10-Minute Guide to Cost-Competitive Military Biofuels, Part 1

Want to know about the Administration’s ambitious multi-agency program for cost-competitive military biofuels, but haven’t the time to plow through the mountain of documents?

By JIM LANE, Editor & Publisher, Biofuels Digest

Jim LaneIt’s finally here. The Obama Administration has laid out an integrated strategy for commercializing advanced biofuels, with a focus in this phase on military advanced biofuels at cost-competitive prices with conventional fuels. The vehicle is a joint program between the Department of Energy, the Department of Agriculture and the Department of Defense (principally, starring the U.S. Navy, though, as we’ll see, critically including other elements).

In his blueprint for a Secure Energy Future released in March 2011, President Obama set a goal of reducing oil imports by one-third by 2025, and laid out an all-of-the-above energy plan to achieve that goal by developing domestic oil and gas energy resources, increasing energy efficiency, and speeding development of biofuels and other alternatives.

It’s a huge step in the journey toward those goals — a multi-step integrated program that we’ll investigate today, and provide to you in a convenient 10-minute guide with links to the full funding announcements.

The Program

On June 27, the Air Force announced a funding opportunity announcement (FOA) for $30 million under its Defense Production Act (DPA) authority. Because the desired fuels would be for military operational use, they must be approved and certified JP-5, JP-8 and/or F-76 equivalents by the time the commercial-scale biofuel production facility would become operational.

The Funding

The Defense Department is committing $210 million between two phases. The first phase is expected to include five awards at up to $6 million each. Only those applicants selected for Phase 1 can compete for the Phase 2 awards. Up to three Phase 2 awards are expected at approximately $70 million each ($180 million total). Only $100 million is allocated for fiscal year 2012, so total Phase 2 funding depends on future appropriations.

The Big However

No more than $70M funding may be available for Phase 2, as fiscal year 2013 and future years are not yet appropriated. “The funding profile is an estimate only and will not be a contractual obligation for funding as all funding is subject to change due to government discretion and availability,” the FOA states.

But as Navy Secretary Ray Mabus notes, “We’re still early in the appropriations process.”

The Phases

Phase 1 would involve the planning and preliminary design for a domestic integrated biofuels production enterprise (IBPE) that meets a target of at least 10 million gallons per year neat biofuel production capacity. Performance is expected within one year. Phase 2 involves the construction, commissioning and performance testing of such a facility. Performance is expected to be completed within three years of the Phase 2 award.

Additionally, the total enterprise envisioned in this effort must include a capability to blend the neat biofuel product with petroleum-based equivalent fuels in order to meet approved certifications and specifications, which must include blends of up to a maximum 50/50 ratio. Capabilities and/or facilities to store and transport the resulting product must also be an element of the project.

The Location

From the FOA: “The proposed refinery must be located within the United States or Canada, and use a domestically produced acceptable feedstock. To qualify as a domestic source under Title III of the Defense Production Act, the IBPE must be located within the United States or Canada (territories and protectorates are not considered domestic). Supply chains that will import feedstock from outside the United States or Canada (including sugars used for microbial conversion processes) will not be considered.

The Feedstocks

  1. Renewable biomass. Materials, pre-commercial thinning, or invasive species from National Forest System land and public lands (with significant caveats — see the full FOA). Trees; algae and other microorganisms (grown non-heterotrophic for biomass or direct products); crop residue (including cobs, stover, bagasse and other residues); vegetative waste, wood waste and wood residues; animal waste and byproducts (including fats, oils, greases and manure); and food and yard waste.
  2. Municipal solid waste (MSW) and sludge. The organic fraction therein can be used.
  3. Other “transitional feedstocks”, such as corn starch, cane, beet or sorghum sugars, or oils derived from soybeans, canola, sunflowers, corn, peanuts or distillers dried grains with solubles (DDGS) can be used, but must offer “a credible transition plan” that demonstrates how subsequent commercial production facilities (built after the one built under the DPA Title III Program) could be economically designed and constructed utilizing “renewable biomass” materials.

The Cost-Share

Awardees selected for phases 1 and 2 will be required to share at least 50 percent of the cost.

The Due Dates

Responses are due to the DPA Title III executive agent by August 13, 2012. The Air Force expects to announce awards by March 1, 2013. This is for the Phase 1 portion of the DPA program, $30 million to go to awardees for architectural and engineering expenses for integrated supply chains.

Phase 2 would apply the balance of the $240 million ($100 million of which has been appropriated to date) from the Navy and DOE toward physical construction, shakedown and operation.

The DPA as a Funding Authority

The Defense Production Act is an authority that dates back to 1950, and has been used to boost industries such as steel, aluminum, titanium, semiconductors, beryllium and radiation-hardened electronics.

Title III of the DPA provides unique authorities, under which the government may provide appropriate incentives to create, maintain, protect, expand, or restore the productive capacities of domestic sources for critical components, critical technology items and industrial resources essential for the execution of the national security strategy of the United States, including energy.

Why Is the Air Force Managing this Program?

As the executive agent for the Department of Defense’s DPA Title III Program, the Air Force is responsible for executing programs that ensure domestic production capability for technology items that are essential to national defense.

Defense Production ActMore on the FOA

The complete funding announcement is here.

Future Funding

Agencies participating in this initiative will make additional funding requests to Congress to support the initiative, including President Obama’s fiscal year 2013 budget request of $110 million.

Parallel USDA Support

USDA’s additional $170 million in commodity credit corporation funds can also be used by Phase 2 awardees, but would be administered directly through the USDA program. Neither commodity credit corporation funds, nor Defense Logistics Agency Offtake Agreements would be awarded as part of the DPA Title III Advanced Drop-In Biofuels Production Project.

Parallel DOE Announcements

The Energy Department is also announcing $32 million in new investments in earlier stage biofuels research that complement the commercial-scale efforts announced recently by the Navy and USDA.

The funding announced by DOE includes $20 million to support innovative pilot-scale and demonstration-scale biorefineries that could produce renewable biofuels that meet military specifications for jet fuel and shipboard diesel using a variety of non-food biomass feedstocks, waste-based materials and algae. These projects may support new plant construction, retrofits on existing U.S. biorefineries or operation at plants ready to begin production at the pilot- or pre-commercial scale.

The funding announcement is here.

In addition, the Energy Department also announced $12 million to support up to eight projects focused on researching ways to develop bio-based transportation fuels and products using synthetic biological processing.

The funding announcement is here.

Please tune into the Chemical Equipment Daily for part two of this two-part series. What’s your take? Please feel free to comment below! Copyright 2012; Biofuels Digest