Biofuel battles: Politics, policy, and the pentagon

Energy Research & Social Science 10 (2015) 10–18

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Energy Research & Social Science journal homepage: www.elsevier.com/locate/erss

Review

Biofuel battles: Politics, policy, and the pentagon John A. Alic ∗ PO Box 807, Avon, NC 27915, USA

a r t i c l e

i n f o

Article history: Received 4 August 2014 Received in revised form 12 June 2015 Accepted 16 June 2015 Keywords: Biofuels Climate change Sustainability Transportation

a b s t r a c t The case for public investment in biofuels hinges on reductions in carbon dioxide emissions from transportation, a major cause of global warming. Yet the long-term sustainability of such fuels remains undetermined, in part because of lagging innovation. The US Department of Defense (DoD) seeks to hasten innovation in drop-in synthetics, chemically indistinguishable from petroleum fuels, by holding out the prospect of volume purchases of biokerosene. DoD’s procurement-centered approach contrasts with that of the US Department of Energy, which has been mostly content to fund undirected research. DoD justifies its policy on the basis of energy security and high and volatile oil prices—weak rationales both. Nonetheless, a number of policy pieces are in place and will probably remain. The overall thrust could be strengthened by increasing incentives for drop-in synthetics and making explicit provision for assessment of long-term sustainability based on actual operating experience. © 2015 Elsevier Ltd. All rights reserved.

Contents 1. 2. 3. 4. 5.

First-generation and advanced biofuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Defense Department policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Innovation in transportation fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Accelerating biofuels innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

This journal’s concerns include energy production and consumption as causes of climate change [1], the context for discussion below. The treatment of biofuels is necessarily US-centric in that it focuses on the Department of Defense (DoD), a unique organization of great size and technological capacity with inner workings less likely to be familiar to readers than those of the US Department of Energy (DOE). Multiple imponderables surround the large-scale dynamics of socio-technical, socio-economic, and socio-ecological systems associated with climate change, mitigation, and adaptation [2]. Wealthy countries have already begun adapting to consequences of climate change such as rising sea levels. Costs will be high, poorer countries will struggle, and the poorer people in these countries will suffer the most. The sooner the world learns whether biofuels will prove sustainable and can help decarbonize energy systems,

∗ Tel.: +1 2529956870. E-mail address: [email protected] http://dx.doi.org/10.1016/j.erss.2015.06.006 2214-6296/© 2015 Elsevier Ltd. All rights reserved.

transportation in particular, the better. Timely answers require accelerated innovation. There are three main tests for sustainability: (i) negative lifecycle greenhouse gas (GHG) emissions, in particular more carbon dioxide (CO2 ) removed from Earth’s atmosphere during feedstock growth than added during processing and consumption; (ii) positive energy returns, more energy in fuel supplied to final customers than consumed in feedstock growth and processing; and (iii) tolerable impacts on agricultural land use and food prices. Impacts, direct and indirect, must be assessed along the entire supply-consumption chain. Innovation is important because low levels of photosynthetic energy conversion efficiency—the fraction of energy in incident sunlight converted into chemical energy—impose fundamental limitations on biomass production [3]. And while global output of biofuels has risen over the past several decades as a result of policies adopted in the United States, Europe, and Brazil, the long-term impacts of cultivation, processing, and consumption remain undetermined, no matter the assumptions and assertions of advocates and enthusiasts.

J.A. Alic / Energy Research & Social Science 10 (2015) 10–18

1. First-generation and advanced biofuels Today’s most common biofuels, ethanol and biodiesel, are less than satisfactory substitutes for petroleum [4]. Synthetic fuels made from edible crops such as corn and soybeans compete with food production, and corn ethanol, the principal US biofuel, exhibits only marginally positive energy returns, while contributing little or nothing to reduction in GHG emissions [5]. Ethanol made from sugar cane, as in Brazil, yields higher energy returns. So does biodiesel made from soybeans, the most common feedstock in the United States. Unlike petroleum fuels, however, which are hydrocarbons consisting solely of hydrogen and carbon, alcohols and biodiesel contain oxygen (for which reason biodiesel is a misnomer). Their oxygen content makes these fuels incompatible, except in low-percentage blends, with vehicles and infrastructure (tanks, pipelines, pumps, valves) designed for petroleum. Any large-scale shift to such fuels, while technically straightforward, would require substantial investments in infrastructure, and fleet turnover in the United States, with 250 million cars and trucks on its roads and highways, would take years. (In Brazil, by contrast, the personal vehicle fleet has been expanding as a result of rising income levels and longstanding government policies have encouraged sales of ethanol-compatible cars and trucks while supporting the sugar cane industry [6].) Advanced biofuels, perhaps based on feedstocks created through genetic engineering, appear to hold greater promise. Yet relatively few of the many possible technological pathways to such fuels have been explored, and no one at this point can know which are likely to prove superior. If biofuels are to be anything more than small-scale supplements to other transportation energy sources, continuing investments in fundamental research will be needed to identify and then improve feedstocks with high levels of photosynthetic efficiency and to process these feedstocks into practical fuels at affordable costs. Although such research may reveal promising avenues for further development, it cannot provide an adequate basis for assessing long-term sustainability. These sorts of analyses are hard enough with verifiable data as a starting point [7]. In the absence of such data, evaluations of advanced biofuels depend on unverifiable assumptions. Inaccuracy and bias in planning estimates are endemic even in private firms that attempt to impose and enforce transparent estimation procedures on major investment decisions [8]. Assessments intended to inform public policy show still larger errors, sometimes an order of magnitude or more [9]. Such errors can only be avoided or rectified on the basis of data drawn from operating experience. In part because process development and scale-up of biochemical processes seldom proceeds in predictable fashion, reliable estimates require data drawn from reduction to practice: cultivation and collection of biomass in volume, and design, construction, and operation of production-scale biorefineries. In the United States, DOE funds most government-supported biofuels research. Around the middle of the last decade, DoD, a major consumer of kerosene as jet fuel, began to explore drop-in substitutes for petroleum in the form of biokerosene. (Militaries avoid gasoline because of its flammability.) To be candidates for purchase by DoD, and by the defense ministries of most other countries, alternatives to petroleum must be direct replacements for petroleum—drop-in biofuels, chemically indistinguishable from petroleum fuels so they can be mixed or substituted for them in any proportion—since much military equipment is old, will nonetheless remain in service for many more years, and costs far too much to replace. The US Air Force, for example, took delivery of its last B52 bomber in 1962 and in 2006 chose this venerable system for its first round of acceptance tests on fuels blending petroleum jet fuel with biokerosene. DoD, with its demonstrated ability to drive

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technological advance toward commercialization, including technologies with major spinoffs in the civilian economy [10], is better placed than DOE to encourage practical innovation and scale-up of advanced biofuels. As outlined in a later section, the two agencies should collaborate. Individually, road vehicles make near-negligible contributions to CO2 emissions. Taken together, cars and trucks account for over 27 percent of the US total (the global average is a bit higher). Inclusion of other transportation modes (air, water, rail) raises the figure above 30 percent, nearly as much CO2 as emitted by coal-burning power plants [11]. But while CO2 from power plants can at least in principle be captured and sequestered away from the atmosphere, trapping CO2 from individual vehicles is impractical. Current US policies seek to reduce CO2 through tighter fuel economy standards and subsidization of alternatives such as battery-electric powertrains. Such measures depend on replacement of older vehicles to get advanced technologies into the fleet. Unlike in developing countries, where rising affluence drives sales, many US households already have several vehicles and in recent years the fleet has hardly grown. For this and other reasons, average vehicle age has roughly doubled since the mid-1970s, from 5–6 years to 11–12 years [12]. Since the 1970s, moreover, the new vehicle market in the United States has fragmented into ever more niches differentiated by size, type, price, and amenities. Slow overall growth in such a market, one in which personal vehicles sell in large part as fashion items, implies that many niches, such as those for electric and natural gas-fueled vehicles, will remain small indefinitely. Given these quite predictable trends, sustainable drop-in fuels would complement ongoing gains resulting from downsizing and lighter vehicle weights, alternative powertrains (and smaller-displacement conventional engines that operate at higher average efficiency levels, as in hybrids), reductions in rolling resistance, aerodynamic drag, and frictional losses, and so on. In short, a policy centered on dropin biofuels would mesh far better with existing and foreseeable market dynamics than one that relies on turning over the fleet to introduce new technologies. Prospects for drop-in biofuels have been elusive, in part because of high projected costs relative to petroleum (and also relative to first-generation biofuels such as corn ethanol). In the absence of subsidies, alternative fuels must meet prices set in global markets for petroleum. These markets have become more diversified and resilient since the energy crises of the 1970s [13]. Increased production from unconventional sources such as oil sands, oil shales, and tight oil found in deep, low-permeability geological formations makes shortages and rapidly escalating prices still less likely, at least in the absence of wars or other disruptive crises. The US government has subsidized production of ethanol since the 1970s, a time of shortages caused by Arab oil embargoes and the revolution in Iran. Production of corn ethanol is simple and, once the feedstock has been purchased, not very costly. Ethanol could be added to gasoline in small percentages as a fuel extender. Its oxygen content helps control exhaust emissions and raises octane ratings as a replacement for lead compounds phased out because of toxicity. US fuel ethanol output rose from about 25 million gallons in 1980 to 750 million gallons in 1990 and reached 3.9 billion gallons in 2005 [14]. That year Congress instituted a Renewable Fuel Standard (RFS) requiring suppliers to blend increasing percentages of biofuels with petroleum fuels [5]. Two years later, Congress wrote a more aggressive blending schedule, known as RFS2, into the 2007 Energy Independence and Security Act (EISA). Corn ethanol production boomed, exceeding 13 billion gallons in 2010, then flattened. Consumption of gasoline, or gasohol, did not rise as fast as lawmakers anticipated in writing EISA, stabilizing instead in the vicinity of 140 billion gallons per year. (Demand is now expected to drift downward as tighter fuel economy standards take effect.) Essentially all gasoline sold in the United States now

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J.A. Alic / Energy Research & Social Science 10 (2015) 10–18

contains 10 percent ethanol. (The RFS2 quota for biodiesel is lower than that for ethanol and output in recent years has been around 1 billion gallons.) Older cars and trucks, along with much of the distribution and sales infrastructure, cannot tolerate more ethanol without risk of damage and the 10 percent level, E10, has come to be known as the blend wall. The limitation stems from choices made for fuel-contacting materials and components in the 1980s and earlier, when gasoline contained little or no ethanol. Sparkignition engines can be designed to run on any percentage of any alcohol and newer cars and trucks accept E15 or E20. Indeed, socalled flexible fuel vehicles, which can run on blends of up to 85 percent ethanol (E85), have been sold in the United States since the 1990s. Purchasers benefit from tax credits. Most then go on to fill their tanks with ordinary E10 [15]. RFS/RFS2 created a guaranteed market through 2022 for biofuels, an indirect subsidy benefiting producers. Federal tax credits add further incentives and a number of states provide subsidies of their own. Estimates by the Energy Information Administration put total federal subsidies for biomass and biofuels in 2010 at nearly $8 billion, most of this for corn ethanol [16]. Iowa grows more corn than any other state, and the disproportionate influence of the state’s voters in presidential nominations has helped build and sustain political support for subsidies. Before EISA most of the US corn crop sold for animal feed. With bioethanol refineries now taking 40 percent or more of the harvest, corn prices have risen and so have prices for other food products [17]. Indeed, corn (and soybean) prices have been high enough that some biorefineries have shut down as unprofitable. RFS2 also required blending of cellulosic ethanol and other “advanced” biofuels beginning in 2009. Production of cellulosic ethanol—made from the cell walls of grasses, shrubs, and trees, or corn stover, post-harvest remnants ordinarily left in the field—was expected to limit upward pressure on food prices. The cellulosic ethanol quotas have not been met for lack of production capacity. Many firms, mostly small startups, touted ambitious plans, only to run into trouble and scale back or cancel them. Some entered bankruptcy. One of the best-known, Range Fuels, backed by prominent Silicon Valley venture capitalist Vinod Khosla, planned to make ethanol from wood chips; despite over $150 million in federal loan guarantees and grants the company closed its doors at the end of 2011 [18]. Some months later, Terrabon, also heavily publicized (thanks in part to participation as a subcontractor on biojet R&D for the Defense Advanced Research Projects Agency, DARPA, a fabled seedbed of innovation), entered bankruptcy [19]. After KiOR, another widely hyped (and Khosla-backed) startup, followed suit in 2014, press reports put its cumulative losses at $630 million because of “costs that ran $5 to $10 a gallon even without counting the cost of building the plant” [20]. With no cellulosic ethanol reaching the market, the Environmental Protection Agency (EPA), which has discretion under EISA to adjust the RFS2 quotas, cut those for advanced biofuels to token levels. In the summer of 2014 the US–Dutch joint venture POET-DSM finally opened the first US commercial-scale cellulosic ethanol plant [21]. Another firm, Abengoa, quickly followed [22]. Prospects for these plants, along with others near completion, depend on realized production costs in routine operation, once shake-down has been completed, and on future EPA decisions concerning the RFS2 schedule (which Congress could also revisit). There are thousands of possible pathways between biomass and biofuel. At this point no one knows which might be best. So-called third-generation biofuels, such as those made from algae, may hold promise. Algal feedstocks have attractions including rapid growth [23]. Some varieties exhibit photosynthetic efficiencies several times those of typical agricultural crops and, living in water, they need not encroach on arable land. On the other hand, energy content may be little more than the energy inputs needed for growing

and processing—most evaluations indicate meager positive margins, little if any better than corn ethanol—and water consumption could also be prohibitive. There are many thousands of algal varieties, and at this point much of the ongoing research aims simply to identify the most promising, after which genetic engineering would probably follow—provided investors see reasonable prospects for profits. Price competition is the final hurdle for any biofuel. While cellulosic ethanol promises greater energy returns than corn ethanol, without market set-asides under RFS2 it is far from clear that such fuels can be produced at competitive costs. Crude oil and refined products move easily and cheaply worldwide. Markets function reasonably well. Larger state-owned oil companies command some market power, but no single producer can set prices globally, nor can the Organization of Petroleum Exporting Countries, a shaky cartel that from its beginnings has struggled to reach agreements and hold members to them. Leaving aside transportation charges, price spreads for crude oil reflect qualitative differences such as sulfur content. Refined products including gasoline, jet fuel, and diesel fuel sell at common prices. Producers cannot differentiate them as automakers differentiate battery-electric vehicles through technical attributes such as range or pickup trucks through powered tailgates. Biorefiners have no choice but to accept prices set in world markets or depend on subsidies, as for ethanol in the United States. As in many industries, scale is important for costs; in (petro)chemical processing and by extension biorefineries it has unusual significance, both technical and economic [24]. To reap available scale economies, US oil refineries average nearly 2 billion gallons per year in capacity [25]. This is many times the size of corn ethanol plants, with average annual capacities of about 70 million gallons, and biodiesel plants are smaller still, at around 20 million gallons [26]—which is also about the size of the cellulosic ethanol plants built by POET-DSM and Abengoa. By contrast, Shell’s new gas-to-liquid (GTL) plant in Qatar will process natural gas into more than 2 billion gallons of diesel fuel annually, plus a nearly equal volume of nonfuel chemicals [27]. Transportation costs limit biorefinery scale. While oil can be piped and GTL plants in Qatar sit above the gas fields from which they draw, biomass—low in value and in density—moves mostly by truck. Shipping charges over even a few hundred miles can double the cost of feedstock at the plant gate, to which storage costs must be added for seasonally available biomass such as corn stover. (POET-DSM and Abengoa will buy corn stover from farms within about 50 miles of their plants.) Dense, higher-value feedstocks, perhaps at some point algae, may be worth shipping greater distances, but the calculation will be the same: biorefineries will be sited to balance the delivered costs of feedstock against scale economies in constructing, equipping, and operating the facility. Absent some sort of radical departure in bioconversion, perhaps the ability to make fuels directly from algae or bacteria—long-term research goals of uncertain feasibility—biorefineries will remain small. It will probably take more than 100 biorefineries to produce as much as a single oil refinery or GTL plant. And while petroleum refiners can cut final product prices when oil prices fall without much harm to profitability, costs for biofuels vary with biomass prices uncorrelated with the oil market—another reason why subsidies have been necessary. Better biofuels, and better policies, are needed. 2. Defense Department policies In fiscal 2013, DoD spent $15.4 billion on fuel ($2 billion less than in the preceding year), nearly all of this for kerosene and most of it for jet fuel [28]. As oil prices pushed toward new highs after 2005, the Navy and Air Force, citing energy security and the effects of

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high and volatile oil prices on their budgets, announced ambitious near-term goals for replacing petroleum with drop-in synthetics. Navy Secretary Ray Mabus became the public face of DoD fuels policy when he announced a “Great Green Fleet,” expected to take to the seas in 2016 powered by biokerosene. The Navy went on to establish quantitative targets including purchase of 300 million gallons of biofuels by 2020 and the Air Force declared it would “be ready” to buy half of its domestically-consumed jet fuel, or about 390 million gallons, from alternative sources by 2016. The Army did not announce quantitative targets, but has followed the other services in testing and certifying equipment for operation on synthetics. Brief summaries of the plans of all three services appear in Ref. [29]. During the 1970s the Air Force supported a good deal of R&D on coal-based synthetic jet fuel, conducting some of the work in its own laboratories [30]. More recently, the services have left biofuels R&D to DARPA, a civilian-managed agency that funds extramural work exclusively. Over the period 2007–2011, DARPA’s Biofuels Program spent $100 million on contracts with industrial firms (some with university participation) [31]. At the end of the program, managers stated that the agency’s technical objectives—to develop cost-competitive technologies for making jet fuel from biomass—had been met [32]. Although it seems implausible that true cost competitiveness could have been demonstrated, DARPA did not propose a follow-on and DoD policy shifted to production subsidies. Under authority granted in the Defense Production Act (DPA), the Navy joined in mid-2012 with DOE and the US Department of Agriculture (USDA) in a three-year $510 million “Advanced Dropin Bio Fuels Production Project” [33]. The project is consistent with a 2009 White House directive calling on federal agencies to “leverage” their procurements “to foster markets for sustainable technologies” [34]. Following an initial request for proposals, three firms won contracts for R&D and design studies, with government agreeing to pay up to half of the costs [35]. A second round of awards covering plant construction followed in September 2014; production start-up is expected in 2016 or 2017 [36]. Will the Pentagon’s commitment to biofuels suffice to drive innovation? This seems unlikely. Nothing in the information so far released suggests much in the way of technical advance. The three funded plants will process conventional feedstocks (waste oils and greases, municipal wastes, or forest byproducts) using well-established technologies, either Fischer–Tropsch methods, as originally developed in the 1920s for making synfuels from coal, or hydroprocessing, widely used in petroleum refining and again dating from the 1920s. Only one of the three DPA plants will be of any size, with an annual capacity of 82 million gallons; the other two have design capacities of 10 million and 12 million gallons. If meaningful innovation is to be the goal, stronger measures will be needed, to broaden and deepen the research base (technology push, in the language of innovation studies) and to increase the incentives for building production capacity (demand pull). In titling the Energy Independence and Security Act, Congress highlighted politically popular themes. The Pentagon has adopted similar rhetoric. Energy security does carry significance for DoD, although not so much for fuel as for electrical power purchased from utilities, especially at overseas bases in regions with poor infrastructure. Military professionals everywhere know that logistics saves lives and wins battles. World War II drove the lesson home for US planners and it has hardly been forgotten. No matter the circumstances and regardless of the costs, the Pentagon will not let US forces run seriously short of fuel. Casualties suffered in attacks on supply convoys in Iraq and Afghanistan spurred efforts to reduce energy consumption in the field and these will continue. The Strategic Petroleum Reserve is full and with North American petroleum output rising, fuel security by almost any reckoning has

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improved since the Defense Science Board stated the obvious more than a dozen years ago: “The issue is not whether DoD will be able to obtain the oil it needs to provide for our national defense, because it will” [37]. While curtailment of supplies from the Middle East would send oil prices upward, one-fifth of US imports come from Canada and Mexico, domestic refining capacity is not a constraint, and DoD has first claim on supplies under US law in the event of war or serious crisis short of war. Production of jet fuel from biomass, furthermore, would have little effect on pricing unless and until output reached levels significant relative to worldwide demand. This seems unlikely, certainly over the next decade or so. The Defense Logistics Agency Energy (DLA Energy) buys fuel for all of DoD. With US forces stationed in many countries, DLA Energy maintains over 600 fuel depots worldwide, shops for the best price at points of delivery, and makes one-third to one-half of its purchases abroad [38]. DLA Energy’s annual purchases amount to about 5 percent of global jet fuel sales and the procurement goals of the Air Force and Navy for alternative fuels amount to perhaps 1 percent of worldwide consumption [39]. Airlines, the major customers for jet fuel, compete in a low-margin business that has seen frequent bankruptcies; they have no reason to buy biojet at premium prices except perhaps in small volumes to support green advertising campaigns [40]. In any event, a biorefiner with costs low enough to undercut petroleum prices would almost certainly choose higher profits, at least while paying down its investment and start-up costs. Biojet production will have negligible or near-negligible effects on world markets for the foreseeable future. Nor can the armed forces expect biokerosene to dampen the price fluctuations that, as for airlines, complicate budgeting and cash management. The Air Force, largest consumer among the services, spent $8.1 billion on jet fuel in fiscal 2013 [28]—a lot, but not nearly so much as United Continental, the largest US-based carrier, with a (calendar) 2013 fuel bill of $12.3 billion [41]. And because fuel makes up a smaller share of operating costs for the military than for airlines, DLA Energy and the services should at least in principle have an easier time coping with price swings. Depending on the routes they fly, airlines spend one-third or more of operating costs on fuel [41, and other airline 10-Ks]. The Air Force owns many more planes than even the largest commercial carrier, but flies them less; something under one-fifth of its operating and support budget goes for fuel [42]. Regardless of industry, private firms with substantial fuel bills often turn to financial instruments such as futures contracts to dampen the effects of price fluctuations on cash flow. The Pentagon has legal authority to adopt similar practices (or to hire consultants for advice, or indeed to manage its fuel purchases), but has not done so; DLA Energy simply buys fuel on the spot market and bills the services accordingly [43]. While hedges carry risk, and several airlines have lost considerable sums, if fuel price volatility causes genuine difficulties for the military, surely DoD should look first to its financial management practices rather than to subsidies for biofuels. Should the US government wish to argue that DoD efforts aimed at mitigation of climate change served national and international security interests, it could add this to its list of justifications for support of biofuels. Global warming already affects routine military operations. Declining ice cover in the Arctic Ocean has been a favored example [44]. DoD maintains more than 7000 fixed-base facilities worldwide, ranging from unmanned storage depots to sprawling air and naval stations in the United States and abroad, as in Okinawa and Kuwait. With rising sea levels, a growing number of these will be at risk of flooding during periods of storm surges and extra-high tides. The low-lying Hampton Roads area of Virginia, for instance, is home to nearly 30 military installations, and much of the island of Diego Garcia, a major air and naval base in the Indian Ocean, is little more than a meter above sea level. Security

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risks associated with climate change are easy enough to envision. After all, when authorities called out the national guard in 2005 after Hurricane Katrina hit New Orleans, the troops struggled to keep order just as had overwhelmed local police. Unsurprisingly, the US national security establishment has for some time been incorporating climate change into various of its scenarios and contingency analyses [45]. DoD’s Quadrennial Defense Reviews (QDRs) provide a concrete sense of (slowly) changing views. Successive reports have given climate change an increasingly prominent place. In 2010, climate change was listed among “trends whose complex interplay may spark or exacerbate future conflicts” [46]. The most recent QDR took another small step: “The pressures caused by climate change will influence resource competition while placing additional burdens on economies, societies, and governance institutions around the world. These effects are threat multipliers that will aggravate stressors abroad such as poverty, environmental degradation, political instability, and social tensions—conditions that can enable terrorist activity and other forms of violence” [47]. The United States is enmeshed in a worldwide web of alliances, and its forces will continue to be drawn into conflicts, whether as peacekeeper, supplier of humanitarian assistance and disaster relief, or participant. Because climate change seems likely to contribute to at least some of the future strife underlying these involvements, it makes sense for DoD to contribute to US efforts at mitigation.

3. Innovation in transportation fuels Commercialization, the introduction of some sort of technological advance into end-markets or production processes, is the usual signpost marking the onset of innovation. Some developments find almost immediate acceptance. Others reach the market only to falter, as did battery-electric vehicles when the auto industry was young and again in the 1990s. Because patterns vary with industry and the technical knowledge embodied in innovations, public policies must be tailored to circumstances [48]. Because much uncertainty surrounds prospects for new technologies and their applications, whether military or commercial, since World War II DoD acquisition (the term covers both R&D and procurement) has been a powerful force in driving innovation including fuels, powerplants, and other energy technologies. Moreover, some of these DoD-funded developments, notably the Internet, got started without strong backing by the armed forces. The great majority of innovations consist of incremental advances in components and subsystems, such as improved designs of lithium-ion cathodes for electric-vehicle batteries or temperature-resistant jet engine turbine blades. On occasion, “radical” innovations interrupt ongoing patterns of incremental advance, suggesting analogies with punctuated evolution in biological systems. In the 1950s, jet engines and gas turbines were an infant technology, fundamentally different thermodynamically and mechanically from their predecessors; they were also more costly, far less reliable, and prodigious guzzlers of fuel. Technical advances, in the United States mostly from work carried out by private firms under Air Force and Navy contracts, brought steady increases in fuel efficiency and reductions in maintenance requirements. Military experience provided evidence of these gains and airframe manufacturers began to design civil aircraft around gas turbines and jet engines. With continuing improvements in efficiency and reliability, electric utilities started to buy turbines based on aviation designs in the 1980s for peak generating capacity; specialized units designed for stationary power generation followed. Over more than a century, innovations in transportation fuels centered on processing of crude petroleum, displaying a pattern similar to that sketched above: steady incremental improvements interspersed on occasion with more fundamental developments

such as catalytic cracking [49]. Technically viable processes for synthesizing liquid hydrocarbons from coal were also developed, around the time of World War I, but remained a sideshow. Costs were high and only Germany and South Africa built large-scale plants—Germany because it lacked oil to power its wartime military and South Africa because its apartheid-era government, fearing embargos of imported oil, subsidized investment in the Germandeveloped Fischer–Tropsch process. Today, while GHG emissions make coal-based synfuels an unlikely prospect, portions of the underlying knowledge base have been adapted for biofuels, as illustrated by the adoption of Fischer–Tropsch conversion in two of three DPA-funded biorefineries. For cellulosic biofuels, some of the technical obstacles that slowed earlier commercialization appear to have been overcome. The question now becomes that which blocked coal-based synfuels from the 1930s on: can production of cellulosic biofuels deliver acceptable profits on an everyday basis, with or without subsidies? Answers should not be assumed, because of the particular sorts of technical problems encountered in bio/petro/chemical processing. Such processes involve chemical reactions that may include hundreds of steps, some or many of which may be poorly understood, perhaps because they take place too rapidly to be probed without highly sophisticated equipment or because of the often-mysterious behavior of catalysts. Properties such as viscosity vary spatially and phenomena including mixed-mode heat transfer (e.g., convection combined with radiation, perhaps in the presence of ongoing reactions) also contribute to process complexity, along with laminar-to-turbulent flow transitions (perhaps again involving multiple phases and partially-completed reactions). Scale-up—increasing the size of pipes, pumps, and reaction vessels—alters the effects of governing variables such as temperature gradients on dependent variables such as reaction rates with the result that process yields and efficiencies often change in unpredicted ways. Put simply, the “state of the art” is such that even the most sophisticated computer-based process models and simulations tend to break down. As a result, both startup firms, which may have deep knowledge in proprietary processes but lack technical breadth, and large firms with extensive experience, frequently stumble in scale-up. Shell, for example, built a gas-to-liquid plant in Malaysia in the 1990s and later designed its GTL plant in Qatar, more than ten times larger, along generally similar lines. The Qatari plant nonetheless encountered numerous unanticipated difficulties and ended up greatly over budget and behind schedule, with costs that reached a reported total of $19 billion, nearly four times the original estimate of $5 billion [27]. Shell’s experience is not inconsistent with evidence on 44 oil and chemical company projects collected by Merrow, Phillips, and Myers [50], a study that remains relevant after more than three decades because the fundamentals of what chemical engineers call unit operations have not changed much, computerized process modeling and computer-aided plant design notwithstanding. Other industries, auto production or microelectronics, confront technical uncertainty too. Yet in most cases product/process design and development proves less risky and more manageable than in the (petro)chemical and by extension the biochemical/biofuels industry, where technological particulars combine with the hubris that is so much a part of entrepreneurial business activity to make techno-economic forecasting even less reliable than in other circumstances. Government policies should take these sorts of technologyand industry-specific factors into account. Too often, they do not, and US energy innovation policies sometimes seem to embody a sort of optimism better associated with microelectronics and computing, as if “breakthroughs” could provide order-of-magnitude gains—something that is precluded for most energy technologies by fundamental physical principles [51].

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4. Accelerating biofuels innovation The Internet, among the most dramatic and transformative of all spinoffs, sprang from a late 1960s project of the Advanced Research Projects Agency (now DARPA) to link mainframes at university-based research centers. The impetus came from civilian engineers and scientists—the R&D community—not from the armed forces or the Office of the Secretary of Defense, demonstrating that high-level endorsements are not always necessary to initiate spinoffs. Packet switching—division of a digital signal into many small blocks, or packets, each with an identifying tag to permit independent routing over the network and reassembly at the destination—part of the technical basis for ARPANet and the Internet, had been explored some years before for pressing reasons of national security: command, control, and communications systems with some chance of functioning under full-scale nuclear attack [52]. DoD unaccountably let this work drop before it had advanced beyond the conceptual stage. Reinvention for the ARPANet came later, without apparent benefit from prior knowledge, and not for strategic reasons but so that scientists could be scientists, sharing data and exchanging text messages. The implication: even though spinoff usually begins with technologies deemed critical by military professionals, this is not essential. Given sufficient political cover, continued DoD investment in biofuels could provide a substantial boost to innovation despite the absence of compelling military need. Sensible policies would emphasize drop-in biokerosene—jet fuel and diesel fuel—and give DoD the lead role. Biokerosene would find ready markets worldwide. In the United States, diesel fuel accounts for one-quarter of road vehicle fuel consumption; the share is higher in many other countries, and consumption of diesel fuel globally is expected to increase more than twice as fast as consumption of gasoline [53]. Production costs should be somewhat less than for gasoline synthesized from biomass, which requires additional processing steps (at least with technologies now available or in sight). If sustainability could be assured and costs were reasonable, biokerosene would be the first-choice biofuel for climate mitigation. At some later point, the policy focus could switch to biogasoline, with DOE taking over responsibility within the US government. The armed forces purchase kerosene in volume, the Pentagon knows how to set priorities and stick with them, and defense agencies have learned to manage technology projects with practical ends in view–and how to work with industry to achieve them. DoD has technological capabilities unmatched elsewhere in government. Defense agencies operate some 50 R&D laboratories and employ nearly half of all civilian scientists and engineers who work for the federal government [54]. DoD managers long ago grasped a lesson that seems to have eluded enthusiasts for energy research: “the real difference in performance between a weapons system and its predecessor was usually not the consequence of one, two, or three scientific advances or technological capabilities but was the synergistic effect of 100, 200, or 300 advances, each of which alone was relatively insignificant” [55]. Much the same can be said for complex energy systems of the sort that must be decarbonized to slow climate change [56]. And in part because national security gets strong and consistent support across the political spectrum, the military mission acts as a source of organizational discipline within DoD that has few counterparts elsewhere in government. To be sure, Pentagon management has often and justly been criticized, and cannot stand comparison with the practices of well-run private firms [57]. Yet if the Air Force and Navy have never been able to agree on a common jet fuel specification, when collaborative planning and R&D management promise direct benefits, as in programs to improve jet engine/gas turbine performance, the national security mission helps to check inter-service rivalry.

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Of course the Energy Department has its missions too. But only on the nuclear weapons side of DOE—the National Nuclear Security Administration (NNSA), with twice the budget of DOE’s energy programs—does sense of mission compare in disciplinary force with the imperatives at work in DoD management. NNSA has customers, the military services, ready to articulate their desires in technical detail. Much as within DoD, moreover, the nebulous meanings attached to national security, which accommodate multiple interpretations, help absorb or disguise at least some internal conflicts within NNSA. This part of DOE descends from the Atomic Energy Commission (AEC), established by Congress in 1946 as a civilian-managed agency to take over what had been the Army-run World War II Manhattan Project. Military leaders were opposed. They believed that nuclear warheads were weapons like any others and should remain under their control. Losing that battle, the services maneuvered first for authority over warheads in the field and, that accomplished, to take over other AEC functions [58]. Determined to hold on to R&D, warhead design, and weapons production, AEC managers went to great lengths to meet any and all demands of the services, each of which wanted more and more warheads of more and more types. The new agency succeeded beyond all reasonable expectations, enabling Chairman Lewis L. Strauss to tell US President Dwight D. Eisenhower in 1956 that “we are now making in a month what we formerly made in a year” [59]. The accomplishments of these years cemented a sense of mission that still persists within NNSA and DOE’s weapons laboratories. Comparable incentives have never existed for energy-related research and technology development. With the priorities of the services forcing the AEC “to concentrate its efforts almost entirely on production [of fissionable material for bombs] and military propulsion reactors [for Navy submarines],” disarray surrounded early efforts to develop nuclear reactors for generation of electrical power [60]. Ever since, the AEC and its successors have had to juggle competing interests: scientists seeking funds for “big physics” experiments; those arguing for breeder reactors or fusion energy research; more recently, proponents of renewable energy and “clean coal.” Lacking anything like a unified constituency, managers dithered, compromised, and shifted directions, sometimes finding themselves circling back to research topics earlier abandoned, as DOE did in restarting work on algal fuels funded from the late 1970s until halted in the mid-1990s [61]. It is no surprise that outside reviews over the years have returned a string of generally similar verdicts: lack of “clear missions that allow firm goals to be set against which the performance of the laboratories can be measured” too often leads to “low-quality research in pedestrian subjects” [62]. Recent assessments have been only a little more charitable [63]. Congressional authorization in 2007 for the Advanced Research Projects Agency-Energy (ARPA-E), an effort to carve out a place for high-impact research directed at energy innovation rather than science, one that could be insulated at least partially from the rest of the DOE bureaucracy and the claims of the national laboratories on funds, stemmed in part from the failures of earlier reform efforts. Despite its travails DOE has made significant contributions to energy innovation [64]. These have conferred scant protection against political attacks for reasons including lack of consensus within government and among interest groups on US energy policy writ large. For a century—Congress first extended tax preferences for oil exploration in 1916—competing energy interests have sought influence over policy. Since the 1970s, groups urging conservation and investments in renewables have made it still harder for DOE to cohere around some sort of unifying mission, the more so with conservative politicians and market fundamentalists arguing that NNSA should be moved, finally, to DoD and that DOE’s energy programs should be disbanded, with economic markets allowed to work their will. These conflicts will not disappear—after all,

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much of the rhetoric surrounding “free enterprise” was contrived by advertising firms as long ago at the 1930s at the behest of business interests opposed to President Roosevelt’s New Deal [65]—and neither high-level policy proclamations, such as the Obama administration’s “all of the above” energy strategy, nor managerial fiat within DOE headquarters can be expected to bridge them. Deeply embedded patterns of political and organizational behavior, then, suggest that if policymakers were to assign DoD superordinate responsibility for biofuels programs conducted jointly with DOE, outcomes should be superior to efforts managed by DOE alone, or to cooperation under some sort of nonbinding agreement such as the 2010 memorandum of understanding (MOU) “Concerning Cooperation in a Strategic Partnership to Enhance Energy Security” [66]. In essence an avowal of intent, subcabinet officials (not the heads of the two agencies) signed this MOU. Some cooperation did ensue: DOE and the services have shared in funding perhaps two dozen projects, mostly small and perhaps best described as engineering development (e.g., lowfriction lubricants, more efficient electronic components) [67]. The MOU covering the DPA project offers a better model for structuring collaboration on biofuels. Signed by the cabinet-level secretaries of the three departments, it specifies the financial commitments of each, along with procedures for contracting, for resolution of disagreements among the agencies, and for withdrawals [68]. In principle, technology push from DOE research combined with market pull from DoD procurement should foster well-adapted innovations at multiple points along the biofuels supply chain, positioning firms for continuous innovation of the sort that has long propelled the petrochemical industry. In practice, current policies seem unbalanced. DOE supplies the bulk of federal R&D dollars through its Bioenergy Technologies Office, recently budgeted in the vicinity of $200 million annually [69]. As a research agency, DOE selects projects on the basis of scientific promise as much as practical need, spreading funds among a wide variety of subject areas [70]. According to the agency itself, “DOE focuses too much effort on researching technologies that are multiple generations away from practical use” [71]. With the end of DARPA’s Biofuels Program, conversely, defense agencies no longer fund significant alternative fuels R&D of any sort [72]. On the procurement side, the DPA project could hardly be described as ambitious and will not get the Navy and Air Force very far toward their announced goals. In 2013, DLA Energy purchased 3.7 billion gallons of kerosene fuels [28]; it would take 100 biorefineries of the average size funded under the DPA project to produce half this volume, enough for the 50:50 mixtures assumed in the plans of the services. Given the many unexplored pathways to synthetic fuels, such as those from bioengineered microalgae, a better-balanced policy would strengthen incentives for both procurement pull and long-term innovation. DoD should support results-oriented nearterm R&D while DOE continues to fund more fundamental research that could help foster innovation in generation-after-next technologies. The basis for collaboration should be a binding DoD–DOE agreement. This could be viewed as an expansion and extension of the existing DPA project (with optional USDA participation). Initial planning horizons should be six to perhaps ten years, supporting a portfolio of R&D and demonstration projects on next generation and generation-after-next technologies. Precedents for efforts with similarly long time horizons include DoD’s multi-agency Integrated High Performance Turbine Engine Technology (IHPTET) program. All three military services participated in IHPTET, along with DARPA and the National Aeronautics and Space Administration. The program began in 1986, building on the earlier Advanced Turbine Engine Gas Generator program; several follow-ons are now proceeding in parallel [73]. Because firm budget allocations over such periods are impossible and technical plans in any case shift as R&D results come in, commitments

by technologically capable firms—jet engine manufacturers and their suppliers, in the case of IHPTET and its successors—depend on strong agency buy-in. Otherwise government programs risk attracting rent-seeking enterprises that may not be positioned or motivated to carry through meaningful innovations. Given time horizons longer than those for the DPA project, DoD and DOE should be able to attract proposals from companies working on promising but as yet immature technologies. Washington should also seek proposals for biorefineries of greater capacity. Consistent with DoD’s commitment to sustainability [74], program design should make explicit provision for determination of the net GHG impacts of supported technologies. These should be based on operating experience as new capacity along the entire supply and utilization chain comes on-stream. (Although firms may consider some data proprietary, defense agencies know how to keep secrets.) DoD, finally, should relax its pricing policy for biokerosene. Following announcement of DPA plant construction awards, DLA Energy stated merely that if participating firms “met production process requirements” (i.e., military fuel specifications) they “would be eligible to compete” for procurement contracts [75]. It seems unrealistic to expect biofuels suppliers to compete from the outset on a price basis, which would almost certainly be a money-losing proposition for any firm with new technology; while big companies might choose to cross-subsidize, this would probably not be an option for small firms with limited financial resources. Instead the Pentagon should put in place a sliding scale of prices, committing to pay a premium for biokerosene by amounts that narrowed by stages over a decade or two. After all, the Air Force once paid $50 for microchips that commercial customers a few years later could purchase for $2 or $3, and DLA Energy currently spends $25 per gallon for highdensity kerosene specially formulated for cruise missiles. There is no reason, if Washington truly wants to encourage innovation, why DoD should not pay extra for biofuels until technologies mature, capacities increase, and learning economies build.

5. Conclusion With petroleum likely to remain relatively plentiful and relatively inexpensive for the next several decades—and alternatives such as battery-electric vehicles unlikely to penetrate existing markets fast enough to make much difference over the foreseeable future—demand for biofuels will continue to depend on government policies and climate change mitigation will provide the only compelling reason for subsidies. While at some future time biofuels may be needed to supplement petroleum, there is little reason to pursue them currently except as they may help reduce emissions of CO2 from transportation. To this point, however, US policymakers have made poor choices, favoring ethanol and biodiesel, which are incompatible with existing vehicles and infrastructure, and not very desirable on other grounds. Drop-in alternatives make more sense, starting with biokerosene, which can substitute for jet fuel and also for road-vehicle diesel, and which promises to be simpler and less expensive to produce than biogasoline. Expanded production of biofuels might or might not help slow the rate of climate change. Answers to this question are critical and faster innovation would help build a basis for better policies looking forward. Such considerations help justify greater Pentagon involvement in an expanded and strengthened effort in the United States. This should be directed at jet fuel for the military and diesel fuel for civilian markets. Beyond DoD’s technological capabilities, and beyond the fact that DoD is a major consumer of transportation fuels, climate change may well become a significant cause of future militarized conflicts. In the long term, such a policy requires compelling assurance of sustainability. Today, net GHG emissions for biofuels

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cannot be estimated with any confidence. Large uncertainties, especially for more advanced biofuels, accompany “paper studies” of the sort commonly called techno-economic assessments. These appear frequently in the gray literature, prepared by academics, DOE scientists, and environmental and trade groups. Few provide much illumination—not even those published in peer reviewed journals—as suggested by the dispute over Liska et al.’s recent analysis of emissions associated with alcohols made from corn stover [76]. Usual starting points include assumed values for process parameters; indeed, in the absence of proprietary data, there is seldom any other choice. The assumptions typically become inputs for computer-aided design and planning packages, often software sold to all comers by vendors such as AspenTech. Petrochemical firms too begin this way, with feasibility studies based on computer models. Despite extensive design and production experience, including reams of internally generated process data, more often than not these firms, along with their consultants and contractors, go wrong. Illustrations range from the troubles of so many cellulosic ethanol startups to Shell’s experience with its huge GTL plant in Qatar. If petrochemical firms, with their reservoirs of technical knowledge and expertise, cannot get their cost and performance estimates right, assessments by academics and government analysts must be heavily discounted. Sustainability can only be reliably determined on the basis of actual operating experience. Verifiable data is a necessary basis for sober policy analysis. Otherwise decisionmakers will continue to guess concerning prospects for sustainability of biofuels, based on estimates, projections, models, and simulations that too often come from interested parties. And even if special interests do not consciously or unconsciously undermine analytical rigor, the technological specifics of bio/petro/chemical processing combine with the sort of generic technological optimism that afflicts so many large-scale investment projects to yield assessments that tend to understate costs greatly and inflate benefits grossly. If sustainability cannot be assured, based on verifiable data, then further expansion of biofuels output should be curtailed in favor of other approaches to managing GHG emissions associated with transportation. Acknowledgements This article draws in places on [4], work conducted with support from the Consortium for Science, Policy and Outcomes and the Clean Air Task Force through a grant from the Nathan Cummings Foundation. Travis Doom and Dan Sarewitz provided vital support and guidance. The author also thanks one of the anonymous reviewers for notably perceptive and helpful comments, and the journal’s editor, Benjamin Sovacool, for shepherding the paper through the mill. Earlier versions were presented at the 2014 annual meeting of the International Studies Association, Toronto, March 26–29, and the Ninth Annual Appalachian Spring Conference in World History and Economics, Appalachian State University, Boone, NC, April 12, 2014. References [1] Falkner R. Global environmental politics and energy: mapping the research agenda. Energy Res Soc Sci 2014;1:188–97. [2] Hodbod J, Adger WN. Integrating social–ecological dynamics and resilience into energy systems research. Energy Res Soc Sci 2014;1:226–31. [3] Barber J. Biological solar energy. Philos Trans R Soc A 2007;365(1853):1007–23. [4] Alic JA. The rightful place of science: biofuels. Tempe, AZ and Washington, DC: Consortium for Science, Policy and Outcomes; 2013. [5] The renewable fuel standard: issues for 2014 and beyond. Washington, DC: Congressional Budget Office; 2014, June [Figure 6 includes estimates from a number of different sources]. [6] Meyer D, Mytelka L, Press R, Dall’Oglio EL, de Sousa Jr PT, Grubler A. Brazilian ethanol: unpacking a success story of energy technology innovation. In: Grubler A, Wilson C, editors. Energy technology innovation: learning from historical

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