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Government Agencies Award Annual Contracts for 100 Million Gallons of Drop-In Biofuels

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September 26, 2014

On September 19, three companies received contracts and funding from the Departments of the Navy, Energy and Agriculture to develop biorefineries to produce “drop-in” fuels for the military and the private sector. “Drop-in” biofuels are equivalent to traditional gasoline, and require no engine modifications; they are desirable due to their environmental and security benefits. Deputy Energy Secretary Daniel Poneman commented, “By advancing technologies that reduce our carbon emissions, this multi-agency partnership is demonstrating that by protecting our energy and environmental security, we will enhance our national security as well.”

The contracts require the three companies to produce a total of 100 million gallons of drop-in biofuels every year, for use in military ships and jets. The contracts specify that Fulcrom BioEnergy (See September 5 SBFF), Red Rock Biofuels and Emerald Biofuels will begin production in 2016 and 2017 for a weighted average price of $3.45 a gallon, competitive with conventional military fuel pricing. This represents a major price improvement over a 2012 Naval contract for biofuels, which carried a price of $27 a gallon on 450,000 gallons. Each company will produce biofuels from different feedstocks; Fulcrom BioEnergy will use municipal waste; Red Rock Biofuels, woody biomass; and Emerald Biofuels, waste fats. Besides the contract, each company will also receive $70 million in government funding, which they are matching with more than $700 million in private sector funding (cumulatively).

The initiative is part of a 2011 presidential directive requiring the Departments of the Navy, Agriculture and Energy to invest up to $510 million from 2011 to 2014 in drop-in biofuels, to reduce U.S. dependence on foreign oil.  Navy Secretary Ray Mabus said this latest announcement was an important step toward his goal to power half the Navy with renewable energy sources by 2020. “This truly is a game-changer … this is going to make alternative fuels just the new normal,” Mabus commented. Officials added that as companies ramp up drop-in biofuel production, it will be incorporated into the Navy’s regular bulk fuel procurement.

 

Author: Laura Small

 

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