GAO Report Addresses DOD Alternative Fuels Investments

by Erin Voegele (Biomass Magazine) In late July, the U.S. Government Accountability Office published a report focused on U.S. Department of Defense investments in alternative fuels. The report notes that while the DOE has purchased small quantities of alternative fuels for testing and demonstration purposes, it has not yet done so for military operations.

Within the report, the GAO indicates it was asked to examine aspects of DOD’s investments in alternative fuels. As a result, a report has been delivered to the chairman of the House Committee on Armed Services that reviews the extent to which DOD has purchased alternative fuels and demonstrated that those fuels can meet safety, performance and reliability standards; has a process for purchasing alternative fuels for military operations that takes into consideration any cost differences between alternative and conventional fuels; and has used Defense Production Act authorities to promote the development of a domestic biofuel industry.

According to the report, the DOD purchased approximately 2 million gallons of alternative fuels for testing purposes from 2007 through 2014 at a cost of approximately $58.6 million. This includes approximately 450,000 gallons purchased for the Department of Navy’s July 2012 Great Green Fleet demonstration, which was part of a larger, biennial multinational maritime exercise, known as the Rim of the Pacific exercise. Over the same period, the DOD purchased about 32 billion gallons of petroleum fuel at a cost of $107.2 billion.

In the report, the GAO highlights the higher per-gallon price of the alternative fuels, noting that the DOE is currently purchasing alternative fuels for testing purposes at a premium price. The report explains that the marginal unit cost of producing a commodity at small scale with new processes being researched and developed is typically much higher than the cost of producing the same or similar commodities using existing large-scale commercial production facilities.

The report cites Army officials as stating testing processes for alternative fuels made from the Fischer-Tropsch and hydroprocessed esters and fatty acids production processes, as well as fuel made from the alcohol-to-jet production process, for use in Army aviation assets is complete. The test results are undergoing review in order decide if these fuels will be approved for use in Army aviation assets. Army officials also noted they plan to complete the testing of alternative fuels made from the alcohol-to-jet production process for use in tactical and combat ground vehicles and ground support equipment by the end of the year.

According to the GAO, the DOD’s first attempt to purchase military operations through its large-scale fuel program occurred in June 2014 for the purchase of jet propellant-5 jet and naval distillate fuels. The USDA made available approximately $27 million in Commodity Credit Corp. funds to support successful biofuel contract awards. According to the DOD, proposals with biofuels bids for only naval distillate fuel but not jet propellant-5 jet fuel were received. However, none of the submitted proposals met all of the technical evaluation factors and none of the fuel contract awards announced in February were for alternative fuels. DOD’s second attempt to purchase alternative fuels for military operations through its large-scale fuel program began in April. The USDA has made available approximately $66 million in Commodity Credit Corp. funds to support successful biofuel contract awards. Proposals were due May 18 and the DOE is expected to make contract awards before Oct. 1.

A full copy of the report, titled “Defense Energy: Observations on DOD’s Investments in Alternative Fuels,” can be downloaded from the GAO website. READ MORE