The Pentagon Is Quietly Moving forward on Biofuel Deals. Republicans Want to Stop It

by Travis J. Tritten (Washington Examiner) ... (Former Navy Secretary Ray) Mabus’ vision is, however, quietly moving forward under the Trump administration. The Pentagon has authorized $140 million to help build two biofuel refineries in recent months, a move that has agitated some top Republican lawmakers who have long opposed what they see as a waste of taxpayer money.

“I would be interested certainly in seeing if the government could get out of those contracts and certainly not spend additional money toward that end,” Rep. Mac Thornberry, R-Texas, the chairman of the House Armed Services Committee, told the Washington Examiner.

Fulcrum BioEnergy, a California company, was given access to $70 million in matching funds in October to build a refinery outside Reno, Nev., that will turn municipal waste into fuel, the Pentagon said.

In December, the department authorized another $70 million for a refinery project by Red Rock Biofuels in rural Oregon that aims to reduce the chances of forest fires by making biofuel from fallen trees and other potential tinder in forests.

"The biofuels contracts date back to 2013 and are still being executed due to legally binding contractual language,” said Adam Stump, a Pentagon spokesman.

The Nevada and Oregon plants are what is left of four original projects supported by the prior administration. Two other companies were given $10.8 million to design refineries, but those projects never panned out.

The money is being distributed through the Pentagon’s Defense Production Act program, which was created during the Korean War to stoke the defense industrial base.

Mabus oversaw the testing of a Navy F/A-18 “Green Hornet” in 2010, which was the first supersonic jet to fly on a biofuel blend, and two years later, a demonstration showcasing Navy ships and aircraft operating on a biofuel blend during the multinational Rim of the Pacific exercise.

His efforts culminated in 2016 with the steaming of the Great Green Fleet, a blueprint for future fuel use. The strike group with the USS John C. Stennis aircraft carrier, which itself is nuclear-powered, was sent on a regular deployment to the Western Pacific using a biofuel blend.

Eric Pryor, the chief financial officer of Fulcrum BioEnergy, says the Reno biofuel plant will be a springboard to opening eight refineries across North America. The Pentagon funding, he says, was crucial to closing a $175 million private bond offering in October that was backed by investors such as BP, United Airlines, and Waste Management.

From the beginning, it was understood that the refineries would have to be cost-competitive with traditional petroleum-based fuels, said a former senior defense official, who asked to remain anonymous in order to discuss the negotiations that took place.

The Defense Production Act funding is one of the few aspects of the Pentagon that does not fall under the authority of Thornberry’s House Armed Services Committee. Instead, the House Financial Services Committee and its chairman, Rep. Jeb Hensarling, R-Texas, has oversight.

“I think it would be helpful to get legal opinions about other options” instead of paying out the $140 million under the contracts for biofuel refinery construction work, Thornberry said. “I’ll definitely talk to Jeb about seeing what we can do together.”

The Trump administration also just nixed another source of taxpayer funding designed by Mabus and the Obama administration to “prime the pump” for the companies as they produce military-grade biofuels for the Navy.

The agency canceled Farm-to-Fleet on Feb. 1, saying it “has reassessed how to best use limited available funds and has determined that the [funding] is no longer a priority.”

The high prices in 2012 for the “very small research amounts” have come down dramatically. The Pentagon’s most recent purchase from AltAir came in at $1.41 per gallon, Mabus said. The Defense Logistics Agency, which handles all fuel purchases, projected the Navy’s F-76 diesel fuel to be $2.17 per gallon for this year. READ MORE