U.S. Navy Eyes Biofuels to Fuel Fleet of the Future

by Matt DiLallo (Motley Fool) ... America's military actually consumes as much energy as the entire population of Nigeria, and there are 140 million people living in Nigeria. Suffice it to say, the military uses a lot of oil, which is why it's looking at alternative fuel sources to wean itself off of oil. One of those alternative sources is biofuels, and this year actually marks the first time the U.S. Navy is including biofuels in its annual procurement for bulk fuels.
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In order to combat the high price of commercial drop-in biofuels, the Navy and the U.S. Department of Agriculture, or USDA, worked together to create the Farm-to-Fleet program. Under the program, producers seeking to offer drop-in biofuels can apply to the USDA Commodity Credit Corporation for grants that will offset the cost of the feedstocks needed to produce these drop-in biofuels. Further, some drop-in biofuels can qualify for Renewable Identification Numbers, which can be sold to further offset the cost. The hope is that between these two offsets producers will be able to supply a drop-in jet fuel, which is the most costly fuel the navy uses, for the same price as traditional jet fuel.
Final thoughts
There still is a pretty big disconnect between the price and availability of drop-in biofuels when compared to petroleum-based products. However, the hope is that by working directly with the USDA the cost of biofuels will slowly come down so that by 2020 they will be both readily available and cost comparative. That is why this year's procurement measures are a step in the right direction. But it's still a small step, and the Navy has a large gulf to cross as it works to more than double its access to alternative energy sources over the next few years. READ MORE