Biofuels Get the Axe
Since about 1973, the year of the first oil embargo, muddle-headed politicians from both parties have used the absurd idea of "energy independence" as a campaign talking point that rube voters will swill like free beer. But in the ugly trench warfare of daily politics, their actual votes sometimes undermine this supposed apple-pie-and-motherhood, all-purpose good thing.
That's what a Republican-led group in the House Armed Services Committee did last week when it voted to kill the Department of Defense's plan to run its airplanes on a blend of half biofuel and half conventional Jet A by the year 2017. Slipped into the defense department's appropriation is language that would prohibit the services from spending more for fuel than they do for traditional fossil fuels. If it sounds like an amendment written by an oil company lobbyist, it probably is.
If this vote stands, the effects are far reaching, especially for the Navy, whose ambitious "Green Fleet" plans foresee the service running entirely on a 50-50 blend of fossil and biofuels by 2017. (For more on this, listen to this podcast.) As early as next month, the Navy hoped to put a battle group to sea fueled entirely on a bio-fuel blend. Both the Navy and Air Force have extensively tested aviation bio-fuels refined from camelina and are satisfied that they perform as well as fossil fuels.
So what's the problem? The cost, obviously, which is variously estimated at more than twice to as much to four times as much as fossil fuels. Blending the two helps reduce that cost, but the blend is still more expensive. The military's concern here is mostly about supply security and the cost of delivering the fuel—both in dollars and lives lost in protecting fuel convoys against attacks. The Pentagon recently estimated that in Afghanistan, it costs $400 a gallon to get fuel in theater. Even if that's an exaggeration by ten fold, it's obviously expensive to fuel military operations and always has been. This cost may be meant to suggest a geopolitical price, too. If we're less dependent on imported oil, maybe we're less inclined to enter wars where it's extracted.
The justification for spending more on biofuels is that in doing so, the services would be priming the pump to drive up the volume, lower costs and improve efficiency in a way that would make biofuels more competitive not just for the services, but for civilian buyers of Jet A, too. In other words, it's really a government subsidy to support an emerging industry. Let's see, where have I heard this argument before? Oh, yeah…that's what the corn state pols—many of them fiscally conservative Republicans—said when they enacted tax credits for the ethanol industry. Thirty years into that, we have $6 billion in government handouts going mainly to three large producers of ethanol, a fuel that isn't green, no one likes and has about as much chance of assuring energy independence as converting the railroads back to wood-fired steam.
The problem here isn't the principle. The idea that government R&D should fund industries and/or ideas that eventually become economic, profitable entities is sound and the country has flourished doing this very thing. Think about nuclear energy, the microchip, the internet, penicillin—it was a USDA lab that figured out how to increase yield. The list is long. The problem is knowing when to stop shoveling funds into the public trough so the embryonic industry can live or die of its own economic vitality.
Left to their own devices, elected officials would struggle with such decisions but, beholden as they are to special-interest money, sensible long-term public policy is all but extinct. The proof is in the ethanol program, which any sane person could only conclude has been an enormous boondoggle. But does that mean that the DOD's green fuel initiative will go the same way?
Maybe yes, maybe no. Although the green lobby persistently overstates the economics and importance of biofuels, that doesn't mean they have no role. That the economics haven't worked yet is not an argument that they never will. We are still firmly in the age of oil and the fact that technology is yielding yet more hydrocarbons, not less, complicates the emergence of biofuels.
But just because that's true now, doesn't mean it will be in 20 years, which means that the House's vote to kill DOD's plans looks fiscally sound, but just stupidly short sighted. Energy conversion transformations happen in decade scales, not years or months. And sometimes, research leads to expensive blind alleys. The Navy's Green Fleet plans may be one of those, but it's worth taking it a little further to find out, in my view.
If I were king, I'd kill ethanol's $6 billion free ride and give half the money to DOD for bio-fuel research with a statutory limit of say, seven years. But that may make far too much sense, I guess.