Wednesday, July 18, 2012

Expecting different results?


Back in December of last year we reported out on the Navy's big biofuel push which started out with replacing a quantity of JP-5 which fuels the Navy's jets and helos. Here is what we said at the time:

The departments of Agriculture and the Navy announced plans Monday to buy 450,000 gallons of non-food biofuels -- at a cost of $16 per gallon -- in what will be the largest federal purchase of biofuels in U.S. history.

The purchase is being authorized by an executive order under the Obama administration's "we can't wait" campaign.

Administration officials gave no indication why they're not going through Congress, instead using a program that was established to promote rapid job growth by bypassing congressional debate.

Perhaps why Congress was not able to chime in on this decision was because the fuel that this biofuel is replacing, JP-5, which powers the Navy's jets and helos goes for about $4/gallon. Crazy theory, we know, but that might just explain it.

Back to real time: We went on to point out that one of the firms that was producing the biofuel was politically-connected. C'mon, you know where this is going. Back to December:

Two companies will participate in the program -- Louisiana-based Dynamic Fuels, a joint venture of Tyson foods and Syntroleum Corp, which makes biofuel from used cooking oil; and California based Solazyme, which makes fuel from algae.

Now we get to the part you've been waiting for:

Solazyme is not just any biofuels company, and its continued partnership with the Navy is not without crony connections. Its strategic advisor is T.J. Glauthier, Obama donor and part of President Obama’s transition team, as Solazyme’s website states:

TJ Glauthier is an advisor and corporate board member in the energy and “clean tech” sector. He advises companies dealing with the complex competitive and regulatory challenges in the energy sector today. He also served on President Obama’s White House Transition Team, where he focused primarily on the energy portion of the economic stimulus bill.

Here and now: Yeah, we are so cronying out our national security.

So, nearly 3 years after SecNav Ray Mabus* made the bold prediction that by the year 2020, half the Navy's fuel and power would come from green sources, how's all that working out?

On Wednesday, the Great Green Fleet is scheduled to make its first demonstration voyage in Hawaii, just as Mabus promised it would. But this is hardly the triumphant moment that the Navy Secretary depicted back in that hotel ballroom. Support for the Great Green Fleet — and for Mabus’ entire energy agenda — has collapsed on Capitol Hill, where both Republicans and Democrats have voted to all but kill the Navy’s future biofuel purchases. In the halls of the Pentagon, the Navy’s efforts to create a biofuel market are greeted with open skepticism. Even inside the environmental community, there’s deep division over the wisdom of relying on biofuels. And while the Navy has tried to deflect questions about the cost of its renewables push, a little-noticed Defense Department report shows that the Navy could spend as much as an extra $1.8 billion per year if it buys all the biofuel it’s pledged to burn.

Continue reading full article here:

The summary contains all the usual suspects but these paragraphs jumped out at us:

One reason why: Biofuel companies aren’t like high-tech firms that can start small and slowly scale up. A new biofuel refinery could cost anywhere from $65 to $300 million to build. (And that doesn’t even begin to address the costs involved with farming the land or transporting the product.) Investors are hesitant to lend out that kind of money without major customers who are committed to buy the fuel; customers are skittish about making those kinds of commitments until they know the biofuel-maker can actually deliver. Currently, there’s not a single commercial-grade biorefinery operating in this country (although several are in the works).

“You need that big anchor customer. And the Navy can afford a premium, because it knows how much petroleum really costs,” explains Brook Porter, an investment partner at the venture capital firm Kleiner Perkins Caufield & Byers, which has put more than $1.5 billion into so-called “clean tech” companies. For some of these firms, a big military contract could mean the difference between life and death.

A struggling, expensive industry that is dependent upon one big customer is ripe for the temptation of picking winners and losers and crony capitalism.

And at the end of the day, the Pentagon has simply worn out of Mabus' crusading for bio-fuels:

Even within the Pentagon, doubts about the program crept in. Top Defense Department officials, ordinarily supportive of green tech efforts, rolled their eyes when I asked about the Navy’s biofuel push. ”We’re not in the fuel production business. We’re not into scaling up new new fuels,” says Kevin Geiss, a former computational chemist now serving as the Air Force’s Deputy Assistant Secretary for Energy.

You know, it's a shame we can't figure out this energy independence thing as we keep finding more and more of that black sticky stuff underneath us here in the good ol' US of A.

* Being in the shipbuilding industry, we've been able to see some of Mabus' maneuvering. To say he is a political animal would be an understatement of the highest order.



Harrison said...

AND they got rid of urinals.

I think the fuel/algae thing was started under Bush tho.

Dean said...

I don't know if I have a big problem with getting rid of the urinals, seeing as I get by without having one at home.

Re: Bush. Bad policy is often times a bipartisan affair.