USDA, Energy and Navy to fund more biofuel production with private sector
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Secretary of Agriculture Tom Vilsack, Secretary of Energy Steven Chu, and Secretary of the Navy Ray Mabus developed a plan to jointly construct several drop-in biofuel plants and refineries in partnership with the private sector.
Vilsack said that in addition to reducing our reliance on foreign energy, the plan will create economic opportunity for farmers and jobs in rural areas.
“By building a national biofuels industry, we are creating construction jobs, refinery jobs and economic opportunity in rural communities throughout the country,” said Vilsack. “As importantly, every gallon of biofuel consumed near where it is produced cuts transportation costs and, for the military, improves energy security.”
The production of these fuels for military and commercial use will be done in partnership with the private sector by accepting proposals from companies interested in developing a biofuel plant or refinery with assistance from the federal government. The project will require an equal match of cost share from private industry.
“This arrangement between the three departments will be the first time in history that the U.S. government is addressing in one place, as one entity, all of the risks associated with growing the manufacturing business and sector,” Vilsack said.
The three departments are addressing the kind of feedstock that should be used, the kind of technology that should be used and how to create a marketplace for biofuels. The USDA will be responsible for analyzing the feedstock, the Department of Energy for the technology, and the Navy will serve as a ready customer for the advanced biofuel product. Mabus said the Navy's goal is to get half of its energy sources form non-fossil fuel resources no later than 2020, which means it will need 80 million barrels of biofuel per year.
“Energy independence is one of the most important things we can do from a military standpoint,” said Mabus. “For every dollar that the price per barrel goes up, it costs the Navy more than 30 million in additional fuel costs.”
In March, President Obama issued his Blueprint for A Secure Energy Future, the Administration's framework for reducing dependence on foreign oil. This biofuels initiative is in response to the President's directive and is being steered by the White House Biofuels Interagency Work Group and Rural Council.
Obama's directive includes reducing oil imports by one third by 2025. It currently costs the U.S. approximately one billion dollars per day to import oil. Steven Chu, Secretary of Energy, said that his department supports 29 integrated biorefinery projects in partnership with the private sector, which will provide needed experience in this new effort.
“This partnership will give industry the initial support it needs to emerge capable of producing jet biofuels at competitive prices,” he said. “This includes exploring cheaper ways to move biomass from farms to biofuel plants.”
Vilsack said this partnership provides encouragement for the private sector to become involved with the project and is expecting an enthusiastic response with recommendations and applications.
“What we're doing is providing resources for the construction of these commercial-sized operations, assistance with feedstock, and also a willing and able customer ready to purchase the product,” he said.
Each new refinery will need the capacity and capability to produce drop-in replacement advanced biofuel, which will meet military specifications at a competitive price with petroleum. Vilsack said that the goal is to build these refineries in geographically diverse locations throughout the nation, but that they will be located where there is ready market access and with no significant impact on the supply of agricultural commodities normally used for the production of food.
Vilsack told reporters today that the $170 million from USDA used to fund this initiative will be repurposed from existing resources in the Commodity Credit Corporation (CCC). Mabus also said the Navy will repurpose existing dollars in its funds. He said that the Navy has successfully flown jets on biofuels and previously bought energy from algae resources.
“This is a wise investment not only because of the importance of alternative fuel, but the way we're doing it provides a new model of government doing business,” Vilsack said.
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