Navy will need 336 million gallons of renewable fuel by 2018 to meet its Green Fleet goals. Let’s take that as a starting point.

The same report concluded that “the projected supply of drop-in renewable fuels will not be sufficient to meet anticipated DoD demand for renewable jet fuel products. Also, price premiums for drop-in renewable fuels…may be considerable.” Elsewhere, the report suggests that the price premium may range from $1.43 to $5.24 per gallon.

To accelerate production and ensure that costs are in line, affordable feedstocks — which can represent up to 80 percent of finished fuel costs — are essential.

A National Biomass Lend-Lease project could achieve that goal. What is it, exactly?

…The NBL is a dedicated portion of federal lands — made available for no-cost (lend) leasing to bioenergy producers or their supply-chain partners who, in turn, commit to supplying affordable, drop-in, low-carbon, domestically-produced fuel to the DoD while observing strict sustainability guidelines.

…Keep in mind, the Naval Petroleum Reserve was in no way guaranteeing or financing the refining capacity – they were ensuring that a sufficient source of affordable feedstock would be available to refiners,

Leasing arrangements

The bioenergy producer(s) would have a 15-year feedstock harvest right and a 15-year fuel obligation. The land would be used according to strict sustainability standards, and restored to original condition at the end of the contract. The net goal – no long-term disturbance of either nature, or US carbon storage.

…  Who gets what?

The military gets affordable, low-carbon, domestically-produced fuel. Bioenergy producers get a feasible path to commercial scale. The public gets more renewable fuel in the overall energy supply, without the trade-off of using land that could be used for, say, food production. Sustainability advocates get a land use that is based on good stewardship principles, reduces global carbon, and returns the land undisturbed later on.

Would the financiers go for it – would it really work?

If you offered a lend-lease arrangement — 15 year (very low) feedstock cost, 15 year fuel contract — and the numbers worked out something like the KiOR example so that you really can meet your debt and equity requirements via selling $115 per barrel jet fuel to the military? Yes, we believe that project financiers would go for it, if they were given an appropriate “technology guarantee” or wrap issued by the constructors or the project’s insurers.  READ MORE