DOD awards 3 biofuel contracts under Defense Production Act

By Anna Simet | September 19, 2014

Red Rock Biofuels, Fulcrum Bioenergy and Emerald Biofuels have been awarded contracts under the U.S. Department of Defense’s Defense Protection Act to construct and commission biorefineries that will produce a collective 100 MMgy of drop-in biofuels for military and private sector transportation needs, for an average price of $3.45 per gallon.

During a White House press conference discussing the contracts, U.S. Secretary of Agriculture Tom Vilsack emphasized why the effort is important to rural America in particular, an economy that he said is in great need of rebuilding and from which a disproportionate percentage of the U.S. military originates. “Rural America is 15 percent of the [U.S.] population, and as high as 40 percent of our military… [rebuilding the economy is] important and necessary if we’re going to continue to have young men and women willing to serve our military coming from these small towns, and we need to continue to look for ways to expand economic opportunities in them. The biofuels industry is one strategy that this administration has embraced to try to rebuild it.”

Vilsack said the administration is currently working with nearly 1,000 producers across the country to develop in 12 projects in 11 states, “growing over 50,000 acres of new and creative feedstocks, moving away from the false debate of food-vs-fuel, and looking for creative ways to provide feedstocks of advanced biofuels.”

He added that among other initiatives, the administration has worked with more than 300 companies to provide financial assistance as they work to develop component parts that go into advanced biofuels, and funded $320 million in research in feedstocks and supply chains.

With the new contracts, Fulcrum BioEnergy, based in northern Nevada, will produce 10 MMgy of biofuel through use of MSW, Vilsack said. Red Rock Biofuels in Oregon will utilize woody biomass to create 12 MMgy of advanced biofuels, and, using waste fats, Emerald Biofuels will produce 82 MMgy at a Gulf Coast refinery.

Both Fulcrum and Red Rock will deploy the Fischer-Tropsch process, and initial production of the facilities is to begin in 2016.

“These facilities have to be constructed, operated and maintained,” Vilsack said, emphasizing plentiful jobs created in the small towns and rural areas that the facilities will be located in and source supplies and feedstocks from.

 Following Vilsack, Secretary of the Navy Ray Mabus discussed links between energy security, national security and international stability, and offered a brief history lesson in energy innovation in the navy.

“The navy has always led when we have changed energy sources,” he said. “We went from sail to coal in the middle of the nineteenth century. We went from coal to oil in early part of twentieth century and we pioneered the use of nuclear for transportation in middle of twentieth century…every single time that we did this—every time—there were all sorts of naysayers. Every single time, those naysayers have been wrong. Part of this announcement is showing just how wrong they’ve been on this.”

Ways that energy impact national security center on price volatility, according to Mabus, which has required billions of dollars of unbudgeted military funds. “When a navy ship is refueling, it’s its most vulnerable,” he said. “And it’s [price volatility] strategic. You only have to read the headlines to see how energy is used as a weapon.”

The Defense Protection Act was actually passed in 1950, he added, for the purpose of providing investments in anything America needs, but doesn’t have at scale, for national security. “We’ve done it in a myriad of industries from steel to microchips,” he said. “And energy is particularly called out... Today is a major milestone that only happened because of DPA, which is there to use for America’s defense.”

Mabus added that the contracts with Red Rock Biofuels, Emerald Biofuels and Fulcrum BioEnergy will produce “incredibly competitive” with fossil fuel costs—about $3.45 per gallon.

U.S. DOE Deputy Security of Energy Daniel Poneman, who will soon exit his position, commented on seeing today’s contracts go from concept and lunch-time conversation to a reality, and emphasized that, as others have been about other sources of alternative energy and fuels in the past, biofuel skeptics have been and are wrong.

Such skeptics suggest using other sources of energy such as electric vehicles, and with biomass and biofuels, it has been no different than when any other new source was pursued. “We’re big enthusiasts at DOE for electric vehicles, but I don’t think we’ll have electric jetfighters any time soon,” Poneman said. “Your electric planes will be confined to the hobby shop for some time to come.”

Currently, about 11 percent of America’s energy is renewable, and half of that number is biomass derived, according to Poneman. “America using 2.5 million tons of biomass per year…we’re seeing it play a significant role, and I predict that’s going to continue.”

He added that there isn’t a way to know which option will be the technological winner at the end of the day, but pointed to the recent and upcoming successes of the cellulosic ethanol industry as the indicator as to where this sector is likely to go. “We’ve been seeing the graduated of this effort of earlier years in the cellulosic field, and today we’re really beginning to sharply vector towards drop-in, hydrocarbon-based fuels. Just a few weeks ago, we saw start of production at the nation’s first commercial-scale cellulosic ethanol plant to use corn waste as feedstock, Poet-DSM’s Project Liberty, and Abengoa Bioenergy expects to complete construction of its biorefinery by end of October.”

The advanced biofuel industry is becoming a reality, Poneman concluded. “It’s not just about talk or writing words on a page.”

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