cnas - fueling the future force

8/2/2019 CNAS - Fueling the Future Force

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s e p t e m b e r

2 0 1 0

Fuling h Fuu Foc

Preparing the Department of Defense

for a Post-Petroleum Era

B Christine Parthemore and John Nagl


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Cover Image

Sta St. Rsty Jos prpars to a A-10C Thdrbot II March 25, 2010, with a 50/50

bd o Hydrotratd Rwab Jt ad JP-8. Th A-10 th w what was th frst iht

o a aircrat powrd soy by a biomass-drivd jt bd.

(SAMuel KIng JR./u.S. Air Forc)

Acknowledgments

We would like to thank our colleagues at the Center or a New American Securit (CNAS) or their valuable insights andcomments throughout the research and writing process. Will Rogers, Dr. Kristin Lord, and more than a dozen colleagues allprovided invaluable eedback and critiques. Joseph S. Ne, Jr. National Securit Intern Alexandra Stark contributed her sharp,investigative research skills and excellent writing. We are grateul or external reviews o drats rom, among others, CDR HerbCarmen, USN, Frank Homan o the Nav Sta and Jim Morin o Hogan Lovells. As alwas, Liz Fontaine, Ashle Homan andShannon OReill provided guidance and advice through the production process. Man experts rom the U.S. Nav, Air Force,Arm, Marine Corps, and the Oce o the Secretar o Deense, and other U.S. government agencies and NGOs, contributed tothe discussions rom which we derived this analsis; however we alone are responsible or an errors or omissions.


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F t Ft Foc

Preparing the Department of Defense for a Post-Petroleum Era

B Cisine Paee an Jn Nag

S E P T E M B E R


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E P T E M B E R F t Ft FocPreparing the Department of Defense for a Post-Petroleum Era

About the Author

Christine Parthemore is a Few a e Cene a New Aeican Seci.

Dr. John Nagl is Pesien e Cene a New Aeican Seci.


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I . I N t r o d u C t I o N Te U.S. Department o Deense (DOD) must pre-pare now to transition smoothly to a uture in whichit does not depend on petroleum. Tis is no small

task: up to percent o DODs massive energy

needs and most o the aircra, ground vehicles,

ships and weapons systems that DOD is purchas-

ing today depend on petroleum or uel.1 Yet,

while many o todays weapons and transportation

systems are unlikely to change dramatically or be

replaced or decades, the petroleum needed to oper-

ate DOD assets may not remain aordable, or even

reliably available, or the liespans o these systems.

o ready Americas armed orces or tomorrows

challenges, DOD should ensure that it can operate

all o its systems on non-petroleum uels by .

Tis -year timerame reects market indicators

pointing toward both higher demand or petroleum

and increasing international competition to acquire

it. Moreover, the geology and economics o produc-

ing petroleum will ensure that the market grows

tight long beore petroleum reserves are depleted.

Some estimates indicate that the current global

reserve-to-production (R/P) ratio how ast the

world will produce all currently known recoverable

petroleum reserves at the current rate o production

is less than years.2 Tus, given projected supply

and demand, we cannot assume that oil will remain

aordable or that supplies will be available to the

United States reliably three decades hence. Ensuring

that DOD can operate on non-petroleum uels

years rom today is a conservative hedge against

prevailing economic, political and environmental

trends, conditions and constraints.It will take decades to complete this transition away

rom petroleum. However, DOD has already laid

important groundwork. Te development, testing and

evaluation o renewable uel conducted by the armed

services to date mark the rst steps in guaranteeing

DODs long-term ability to meet its energy needs.

DOD should build on this work and develop a strat-

egy that guarantees its ability to operate worldwide in

the event o petroleum scarcity or unavailability.


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F t Ft FocPreparing the Department of Defense for a Post-Petroleum Era

E P T E M B E R

|

Te Center or a New American Security (CNAS)

launched a project in September to examine

DODs energy challenges and recommend a path

orward. We convened DOD leaders and non-

governmental experts; researched current laws,

requirements and projects; and visited military

bases around the country to discuss DODs energy

challenges and opportunities. From this research,

we concluded that DOD needs a long-term strategy

to adopt alternative uels based on our reading o

current trends in petroleum availability and use, as

well as our identication o petroleum dependence

as a long-term vulnerability or DOD.

DOD ofcials increasingly understand this vulner-

ability. During the course o our project, the Navy

appointed two-star ofcers to lead two task orces

on energy and climate change. Teir activities,

which began quietly within the bureaucracy, are

now well-known examples o leadership by the U.S.

armed orces. Te Air Force and Navy ight-tested

camelina-based biouel blends in the past year.3Te Air Forces Air Mobility Command and the

Ofce o the Secretary o Deense (OSD) are work-

ing to increase energy efciency and maximize uel

savings in existing platorms and new acquisitions.

Te Quadrennial Deense Review (QDR) presented

instructions or integrating energy considerations

into how DOD does business. Bases around the

country are investing in solar, wind and geother-

mal projects. DOD is working to comply with

ederal energy mandates, and in particular thoseound in the Energy Independence and Security

Act (EISA) o , President Barack Obamas

October Executive Order on resource

conservation by ederal agencies and deense

authorization acts.

Tough each o the services has admirably developed

its own energy strategy to improve its near-term

energy management, DOD must also develop a

comprehensive long-term energy strategy. Te strate-

gies developed by individual services ocus heavily

on electricity usage at domestic installations, which

accounts or a relatively small raction o DODs

energy needs, and most goals within these strategies

do not look beyond or a timeline that is

too short to ensure DODs long-term energy security.

Moreover, there is no single ofcial who oversees

DODs entire energy portolio; authority within DOD

is currently divided, which is likely to complicate

implementation o the strategy. Tis report lays out

the strategic necessity or DOD to nd alternatives to

petroleum over the next years and then presents

important steps in achieving that long-term goal.

ransitioning away rom petroleum dependence by

will be enormously difcult, but ortunately

the U.S. deense sector has made several energy

transitions successully in its history. In particu-

lar, it moved rom coal to petroleum to nuclear

power in its ships. In a similarly seismic shi, DOD

rapidly increased its reliance on electronics, space

assets and computer systems in modern warare

in ways that enhanced mission eectiveness. Tese

experiences may oer lessons or DOD as it lever-ages an energy transition to maximize its strategic

exibility and reedom o maneuver.

Now is an opportune time to make this transition.

As the services redeploy rom current wars, the

Army (and to a lesser extent the other services)

have years o reset ahead o them. Acquisition

reorms and personnel restructuring initiatives

launched by Secretary Robert Gates in and

o ready Americas armed

orces or tomorrows

challenges, DOD should

ensure that it can operate

all o its systems on non-

petroleum uels by 2040.


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will continue through the Obama admin-istration and likely beyond. ogether, these

developments will present opportunities to procure

new, more energy-efcient systems.

A successul transition away rom petroleum

will produce nancial, operational and strategic

gains. Reducing dependence on petroleum will

help ensure the long-term ability o the military to

carry out its assigned missions and help ensure

the security o the nation. Tough adopting non-

petroleum uels will require an initial investment,

it will likely be recouped in budget savings over the

long term. Finally, moving beyond petroleum will

allow DOD to lead in the development o innova-

tive technologies that can benet the nation more

broadly, while signaling to the world that the United

States has as innovative and adaptable orce.

Tis transition should not compromise readiness

and, indeed, DOD must always put mission rst.

However, DOD need not choose between accom-

plishing its mission and minimizing the strategic

risks, price uctuations and negative environmentaleects o petroleum consumption. By providing

the private sector with stable market signals and

incentives to invest in scaling up the uels that meet

its unique energy needs, DOD will never need to

sacrice perormance or national security or energy

security. Rather, reducing reliance on petroleum will

only help the armed services to accomplish their

missions in the years and decades to come.

Table 1: DOD energy COnsumpTiOnby Fuel, 2009

Source: Department o Energy, U.S. Government Energy Consumption by

Agency and Source, Fiscal Years 2003, 2008 and 2009. Totals may not equal

100 percent due to rounding.

2009 DOD energy COnsumpTiOn by Fuel

sOurCe, in TrilliOn briTish Thermal

uniTs (bTu)

Fe Sce Eneg usePecenage

a

Pee . .

Naa Gas . .

Ca . .

Cie wae,

enewabe

eneg, an e

es epe as

se in aciiies

. .

oe eecic . .

Total 880.3 99.8


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E P T E M B E R

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Te more the United States reduces its dependenceon petroleum, the better it can hedge against petro-

leum suppliers exerting political leverage over U.S.

interests, including in times o crisis.

At the operational level, heavy reliance on liquid

uels also constitutes a orce protection challenge

or DOD. Fuel supply convoys have been vulnerable

to attack in both Iraq and Aghanistan, where the

services have struggled to adapt to the challenges

o terrorism, insurgency and violent extremism.

In addition to minimizing these risks in the cur-

rent wars, DOD must also conceptualize and plan

or what the uture will likely hold or Americas

security. Te Navys battle against pirates o the

coast o the Horn o Arica oreshadows the lit-

toral and unconventional challenges that await the

United States in the coming decades, as populations

continue to migrate toward the worlds coastal area.

Tese types o problems oen maniest at major

shipping chokepoints (including petroleum transit

chokepoints), and addressing them will include

distinctive ueling requirements. Te Air Force, like-

wise, conronts dramatic changes in manned and

unmanned ight, in addition to the prolieration o

space technologies, all o which could dramatically

alter uel needs. In another example, one recently

published AirSea battle concept ocused on China

notes that the type o conict it outlines could

require hardening ueling inrastructure, improv-

ing aerial reueling, stockpiling petrol, oil, and

lubricants and potentially running undersea uel

pipelines between Guam, inian and Saipan.6 As

the character o warare changes, DOD will haveto continue to consider the attraction o uel supply

lines to opponents.

C s d DdDOD cannot be assured o continued access to the

energy it needs at costs it can aord to pay over

the long term. oday DOD meets its energy needs

primarily through petroleum, which accounts or

more than percent o DODs total energy use.7

However, both demand and supply trends are likely

I I . W h y d o d S h o u l d A d o P tA ltErNA tIvE FuElS

Several actors challenge DODs continued reliance

on its existing petroleum-dominant energy strategy

over the long term: direct risks to U.S. security; trou-

bling supply and demand trends; the oen-hidden

external costs o uel consumption; and a changing

domestic political and regulatory environment.

T rk of pto DdcTe growing world demand or petroleum pres-

ents major geostrategic risks. High prices andrising demand are a boon to major suppliers and

reserve holders such as Iran and Venezuela, which

are unriendly to the United States. It also aects

the international behavior o rising powers such

as China, which is on a quest to secure access to

natural resources that is in turn expanding its

inuence around the globe. In Mexico, one o the

top suppliers o petroleum to the United States,

pipelines serve as an increasingly attractive target

or dangerous cartels to und activities that could

undermine the Mexican government, destabilizethe region and decrease U.S. homeland security.4

American oreign policy itsel has been colored by

its growing petroleum demands since the s

oil crises and subsequent declaration o the Carter

doctrine, which stipulated that the United States

would consider threats to the Persian Gul region

threats to its vital interests due to the strategic

importance o its petroleum reserves.5

Dependence on petroleum or percent o trans-

portation uel is also a dangerous strategic risk orthe United States given the leverage oil can provide

to supplier countries. Many European allies have

experienced such leverage in action with Russia

periodically threatening to reduce or cut o natu-

ral gas exports to countries highly reliant on their

supplies (and in some cases carrying through with

these threats). Similarly, national oil companies

and OPEC can choose to increase or decrease their

production rates to drive changes in the market.


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hostile to U.S. interests. Venezuela, or example,holds over years equivalent o reserves at its

current production rates. Tus, the U.S. reliance

on countries such as Venezuela as a supplier could

increase beyond the roughly million barrels o

petroleum it already imports rom there every day.11

Te reserve part o this ratio may increase, but we

can also be certain that the demand hal o the ratio

will increase, and likely at a aster pace.

Te United States is already moving past the era o

nearly complete reliance on petroleum or trans-

portation uel. Tough it will take several decades

to make this transition, the country should take

every opportunity to hasten progress given projec-

tions o tight markets and a heightened potential

or competition. Tis transition will require careul

investments that account or the potential eco-

nomic, environmental and geopolitical tradeos

involved with all energy sources.

Tere is an array o reliable, renewable uels that

should be considered as alternative supplies to

petroleum, including multiple generations o biou-els. Biotechnicians have long proven the technical

ability to produce hydrocarbon equivalents to

ossil uels, including the jet uel blends that DOD

requires. Eorts by the National Laboratories, aca-

demia and the private sector are ocusing on basic

science that will enable more efcient use o sec-

ond-generation biological uel sources (made rom

non-ood crops) by increasing efciency in pro-

cessing plant materials while retaining net energy

gains, and by overcoming other technical hurdles.

Others are leap-rogging beyond second-genera-tion biouels to uels derived rom algae. Still other

options include displacing petroleum by using elec-

tricity or natural gas to power transportation, and

using distributed renewable energy at overseas and

orward operating bases to displace petroleum in

powering generators. It is encouraging that growth

in renewable energy supply availability requently

outpaces expectations. Ethanol production grew

percent between and , and biodiesel

C o S t S o F P E t r o l E u m

d E P E N d E N C E

hea epenence n age e sppies can

incease peaina neabiiies an ake

e spp inasce a e aabe

age.

Ee a incease in e pice pee

css dod p iin aiina as.

rising gba ean, insance in Cina, is

inceasing e saegic ipance pee

in was a c be eiena u.S. ineess.

Cnies sc as Ian an venezea c

ae e ages eaining esees in a ew

ecaes i cen pcin aes an

wi gain eeage as a es.

hig ees pee cnspin ae

cnibing e canging ciae, wic

can bing esabiizing eecs an igge new

seci caenges.

to raise the price and perhaps even limit the avail-

ability o petroleum.

Te U.S. Energy Inormation Administration

projects that world energy demand will grow rom

its level o . quadrillion British thermal

units (Btu) to . quadrillion Btu by a

steep increase. I current trends continue, energy

demand in non-OECD countries will grow more

than our times aster than in OECD countries.8

Global petroleum demand has increased steadily

rom about million barrels o oil per day in

to more than million barrels today, and willgrow to . million barrels per day by i

current trends hold.9

While global oil demand increases, the supply side

o the equation is equally worrisome. At current

production rates, the global R/P ratio is about

years (seeAppendix I). Proved reserves (those recov-

erable under current conditions10) increasingly lie

in the hands o national oil companies that are oen


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us about million dollars.15 In an era o con-strained budgets, American security is best served

by trying to hedge against uture price uctuations

o this scale.

In addition to the security and nancial costs,

petroleum dependence creates environmental costs

that are causing increasing concern among security

analysts. Emissions rom ossil uel use contribute

to changes in the global climate, which risk alter-

ing geopolitical relations, destabilizing regions o

high strategic importance to the United States,

increasing erosion and storm surges at coastal

installations, and altering disease patterns.16

Melting summer ice in the Arctic is an early exam-

ple; its geopolitical importance has risen sharply

in the past ve years as Arctic countries (and their

potential shipping and natural resource custom-

ers) prepare to exploit newly navigable waterways

and seabed resource deposits. Federal leaders rom

both major political parties, DODs civilian and

military leaders, and security analysts o all stripes

regularly reiterate concerns over the national

security implications o the changing climate

caused by high-carbon uel consumption.17 Other

environmental costs o uel production can include

heavy water use and diverting arable land to uel

production, both o which can trigger negative side

eects i not managed properly. Factors such as

greenhouse gas emissions (including rom burning

high-carbon uels and rom land use change) and

the eects o uel production on ood prices should

thereore constrain DODs energy investments in

high-carbon ossil uels or rst-generation biouelsderived rom ood crops.

T C potc, ld rto eotSigns indicate that ederal and state govern-

ments will continue to push or greater adoption

o domestic and/or lower-carbon energy tech-

nologies. As a result, DOD will ace a changing

legal, regulatory and political environment in

the coming decades. Congress has consistently

production expanded rom trillion Btu to

trillion Btu over the same period. Wind, solar andgeothermal supplies also have expanded aster than

most analysts predicted over the past decade.12

Tese supply-side changes show how technical,

economic and policy decisions, such as tax regimes

that Congress has enacted to even the playing eld

with ossil uels, can aect energy trends.

Any eective DOD energy strategy must also be

exible enough to account or the act that its leaders

will have to make energy decisions based on imper-

ect inormation. Specic projections regarding howrapidly uel alternatives could achieve large-scale

production and consumption are oen treated as

proprietary. Tis uncertainty is particularly prob-

lematic or DOD, which has limited manpower and

unds to invest in uel research and development.

T idct Cot of ptoDdcTe Department o Deense accounts or about

percent o the ederal government's energy

consumption, and its high dependence on petro-

leum-based uels the Deense Energy Support

Center reported . million barrels in petroleum

sales in scal year , totaling nearly billion

dollars13 means that its budget is subject to major

oil price uctuations.14 Petroleum price spikes

negatively aect DODs budget and divert unds

that could be used or more important purposes.

As Secretary Gates said in , Every time the

price o oil goes up by dollar per barrel, it costs

Te United States is

already moving past the

era o nearly complete

reliance on petroleum or

transportation uel.


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I I I . E l E m E N t S o F A d o d E N E r G yStrA tEGy

In response to these actors, DOD should map a

path orward that relies on technological innova-

tion and efciency to hedge against price spikes

and scarcities and to accommodate Americas

economic, political and environmental needs. By

planning now around these likely uture condi-

tions, DOD can weather change, protect its own

interests, reduce its vulnerability to extreme price

spikes and most importantly ensure that it can

meet its mandate to protect the nations security.

Te logical next step is to develop a strategy that

adheres to specic guiding principles.

1. st Coo e goIn order to address security risks, costs, domes-

tic constraints and changing energy supply and

demand trends, DOD should set an overarch-

ing energy goal omanaging a smooth transition

beyond petroleum over the next 30 years. Tis goal

is signicantly broader than the array o goals and

objectives that the services have set to guide theirown energy decisions to date. Tose more near-

term goals move in the right direction, but remain

insufcient given the broad scope and extended

timeline o DODs energy challenges.

Te QDR stated, Energy security or the

Department means having assured access to reli-

able supplies o energy and the ability to protect

and deliver sufcient energy to meet operational

needs.20 Tis leaves much room or interpretation

and is not precise enough to ensure that everyonewithin DOD is moving in the same direction.

o many domestic installations, energy secu-

rity means reliable sources o power that are not

vulnerable to disruption by natural or man-made

disruptions aecting the electric grid. o the Army,

operational needs and installation energy con-

cerns overlap greatly given that operations abroad

center most oen on orward operating bases. Te

Air Force is yet a dierent case; as aviation uel

passed legislation since to support invest-ments and set ederal requirements supporting

energy efciency and renewable energy produc-

tion. Te Obama administration strongly supports

this approach as well. Obama issued an October

Executive Order committing ederal agen-

cies to calculate and reduce their greenhouse gas

emissions, which spurred energy-ocused DOD

ofcials to begin complying with this require-

ment. Likewise, states have instituted renewable

energy portolio standards, and nine others have

renewable or alternative energy goals or require-ments.18 Legal and regulatory changes can also

constrain energy choices. For instance, the U.S.

Supreme Court ruled in that greenhouse gas

emissions constitute a pollutant and thereore can

be regulated at the ederal level, and the Obama

administration has signaled its intent to move

orward with such regulation unless the Congress

mandates emissions reductions through legislation.

While the U.S. government sets domestic regula-

tions and laws, and can exempt combat-related

activities, it does not exercise the same control

internationally. Indeed, there is growing concern

that oreign countries may not always exempt

military activities within their territory rom

environmental standards. For example, the

Canadian government recently decided to upgrade

one o its vessels that was not equipped to meet

the environmental standards o several European

countries, or ear that the vessel could be denied

port access.19 Te Department o Deense must

consider emerging international trends in regulat-ing emissions and adopting less carbon-intensive

energy sources as it considers how to guarantee its

reedom o access to oreign ports and territories.


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this transition. Implementing this strategy mustthereore begin immediately.

Tough it is important to start the critical process

o transitioning to non-petroleum energy sources,

mission accomplishment will always remain DODs

top consideration. It is thereore essential that

DODs energy choices do not interrupt or detriment

operational capabilities. Rear Admiral Philip Hart

Cullom, director o eet readiness or the Navy sta

and head o the Navys ask Force Energy, calls this

creating o-ramps rom petroleum.21 In the near

term, this indicates the importance o drop-in uels,

or liquid uels that are chemically equivalent to

petroleum-based uels and can thereore uel exist-

ing platorms. DODs energy transition should be

nearly seamless to the soldiers, sailors, airmen and

Marines using these uels.

Other goals debated in recent years, includ-

ing a goal o simply increasing the efciency o

petroleum use or a static reduction in overall

uel consumption, will be insufcient. Improving

energy efciency in other words, getting morepower per unit o energy consumed must be part

o a strategy to meet DODs energy needs without

petroleum, but it is important that this not serve as

the goal itsel. Efciency is one o the most impor-

tant short-term operational energy objectives or

DOD; or instance, any energy efciency gains

in Iraq and Aghanistan can immediately reduce

vulnerable supply lines, save lives and ree up man-

power or other operations. However, efciency

does not mark a concrete end state over a multi-

decade time scale, and thereore cannot serve as anoverarching goal. Americas energy efciency has

grown since the s, yet its overall petroleum

demand and corresponding vulnerabilities have

also grown. For DOD, this means that its opera-

tional vulnerabilities and costs remain despite its

efciency gains. In other words, gains in efciency

are necessary and important, but there is a danger

that too heavy a ocus on efciency over a long-

term time scale will mask an increasing reliance on

accounts or the majority o its energy demand,liquid uel supplies are o paramount importance.

Tus, or each o the services, the broad require-

ments o assured access, reliable and sufcient

supplies could mean any number o energy choices,

and will vary depending on whether this denition

applies to short-term or long-term needs.

o accommodate all o these needs, yet still provide

real guidance, DOD should settle on a single over-

all goal and ensure that the objectives set by the

services align with that goal. It is important that

this goal is long-term in nature and general enough

to incorporate the work already set by the military

services and to allow exibility, but specic enough

to guide real changes in behavior and investment.

a ThirTy-year Challenge

We recommend that DOD establish a goal that by

, DOD must be able to operate all o its assets

on non-petroleum uels. Te thirty-year timeline

is sufcient time or the private sector scaling up

adequate supplies, and or DOD aligning its bureau-

cratic and inrastructure systems to accommodatethis change. Knowing that petroleum prices will rise

and renewable uels will become cost-competitive

years beore the world produces all reserves, it is

not prudent to assume that petroleum will remain

aordable or that supplies will be reliably available

to the United States three decades hence; nor is it

wise to perpetuate the geopolitical, operational and

environmental costs indenitely. Ensuring that

DOD can operate on non-petroleum uels years

rom today is thereore a conservative hedge against

the economic, political and environmental condi-

tions and constraints outlined in this report.

Despite the -year timeline, DOD does not have

several decades to begin this transition. Te renew-

able uel development, testing and evaluation that

the services have conducted to date mark the rst

steps in guaranteeing their long-term ability to

meet their energy needs, but even i DOD adopts a

hastened timeline, it will take decades to complete


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S E r v I C E P r I o r I t I E Ste seices ae se an e necessa s an neae gas an bjecies i sggese ng

e age dod as a we. te A, Ai Fce, Na an maine Cps a esabise eneg saegies, an

e ae since ene e accae new eqieens Cngess an execie es. tese ince,

ang es:

air FOrCe

B , be pepae cs cpeiie acqie % e Ai Fces esic aiain e eqieens

ia an aenaie e ben in wic e aenaie cpnen is eie esic sces pce in

a anne a is geene an es pce cnenina pee.22

tes an cei a aica an sses agains / aenaie e ben b .23

rece ea ssi e cnspin in eices b pecen anna ( baseine) ni , an

seai incease e ea ee aeage ies pe gan (mPG).24

Insa a eas enewabe e pp a eac eea ee eeing cene a eac insaain a isses

e an san gans gn e anna.25

army

rece e ans pwe an e cnse b e A a e an in eae. tis ga wi assis in

iniizing e gisica e ai in acica siains b iping e inen anageen an csing

insaains cnspin n ciica ncins.26

raise e sae enewabe/aenaie esces pwe an e se, wic can pie a ecease

epenence pn cnenina e sces.27

navy

te Na wi ensae in ca peains b a Geen Sike Gp cpse ncea esses

an sips pwee b bie. An b , we wi sai a Sike Gp as a Gea Geen Fee cpse

ncea sips, sace cbaans eqippe wi bi eecic aenaie pwe sses nning bie,

an aica ing n bies an we wi ep i.28

te depaen e Na wi b ece pee se in , sng cecia ee in a.29

marine COrps

rece eneg inensi % b eaie a baseine.30

Incease e pecenage enewabe eecica eneg cnse % b Fy .31

once dod esabises is nge eneg ga, i wi nee ai ese eneg pans ense a a seice

ee eneg gas aign. ms, i n a, e wi aea aign wi e nge ga anaging a s

ansiin ben pee b . I wi be ciica bi n ese sccesses b expaning ages pas e

aes specie abe.


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E P T E M B E R

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Second, the uels on which DOD relies must beconsistently available long into the uture. Tis

stipulation leads to a preerence or renewable uel

technologies versus supplies that will eventually

deplete. We do not currently know with much

delity what energy supplies will be reliably avail-

able where and when even or petroleum beyond

the -year time rame, with the likelihood o

demand spiking, possible recalcitrance on behal

o suppliers, diminishment o easily recoverable

supplies and ragile transit routes and delivery

inrastructure. DOD requires consistently availablesupplies and supply systems that will not evaporate

or economic or political reasons.

Tird, new uelsources must hold the potential to

be available globally. DOD relies on international

companies and other countries to provide uel sup-

plies or its use outside o the United States. Reliance

on a single uel that is commonly used in all coun-

tries and produced globally (petroleum) benets

DOD logistically, but this system will not survive

indenitely at a bearable cost. Many countries are

already producing uel alternatives to petroleum and

increasing their capacity to do so, though there is a

lack o inormation about where these supplies are,

whether they can be ormulated to t DODs techni-

cal specications, and to what scale they are likely

to grow in supply availability. DOD must insist that

its platorms can operate on uels that it can procure

abroad in order to ensure its ability to operate glob-

ally and to take advantage o the benets that uel

source diversication can oer.

Fourth,perormance is paramount. DOD can-not waver on its demand or uels that perorm

properly. Its assets, particularly aircra, require

chemical consistency in the uels used. Tis indi-

cates special concern or reliability in ormulating,

rening and properly blending drop-in aviation

biouels that are mixed with petroleum.

Fih, plans to smoothly navigate DODs long-term

energy transition beyond petroleum must account

uel that poses urther risks to the Department oDeense. Efciency should thereore be treated as a

means and an operational enabler.

It is also important that DODs energy goal does

not amount solely to absolute reductions in energy

consumption, devoid o consideration o how DOD

uses energy in its eorts to protect and deend U.S.

interests. DOD must always retain the exibil-

ity to successully conduct its missions. Demand

reduction can be an important means o reducing

vulnerabilities to supply lines abroad and reliance

on a ragile grid at home. However, overall energy

consumption should remain a unction o DODs

activities and global engagements. otal uel

demand must thereore remain exible and should

not serve as a xed, long-term goal.

2. et C e gd fo DODDOD should establish, publish and enorce a clear

set o overarching rules or guidelines to help the

services navigate their energy transitions, and

to signal to the private sector what sorts o uels,

inrastructure and efciency technologies it willneed to supply over the long term.

In setting these guidelines, rst and oremost,

DODs energy investments must meet military needs.

Tose that cannot be designed or adapted by their

producers to meet military needs should not be

considered worth DODs limited energy investment

dollars. Otherwise, as the track record to date indi-

cates, new ueling inrastructure, energy production

technologies and vehicles will simply not be used.

For example, a hydrogen vehicle and ueling stationdemonstration at Hickam Air Force Base in Hawaii

marked a great sign that DOD bases can be used or

testing new technologies, but the small scope o the

demonstration a single ueling station and lim-

ited range o the vehicles signicantly limited the

utility o this investment to the airmen and civilians

working at Hickam. DODs purchases should treat

military utility as a mandatory constraint on any

energy-related purchases.


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|

development stage and less once economies o scaleare achieved. It will be incumbent on potential

alternative uel suppliers that their uels will be

aordable over the long term.

3. p fo uct FtDOD should orecast what its uel vulnerabilities

and needs are likely to be decades into the uture

as a means o guiding energy choices today. Te

uture o DOD aviation and aviation uel in par-

ticular will inuence the pace and composition o

DODs energy strategy over the long term, consid-

ering that aviation uel accounted or percent

o DODs energy consumption as o , and

about percent o the Air Forces energy needs.33

Te uture o manned and unmanned ight will

directly impact the balance o DODs energy

investments in jet uel, energy storage devices and

other energy technologies.

DOD should develop a series o planning sce-

narios to game out uel needs against dierent

potential uture combat concepts. Warare ,

and years rom now will not look like todayswars. Likewise, the way the United States secures

its interests will likely not mirror todays eorts.

Preparing or this uncertainty requires thinking

today about how DOD will operate years down the

line and this by necessity includes envisioning

DODs uture energy needs.

Te key to successul energy planning will be to

ensure diversity within the scenarios: incorporat-

ing diverse needs and diverse sources o energy and

the supply systems that they will require. Planningscenarios may blend together and overlap, but must

involve planning or a very broad range o energy

technologies and requirements. Tis will ensure

that DOD is preparing or a wide range o energy

contingencies. From these, it can derive estimates

o what types o uels, inrastructure and storage

technologies it may need to invest in today.

or the changing political and regulatory environ-ment. Congress mandated that ederal agencies

should not invest in uel sources that carry liecycle

greenhouse gas emissions higher than their current

uel sources32 (such as coal-derived uels, and by

some calculations, potentially corn-based ethanol),

and private companies are pushing Congress more

aggressively than ever to enact legislation to curb

emissions. No ederal agencies should invest their

nite unds in uel sources with higher liecycle

emissions, or that contribute to extensive dam-

age to ood commodity markets or ecosystems.Te private sector should not sell DOD uels that

will contribute to extensive rainorest destruction,

water supply contamination or climate-changing

emissions increases. DOD needs to set and stick to

guidelines that clearly indicate to the private sector

where it should be investing in order to develop

supplies appropriate or DOD needs and national

environmental policy standards.

Finally, over the long-term, DOD should also con-

sider uel afordability: whether its supply systems

will be able to operate or sustained periods o time

without crippling negative direct costs and externali-

ties. In this sense, aordability applies to the actual

cost o DODs energy supplies and the risks that

those supplies carry. Tis standard also indicates

a need to consider the eects o potential price

spikes on the deense budget both within DOD i

its uel costs rise, and or the nation as a whole (i

high prices negatively aect the economy in ways

that lead to a constrained ederal budget). Costs

associated with the increasing difculty in tappingthe worlds oil resources show that dependence on

nite, nonrenewable resources is inherently risky.

Indeed, the blanket assumption that petroleum

would remain aordable indenitely is what caused

the dangerous dependence with which DOD now

wrestles. It is critical, however, that aordability

be considered with reerence to the costs o uels

produced at scale. Any newly developed uels that

are not yet mass produced will cost more in their


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E P T E M B E R

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leverage over the United States. Diversicationcan also ensure that DOD will be able to procure

the uel it needs around the world. Enjoying the

ull operational and budgetary benets o uel

diversication will also require DOD to work with

oreign governments on international standards or

military-grade uels.

5. Cot to ic att F ut Dotc ittoTe best way to begin DODs energy transition will

be to begin with ast-tracked eorts at bases in the

continental United States. Te services are already

increasing renewable power generation at their instal-

lations, and leaders at several bases have even set goals

o becoming net-zero energy consumers (in other

words, producing as much energy as they consume)

and developing resilient microgrids. In several con-

versations with energy managers at U.S. bases during

the course o our research, there was a tangible sense

that increasing efciency and use o renewable energy

domestically contributed to the broader goal o DOD

improving its long-term energy security.

o date, DOD has ocused heavily on generating

renewable electricity at domestic installations, but

it should expand this ocus to include reducing

petroleum use in vehicle eets. Moving to alterna-

tive uels in ground vehicles will be easier than

displacing aviation uels, which require an array o

additional specications. At its installations, DOD

also has more alternative ueling options that those

designed or use in aviation (e.g., DOD cannot y

its aircra with electricity today, but it can adopt

electric ground vehicles i they meet the guidingprinciples outlined above). Tis added exibility

allows individual bases to invest in energy sources

that make sense given regional renewable energy

production capabilities and inrastructure.

6. it fo mx ictDOD should maximize the impact o its invest-

ments by actoring distribution and inrastructure

into its decisions on where to invest. Because energy

4. Dd nw F fo Od eqtTe majority o the vehicles, aircra and weaponssystems that DOD purchases in the near term will

be designed to be ueled by petroleum, as are most

o DODs current assets. Most o these systems

will remain in commission or decades beore

replacements are seriously considered. Notably, the

Ofce o the Secretary o Deense (OSD) is work-

ing to ulll a mandate rom Congress that deense

suppliers work to increase uel efciency as a

consistent part o acquisition processes. In the near

term, DOD should also sustain its ocus on drop-in uels that is, liquid uels designed as chemical

equivalents to petroleum-based uels, and that are

thereore ready or immediate use in existing air-

cra, vehicles and equipment once they are tested

and certied. Te Navy and Air Force have already

begun moving down this path, and both have

now ight-tested drop-in biouels blended with

petroleum-based jet uel. Te key will be to main-

tain and strengthen the demand signal these tests

have begun to create in order to push the private

sector to continue producing military-appropriateuel supplies. It will also be important or DOD to

continue to consider the long-term environmental

ramications o these drop-in uels so as not to

violate Congressional requirements that its alter-

native uels have lower greenhouse gas emissions

than petroleum equivalents.

Diversication o energy supplies stands to be an

important benet to DOD o this ocus on drop-in

uels. Even i DOD positions itsel to meet all o

its energy needs using non-petroleum sources by, there may still be circumstances in which

certain uels are simply not available when and

where DOD needs them. I DOD can procure uels

rom a portolio o sources, such as uels made

rom locally grown switchgrass, algae, camelina

or other crops, that diversity can help to keep

prices competitive (especially as a hedge against

weather or economic conditions reducing crop

output in any given region) and deny suppliers


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|

F14 ToctF begins

epacingNa's FPan II

1974

t h E l o N G l I v E S o F d o d A S S E t S

Gien dods ng acqisiins pcess, a aji e eices, aica an weapns sses a dod p

cases in e nea e wi be esigne se peebase es, as ae s dods cen asses.

Cnsie e wing: dods acqisiins pgas, e acie pgas a been in eep

en a ecae e. Wa is e, s ese sses wi eain in cissin ecaes, an an

dod eneg saeg wi ae accn e eing nees ese sses. Bew ae seea pgas,

eie an acie, a eec dods ng eepen an epen ieine.

1961Fis cnceie

in tFX* Pga

reqes Ppsa

Na

1968

1970Pcinbegins; s

igdec.

Top Gun e,eeaing eF a ppce icn

1986

1998F/AE Spe hne

annnce asepaceen

F tca

F tca fcia eiea Naa Ai Sain oceana

2006

mQ9 r uav

2004Pcinbegins

mQ reape

1994Fis cnceie

as rQ PeaPga b

Genea AicsAenaica

Sses

Pcinbegins

rQ Pea

1997

2001rQ Pea

eesignae mQPea ae

ecnnaissance

mQ reapes epe Aganisan

2007

Pjece aspceen

2018

SSBN(X)pjeceeieen

2080

n ssbnXbtc m s Fis

SSBN(X)pjece eneseice

2028

2007dod beginssies n a

nexgeneainseabase

saegic eeen

Na beginscncep esign

2010

2040las SSBN(X)

be pceb Na

2019Na

pjece pce

sSSBN(X)

Pjece yea Seice lie

mQ reapepgabegins

2002

*Tactical Fighter Experimental program

Source: Defense Acquisitions: Assessments of Selected Weapon Programs (Government Accountability Ofce: Washington, DC, March 2009):10.


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E P T E M B E R

|

alternative uels at a large scale. Tese enablers shouldinclude: permissive state and local laws and incen-

tives; inrastructure to handle transport, storage and

ueling; and supply availability (including states or

regions with current biouels development in progress

or high production potential).

7. s e, K t CSeveral disincentives hinder DODs transition to

more efcient energy use and the use o alternative

uels. Te problems here run deep; over the course

o research or this report we have heard rom

energy managers at U.S. military bases, installation

policymakers in Washington and ofcers represent-

ing each o the services. Perhaps most importantly,

individual bases, the military services and even

the DOD writ large cannot always pocket and

repurpose the money they save i their energy costs

drop. Tis is a result o the type o unding used

or renewable energy or efciency investments or

arrangements with local public utilities or renew-

able energy installations. Additionally, depending

on how DOD pays or renewable energy investments

on its bases, it does not always receive the commen-

surate clean energy credits or the energy generated

on its land. Tese disincentives to save energy also

extend to many contractors. Implementing a long-

term energy strategy will thereore require DOD

to address incentives and disincentives built into

budgeting rules and norms, including or contrac-

tors. Energy Savings Perormance Contracts, which

allow contractors to recoup their energy investments

in ederal projects, are one example o how design-

ing incentives or contractors to reduce energy usecan dramatically lower consumption.35

Correlated to the current misalignment o incentives,

DOD lacks appropriate metrics regarding its energy

security activities. Tis stems in part rom the lack o

a long-term energy strategy or a specic, unied goal.

OSD and the services do have long lists o metrics

or meeting objectives that may or may not measure

progress toward the endpoint DOD needs to reach.

Past metrics have also tended to measure static energy

production, purchasing, transport and transmissionall involve systems o inrastructure and sunk costs,

new uels will not likely displace the old everywhere

simultaneously. Prioritizing energy projects is

today a bottom-up and organic process: Interested

individuals navigate mazes o unding streams,

laws, regulations, contract types and public utility

relationships in order to gain approval and unding

to move orward with renewable energy or efciency

projects. DOD should streamline this process and

target it to maximize results.

For DOD to prioritize where to ocus its energy tran-

sition eorts better, it should identiy the locations

where transition to non-petroleum uels would have

the greatest, most immediate impact. For example,

DOD oen uses jet uel in vehicles and equipment

due to the logistical benets gained in using a single

uel type. Tereore, aviation uel must be a central

ocus o this analysis. DOD should identiy points at

which drop-in biouel blends or other energy systems

will cover the greatest volume o ueling. As it consid-

ers this step, it will nd the private sector aviation

industry, which has considered prioritizing avia-

tion biouel supplies or the nations busiest airports,

instructive. For example, i biouels are available at

the seven busiest U.S. airports in passenger volume,

they could power nearly percent o the countrys

air trafc.34 Tese airports could be used as hubs

around which to build energy inrastructure and

production capacity in order to hasten the adoption

o renewable uels there. Cities around the United

States and institutions such as the U.S. Postal Service

have utilized their hub-and-spoke ueling systemsto quickly integrate new uels and vehicles into their

eets cases which should be studied or best prac-

tices and important lessons in adopting new uels.

Finding the locations with the greatest uel demand,

however, is only the rst step since not all locations

are currently conducive to the production, transport

or use o non-petroleum uels. DOD should thereore

analyze the list o top uel demand locations against

key enablers that could hasten the availability o


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E P T E M B E R

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energy technology sharing. Tis will also requirebetter coordination with the State Department,

the National Labs and U.S. energy industries.

Additionally, it will have the positive eect o

signaling to international suppliers (both countries

and private companies) that DOD will avor pro-

curement o non-petroleum uels when possible.

Energy is an increasingly important issue or U.S.

diplomacy with traditional allies such as Japan, the

Republic o Korea (ROK) and NAO countries.

Where these overlap with important military con-

siderations, DODs active engagement will be critical

or ensuring that its needs are considered. But while

this step may seem straightorward and relatively

easy to implement, in act each country has its own

interests, domestic politics, economic pressures

and tradeos to consider. Oen, logical areas o

cooperation on energy are in act areas o competi-

tion. Cooperation regarding installation energy use

can be particularly difcult as it is oen met with

requirements that avor American products.

It is important to remember that DOD alreadyworks internationally to secure its energy supplies

or the current petroleum-heavy system and

that the process is oen neither smooth nor easy.

Contracting and using supply systems or petroleum

through countries such as Azerbaijan are already

costly and require oen-difcult relationship man-

agement.37 DOD should actively consider how it can

better coordinate with U.S. allies to develop non-

petroleum energy systems to meet its requirements

or reliable, aordable and sustainable uels.

11. st e mtManaging a smooth transition rom petroleum to

meet DODs long-term energy needs will require

bureaucratic and personnel changes. DODs current

structure reects past thinking about energy rather

than current priorities, and the military services and

OSD regularly change the structure o their ofces

and personnel requirements to address questions o

energy. Energy planning and policy are also subject

(or other government agencies) can adopt. Tereis also a strong need or Congressional staers to

expand their knowledge on DOD energy issues, and

to ensure due diligence in examining how DOD may

react to their ideas beore they are enacted in law.

A simple way or DOD to improve its relations

with other government agencies is to provide an

online organization chart o major DOD ofces

ocused on energy and a description o the general

roles and responsibilities o those ofces. Tis may

seem simplistic, but to those not amiliar with the

DOD bureaucracy (especially policymakers on

the Hill and clean energy entrepreneurs) it can be

extremely challenging to nd the proper points o

contact to discuss energy policies in DOD. Tere is

little hope o improving interagency coordination

or Congressional relations i outsiders cannot even

gure out whom to engage with questions or ideas.

10. e a t e TtoTrough oreign military sales, joint exercises and

international basing, DOD can promote adoption o

shared technical standards and directly inuence theenergy systems used by its allies. Tis will improve

its own ability to operate by ensuring that the United

States has access to needed energy supplies globally

and improving interoperability. It will also encour-

age allies to make compatible choices with respect to

energy, instead o working at cross purposes.

DODs long-term energy strategy must there-

ore include an international plan o action. At a

minimum, this should include inormation sharing

on alternative energy research and development.It should also include cooperation with interna-

tional partners on uel testing and evaluation, and

setting uel standards that guarantee interoper-

ability. Tis should be a amiliar concept or DOD,

which already sets joint standards with allies by,

or example, standardizing the use o mm NAO

cartridges by all member countries. Where the

interests and regulations o both countries permit,

such eorts can include working with U.S. allies on


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|

diect f dod

EnegyEnegy

Stategy

Assets ExpeitinayWeapns

Systems

Aviatin Bases/Builings

Extenal

relatins

and non-operational energy are not well delineated

in related laws or Congressional requirements.

Once a long-term DOD energy strategy is in place,

the DOD should assess its related organizational

and personnel structures. Tis assessment should

involve an evaluation o personnel needs, and in

particular what positions are lled by politicalappointees versus civil service ofcers versus con-

tractors, while being cognizant o the work that the

military services themselves conduct.

Since the separation o installation and operational

energy reects DODs energy past more than its

energy uture, it should seek in the years ahead to

merge energy management at the OSD level to a

coherent body under the leadership o one individ-

ual. Te Army, Air Force, Navy and Marine Corps

could continue to manage their own unique energybureaucracies as their leaders deem best. Tis com-

bined ofce should include experts ocused on the

ollowing important areas:

sTraTegy

A major component o DODs energy strategy will

include setting priorities, planning against various

scenarios and contingencies, and tracking progress

against objectives.

to changing mandates by Congress and the White

House. It is important to underscore that many

aspects o DODs current energy personnel structure

mark major improvements and indicate solid leader-

ship on energy. As mentioned earlier, each branch

o the armed services and OSD have new ofces

devoted specically to energy, including experts on

operational uel use. Nonetheless, incorporating

energy better into how DOD does business, as the

QDR mandates, is ar rom institutionalized.

Within OSD and the services, responsibility is

generally split between those managing energy

or military installations and those managing

operational energy. Tis is in part a legacy divide:

Positions governing operational energy in OSD and

the services have only been stood up as dedicated

ofces over the past ew years, while ofces govern-

ing energy use at military bases have long been parto the DOD organizational structure. However,

the separation o energy along these lines is a alse

distinction; the training and equipping carried out

at domestic military installations is geared toward

operational utility. Te only truly static compo-

nent o installations is the buildings themselves,

whereas the people using energy and how they use

it uctuate regularly and depend on operational

requirements. Indeed, the denitions o operational

Figure 1: reCOmmenDeD persOnnel sTruCTure, OFFiCe OF The seCreTary OF DeFense


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E P T E M B E R

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external relations management: private sectorpartnerships; Congressional relations; and inter-

national relations.

Ofcials ocusing on all o these areas will be respon-

sible or interagency coordination and coordination

within OSD as it relates to their work. As much o

the activity on meeting energy goals does and will

continue to reside among the services, coordination

among them and by OSD will be imperative. Tese

positions will also represent a straightorward net-

work o points o contact or other government and

non-governmental representatives needing to coordi-

nate with DOD on energy issues.

Funding or DODs investments in reliable long-

term energy supplies will come in many orms, and

it will be critical or DODs energy personnel to

develop a deep understanding o how to properly

resource its energy strategy. New resources should

go toward sunk costs efciency upgrades, uel

testing and evaluation and energy inrastructure.

However, meeting DODs goal o making a smoothtransition away rom petroleum will require the

private sector to provide cost-competitive, at-scale

renewable uels that the Deense Logistics Agency

can purchase when and where it needs them. Tis

will require DOD to commit to a general direction

or its energy uture in order to send an eective

market signal, and it will require incentives and

regulations beyond DODs control.

Contracting mechanisms and direct unding

appropriated by Congress will constitute important

means or making the necessary sunk investments

or renewable energy adoption. Te American

Recovery and Reinvestment Act proved to be a suc-

cessul and popular stream o unding or several

projects at domestic installations, and lessons

learned can be collected to indicate where und-

ing may be most eective or uture projects. Te

services also devote signicant resources toward

meeting this challenge. Te Navy and Air Force

asseTsOne person should oversee energy issues as related

to specic DOD assets, with a team o individuals

ocused specically on the very dierent categories

o assets. Tis component would consider not just

the stock o DOD equipment, vehicles, ships and

aircra, but also long-term trends in how DOD

employs them.

Aviation: As it comprises more than hal o DODs

petroleum use and requires unique technical

knowledge, aviation uel is a category onto itsel.

Weapons Systems: Assets such as missile deenses

and directed energy weapons also have unique

energy signatures and, given their limited numbers

and specic uses, are operated dierently rom

other categories o assets. Parsing which weapons

systems have unique enough energy requirements

to necessitate consideration independent o the

expeditionary and aviation categories will be di-

cult, and they will likely change over time.

Expeditionary Energy: Tis component wouldinclude all mobile assets not represented in the avia-

tion and weapons systems categories. It will be the

heart o DOD energy activities during wartime, when

uel to deployed troops represents the most critical

energy management.

Buildings/Bases: Tis component o DODs energy

inrastructure should ocus only on installations

themselves. It will require coordination with public

utility commissions and legal and regulatory bod-

ies, and knowledge o oen-complicated state and

local dynamics.

eXTernal relaTiOns

Many o the conditions that will determine

DODs ability to meet its long-term energy needs

will be set by Congress, the private sector and the

international community. Meeting DODs energy

needs over the long term requires eective rela-

tions with al l o these groups. Tis component

will thereore include three important areas o


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|

Iv . CoNCluSIoN

Te steps outlined in this report will help DOD

transition to non-petroleum sources o energy, to

the benet o national security and operational

eectiveness. Yet DODs smooth transition to

a uture energy paradigm that does not rely on

petroleum depends heavily on policies that lie

beyond its own control. Many relevant policy

choices and commitments are up to elected of-

cials, state and local governments, the private

sector and the international community (see

Appendix II: How the Rest o the Government Can

Contribute to DODs Energy Strategy). Congress

and the White House will continue to rene energy

requirements or all ederal agencies, and exert

their leadership to improve the American pub-

lics understanding that these actions are taken to

promote U.S. national security. DODs long-term

energy strategy should include coordination with

all these groups, since their decisions will aect

DODs ability to operate.

Meeting DODs energy demands with new uelsources in the next years will require patient

and persistent leadership by DOD ofcials. But

the benets will prove to be ar-reaching. Tese

changes will help DOD to hedge against unbear-

able costs, maintain its exibility and guarantee

its ability to protect and deend the United States

against all enemies regardless o the availability

o petroleum-based uels.

have been testing and certiying alternative avia-tion uels within their own budgets. Tey will need

to remain consistent in these investments or some

time, but the rewards in potential savings to their

budgets should over the long-term pay o i DOD

can properly align its incentive structures.

Given the urgent need to address operational

energy considerations in the current wars, this

grand bureaucratic adjustment might best be

timed or aer signicant redeployments rom Iraq

and Aghanistan are complete. Managing DODs

long-term energy transition may not need a vast

personnel structure in its next iteration, though

each component o the ofce can grow or shrink to

match the changing nature o DODs activities. Te

Army, Navy, Marine Corps and Air Force are also

likely to continue to provide personnel who will

address energy challenges, and much implementa-

tion will be conducted by base managers.

12. p fo t WotDOD should plan or contingencies in which its

predictions and plans or moving beyond petroleumturn out to be wrong. In other words, its o-ramps

rom petroleum may turn out to be rough roads,

or DOD could make the wrong turns or miss the

ramps altogether. For instance, DOD should imag-

ine scenarios involving absolute shortages o energy,

major price spikes, alternative uels that simply can-

not scale up ast enough and major technological or

environmental game-changers that undamentally

alter how DOD meets its energy needs.

I worst-case scenarios transpire, they couldcost DOD its ability to operate eectively. DOD,

including the war colleges, combatant commands

and OSD, has already conducted war games and

scenario exercises that include uel shortages,

extended blackouts and other contingencies. DOD

must continue to think through these kinds o

scenarios, compile lessons learned rom them and

apply them to its energy calculations.


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25/36

Why EXAmINE rESErvE-to-ProduCtIoN rAtIoS?

b axd stk

hoW thE rESt oF thE GovErNmENt CAN CoNtrIButE

to dodS ENErGy StrAtEGy

Appenices


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E P T E M B E R

|

Te U.S. Energy Inormation Administrationdenes the R/P ratio as the number o years

that oil and gas reserves would last at the current

production rate. Te resulting gure indicates

the length o time in years that known, recover-

able reserves are expected to last i production

continues at the same pace. Tis timeline, while

constantly in ux, gives a more useul indicator

than just supply, demand or reserve gures or the

purpose o long-term policy planning.

Global proved reserves (the quantities o oil that

exist with reasonable certainty and can be recov-

ered under current geological, economic and

technological conditions) are oen cited in consid-

ering the uture o world energy trends. However,

this is not always a helpul indicator. For example,

Saudi Arabia has almost percent o remain-

ing global proved reserves, but at the current

rate would produce its reserves in less time thanVenezuela, which has about percent o reserves

but produces those reserves much less efciently.

Ominously, many major suppliers to the United

States could produce their current proved reserves

in airly short time horizon i they continue at

the present rate: For example, the R/P ratio or

Canada (the top supplier to the United States in

, providing more than percent o total oil

imports) stands at about years today. For the

As prices change and

technology advances, as

demand rises and alls,

and as new reserves

become accessible, R/P

ratios are likewise afected.

A P P E N d I X I : W h y E X A m I N Er E S E r v E - t o - P r o d u C t I o N r A t I o S ?

B Aexana Sak


27/36

|

Figure 2: WOrlD peTrOleum reserve-TO-prODuCTiOn raTiOs

Source: BP Statistical Review of World Energy 2010

ta W reseePcin rai: . yeas

United States itsel, it is years. Te only coun-

tries with current R/P ratios longer than years

are Venezuela, Iran, Iraq, Kuwait and the United

Arab Emirates.

It is also important to note that both elements

o this ratio change regularly, so even reserve-

to-production ratios are not perect predictions

o the uture. As prices change and technology

advances, as demand rises and alls, and as new

reserves become accessible, R/P ratios are likewise

aected. However, just as it is possible or countries

to have a longer time horizon than projected, it is

also possible or countries to exhaust their reserves

sooner than expected, and or rising prices to make

non-petroleum uels more cost-competitive than

investing in new petroleum production. While noeconomic and geologic estimates perectly predict the

uture, R/P ratios can serve as important indicators

or DOD ofcials and policymakers to plan against.

Sources: BP Statistical Review of World Energy 2010 and U.S. Energy

Administration, U.S. Imports by Country o Origin. Data are rom 2009.


28/36


E P T E M B E R

|

Many o the policies and measures that will helpDOD achieve its long-term energy goal o making a

smooth transition away rom petroleum by lie

beyond DODs jurisdiction. Te ollowing actions

by Congress, the White House and the private

sector will contribute to DODs continued ability

to meet its energy demands within the constraints

outlined in this report.

Provide a clear long-term legal and regulatory

environment. Market-based regulatory adjust-

ments and innovation coming holistically through

the private sector will be more helpul than DOD

pushing or dierent systems piece by piece.

Unortunately, today many businesses are biding

time and waiting or a more certain business envi-

ronment rather than producing the uels they have

developed and making the investments they have

planned. Hundreds o businesses have encouraged

the ederal government to pass clean energy and

climate change legislation to provide a signicant

long-term market signal. Doing so should be con-

sidered one o the primary ways that the nations

leaders can help ensure that DOD can meet its

long-term energy needs.

Mind the grid. DODs ability to address its electric-

ity reliability concerns is in part beyond its own

jurisdiction. Almost all o DODs domestic instal-

lations are connected to the public power grid and

must thereore rely on local or regional utilities to

grant it permission or renewable energy production

and to improve grid reliance. Te utilities are work-

ing to bolster grid security, but concerns remain

sufcient that many at DOD and in Congress areconsidering plans or islanding bases, or detaching

them rom the public grid system altogether. Public

utilities should continue to work closely with nearby

installations to ensure that public and deense

community needs are taken into account. A consis-

tent legal and regulatory environment would also

promote decisions by utilities to make investments

in new inrastructure and rules to allow greater

renewable energy production.

A P P E N d I X I I : h o W t h E r E S t o F t h EG o v E r N m E N t C A N C o N t r I B u t E t o

d o d S E N E r G y S t r At E G y


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|

Extend requirements from Congress. Te Energy Independence and Security Act (EISA)

requires ederal buildings, including domestic

DOD installations, to reduce energy consumption

up to percent through . Tis raised the bar

rom previous requirements set in . Congress

should direct additional requirements or efciency

and use o renewable energy in domestic installa-

tions beginning when previous requirements are

set to end (oen ). It should also continue to

mandate that the uels that ederal agencies invest

in have lower greenhouse gas emissions than theuels they are meant to displace. However, two

changes may be in order. Te legislation

requires that DOD reduce energy per square oot,

yet this calculation does not account or the dra-

matic dierences in the ways in which DOD uses

dierent acilities. Congress should also be sensi-

tive to the tight budget environment that DOD

ofcials eel, and consider prizes or innovation

and other mechanisms to provide unding to meet

these requirements. Te next round o legisla-

tive change to require DODs continued progresson energy should be designed through extensive

discussions and good coordination between DOD

and the Hill.

Address information challenges. Credible gov-

ernment estimates are available or ossil uel

resources, including specic estimates o energy

reserves, production, consumption and histori-

cal prices. Tese include reserve-to-production

projections and uture outlooks that are generally

reliable, i oen conservative. Finding compa-rable inormation or non-ossil uels is difcult

to impossible, and oen involves wading through

dense reports. Tere is no single-source place

where those reports lie, and analysts are le to

compare and judge the efcacy o sources on their

own. Te private sector oen provides more acces-

sible inormation but not inormation that can

necessarily be relied upon as neutral and accu-

rate. While we do not recommend that the ederal

government engage in guesswork or estimates thatare less than diligent, DOD must recognize this

inormation gap.

Make reliable models available. DODs incorporat-

ing greenhouse gas emissions, economic costs and

other liecycle eects o its energy options presents

its own challenges. Te computer models used to

make these calculations reect the sum o their

parts: the data and mechanisms used by the model-

ers must be accurate (and reect honest scientic

acts, not political agendas or skewed inormation)

to produce viable calculations. Inormation on the

carbon, water and land use ootprints o emerging

uel sources can also be more difcult to calculate

than those o long-used sources, as they suer rom

relevant inormation oen being proprietary and

in the hands o private companies. New uels may

also be adaptable to meet specic environmental

ootprint requirements once they are developed

and produced at scale, which is a positive actor but

again difcult to quantiy. Meeting environmental

constraints can be an inexact science, and calcula-

tions can change over time. DOD should thereore

rely on energy and related climate models run by

or compared to honest brokers, such as academics

or the National Labs, in its decision-making.


30/36


E P T E M B E R

|

1. U.S. Energy Inormati on Administr ation, Annual Energy Review 2009,

"Table 1.13: U.S. Government Energy Consumption by Agency and Source,

Fiscal Years 2003, 2008 and 2009. (19 August 2010); and BP,Statistical

Review of World Energy(2010).

2. Energy Inormation Administration, Crude Oil and Total Petroleum

Imports Top 15 Countries (May 2010 Import High lights); and BP,Statistical

Review of World Energy(June 2010).

3. Jason Paur, Air Force Debuts Biouel-Guzzling Warthog, Danger Room

(30 March 2010); and Liz Wright, Navy Tests Biouel-Powered 'Green

Hornet', Oicial Website o the United States Navy (22 April 2010).

4. Steve Fainaru and William Booth, Mexico's Drug Cartels Siphon LiquidGold: Bold Thet o $1 billion in Oil, Resold in U.S., Has Dealt a Major Blow to

the Treasury, The Washington Post(13 December 2009).

5. President Jimmy Carter, State o the Union Address (23 January 1980).

6. Jan van Tol, AirSea Battle: A Point-o-Departure Operati onal Concept

(Washington: Center or Strategic and Budgetary Assessments, 2010): 81-82.

7. U.S. Energy Inormation Administrati on, Annual Energy Review 2008.

8. U.S. Energy Inormation Administration,Annual Energy Outlook 2010,

Table A1: World total primary energy consumption by region, Reerence

case, 2005-2035 (11 May 2010).

9. U.S. Energy Inormation Administrat ion Website, Petroleum Statistics(26 January 2010); Annual Energy Outlook 2010, Appendix A.

10. The U.S. Department o Energy deines proved reserves as ollows:

Proved reserves are estimated quantities that analysis o geologic and

engineering data demonstrates with reasonable certainty are recoverable

under existing economic and operating conditions. U.S. Energy Inormation

Administration, World Proved Reserves o Oil and Natural Gas, Most Recent

Estimates (March 2009).

11. Energy Inormation Administration, Crude Oil and Total Petroleum

Imports Top 15 Countries (May 2010 Import High lights); BP,Statistical

Review of World Energy(June 2010).

12. U.S. Energy Inormation Administration Website, Biomass (April 2008).

13. Deense Energy Support Center, Fact Book FY 08 (2009): 19-20.

14. U.S. Energy Inormation Administration, Annual Energy Review 2009,

"Table 1.13: U.S. Government Energy Consumption by Agency and Source,

Fiscal Years 2003, 2008 and 2009. (19 August 2010).

15. Donna Miles, Military Looks to Synthetics, Conservation to Cut Fuel

Bills, American Forces Press Service (6 June 2008).

16. See, or example, Commander Herbert Carmen, USN, Christine

Parthemore and Will Rogers, Broadening Horizons: Climate Change and the

U.S. Armed Forces(Washington: Center or a New American Security, 2010).

17. Many U.S. policymakers, agencies and documents have recognized

the connection between climate change and security: the 2010 QDR says

Climate change and energy will play signiicant roles in the uture security

environment: p. x v; the National Intelligence Council has done extensive

climate change research including reports on The Impact o Climate

Change to 2030; President Obama stated in his December 2009 Nobel Peace

Prize acceptance speech that the world must come together to conront

climate change. There is little scienti ic dispute that i we do nothing,

we will ace more drought, amine and mass displacement that will uel

more conlict or decades. For this reason, it is not merely scientists and

activists who call or swi t and orceul action it is military leaders in my

country and others who understand that our common security hangs in the

balance; in remarks in November 2009 Secretary o Deense Robert Gatessaid that the melting o the polar ice cap in the Arctic plus the requency

and intensity o weather events in this hemisphere, with the corresponding

need or military humanitarian assistance missions, calls or a greater

attention to the security implications o climate change.

18. Pew Center on Global Climate Change, Renewable & Alternative Energy

Portolio Standards (14 December 2009).

19. Bill Curry, Canadian Navys Ships Risk Being Banned rom Foreign

Ports, The Globe and Mail(Toronto) (5 August 2010).

20. QDR: 87.

21. Rita Boland, Great Green Fleet Prepares to Set Sail, SIGNAL Magazine

(July 2010).

22. Air Force Energy Plan (2010): 8.

23. Ibid.

24. Air Force Inrastructure Energy Plan (2010): 12.

25. Ibid.: 14.

26. Army Senior Energy Council and the Oice o the Deputy Assistant

Secretary o the Army or Energy and Partnerships, Army Energy Security

Strategy (13 January 2009): 4.

27. Ibid.

28. Secretary o the Navy Ray Mabus, Remarks at the Naval Energy Forum

(14 October 2009): 8-9.

29. Ibid.

30. United States Marine Corps, Ten by 10: Top 10 Things To Do by 2010 to

Reduce USMC Energy Risks (2009): 3.

31. Ibid.

32. See GovTrack.us, Text o H.R. 6 [110th]: Energy Independence and

Security Act o 2007.

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