Michael E. Canes
Presentation to The Nonproliferation Policy Education Center
September 24, 2012
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The military operational energy economy
DoD operational energy initiatives
Analyzing the initiatives
Biofuels and Small Modular Reactors (SMRs)
Implications & Conclusions
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2001 Defense Science Board (DSB) Report:
“More Capable Warfighting Through Reduced Fuel Burden”
◦ Message: In-theater energy costs a great deal more than its purchase
price – DoD should use a ‘fully burdened cost of fuel’ in assessing
investment alternatives
 DoD Response: Dust collection
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Marine Corps Major General Richard Zilmer –
Iraq, July 2006
◦ "By reducing the need for [petroleum] at our outlying bases, we can
decrease the frequency of logistics convoys on the road, thereby reducing
the danger to our marines, soldiers, and sailors….Continued casualty
accumulation exhibits potential to jeopardize mission success.”
 DoD Response: Initial activity to attack problem
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2008 DSB Report – “More Fight, Less Fuel”
◦ Repeats 2001 DSB message – criticizes DoD for lack
of response
◦ Calls for institutional change within DoD to deal
with energy challenges
◦ Identifies vulnerability of DoD installation critical
infrastructure to long-term grid outage – for
example, from long-term damage to or destruction
of large transformers
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Congress directs DoD to establish leadership
position for energy
◦ Assistant Secretary of Defense for Operational
Energy Plans and Programs is created – (Sharon
Burke)
◦ Office of the Undersecretary of Defense for
Acquisition, Technology and Logistics accepts
responsibility for decreasing the vulnerability of
installation critical infrastructure – (Frank Kendall)
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Operational Energy Strategy
◦ Demand Reduction
◦ Supply Expansion
◦ Strategic Energy Planning
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Operational Energy Strategy Implementation Plan
◦ Schedules & objectives
◦ Services undertake Operational Energy Initiatives (OEIs)
 Currently 357 separate OEIs among the 4 services
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OEPP Certifies Service OEI budgets
Photo voltaics
Advanced generators
UAVs
Trailer mounted
support systems
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FERC & local PUCs oversee grid
Services seeking to diversify sources of power
◦ DoD goal: 25% of power from renewable sources by
2025
 As much as possible from local sources (islanding)
 Other goals involved – e.g., curbing GHGs
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Variety of technological alternatives considered
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Solar
Wind
Geothermal
Biomass
Ocean thermal or wave generated power
Small modular nuclear reactors
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Approach 1: Set an energy-related goal and
measure progress towards meeting it
◦ E.g., DoD is committed to reducing GHGs from
non-combat activities by 34% by 2020
 Pro:
 Military customarily sets goals and tries to meet them
 Can measure whether on path to achieve goal and adjust
policy/programs over time accordingly
 Can seek least cost method of achieving goal
 Con:
 No regard to cost of goal relative to gains
 Failure to reach a goal carries little or no penalty
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Approach 2: Investment alternatives should
enhance operational effectiveness, and energy
alternatives should be judged by their ability to
meet this criterion
 Pros:
 DoD’s objective is to prevail in conflict, not to save on energy
use or broaden energy alternatives
 Lives are at stake
 All logistics are costly to deliver to the front – that is the
nature of conflict
 Cons:
 Costs not considered, but resources are limited
 Not necessarily straightforward to measure gains in
operational effectiveness
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Approach 3: Assess the cost effectiveness of
energy alternatives against one another
◦ Example: DARPA approach to investment in
geothermal technology - $4/kWh the hurdle rate
 Pros:
 Allows judgment whether a potential energy investment is
viable or not
 If an energy alternative is cost effective, it will increase
operational effectiveness because resources saved can be
used for other military purposes
 Cons:
 Not always easy to compare energy investment
alternatives – e.g., what is the fully burdened cost of fuel
across the battle space?
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E.g., Navy goals:
◦ “Great Green Fleet” to sail in 2016 – use 50-50
blend of ‘drop-in’ biofuels & conventional fuels –
about 3,360,000 gallons of each
◦ 50% of total Naval fuel consumption in 2020 to
come from alternative sources
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Some issues:
◦ Congress concerned about cost (Navy since has
modified goals to incorporate cost competitiveness
as a condition of future drop-in biofuel use)
◦ CRS points out: Availability of fuel not at issue;
vulnerability of supply is
◦ How sustain fleet biofuel supply when away from
U.S.?
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A way to ‘island’ energy supply to U.S.
military installations & surrounding
communities
◦ Reduce dependence upon the grid
◦ Scale to installation/community size
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Can be protected by military personnel
Navy experienced with nuclear reactors
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Some Issues:
◦ What about the cost?
 Analysts assert natural gas would have to reach $78/mcf for SMRs to be cost effective
 How cost effective are SMRs relative to other
alternative power sources?
◦ Safety issues similar to those of large nuclear
reactors
◦ Spent fuel disposal still a political issue
◦ Community acceptance (U.S. & elsewhere) after
Fukushima?
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Question: Where are the largest & most cost
effective energy gains likely to come from for
DoD?
Answer: Investment to replace legacy capital
equipment
 DoD underestimated the cost of fuel for decades
 Acquired systems under wrong set of assumptions
 More fuel efficient platforms always made sense and
still do now
 Example: AMMPS generators – save about 25% fuel (also
lighter, less maintenance, etc.) – highly cost effective
 Look to engines, other major components, body designs,
materials
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Cost effectiveness the appropriate criterion to
apply to DoD energy investment
◦ Cost effective energy-related investment will
increase operational effectiveness
◦ Drop-in biofuels & SMRs (and other DoD energy
investments) should meet that test
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DoD’s objective should be to prevail in armed
conflict, not to advance the nation’s broad
energy objectives
 DOE serves the latter role
Questions?