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      03-27-2007, 11:02 PM   #35
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UPDATE: Air Force seeks commercial airlines' support in push for synfuels

The Air Force is calling on the commercial airline industry for help in its effort to commercialize high carbon dioxide-emitting coal-to-liquid (CTL) fuel refining, which military officials and other supporters say is needed to reduce dependence on foreign oil and lower fuel costs.

On March 8, Air Force Secretary Michael Wynne told the Air Force Energy Forum in Arlington, VA, that the service "will need support from the airlines" to increase the demand for synthetic fuel (synfuel) in the United States. "The buying power of the airlines, which constitutes approximately 85 percent of the market, will be important for the Air Force and the synfuel industry," he said in prepared remarks at the forum.

Wynne's call appears to acknowledge warnings by Defense Department officials last year that the military could not, by itself, help commercialize CTL technology.

DOD alone "cannot drive this marketplace" for the fuel, John Young, the department's director for defense research and engineering, said at a briefing last October, adding that at the moment "we're just not going to drive the market where the nation consumes 21 million barrels [of oil] a day. We can help jump-start companies but at the end of the day [DOD's daily consumption of] 340,000 barrels can't drive the marketplace."

The cost to build a synthetic fuel plant, such as one to convert coal to liquid fuel, is estimated to cost about $3 billion, with lawmakers from states with coal interests advocating legislative measures to ease industry's capitalization costs.

However, one energy policy observer who declined to be quoted by name for this article doubts that price-sensitive airlines will be willing to pay more for CTL and other synfuels than current market prices for oil and conventional fuels, arguing that low oil production costs in the Middle East will not likely allow CTL fuel prices to fall below the market price of petroleum anytime soon.

CTL fuels are especially controversial because many environmentalists say CTL refineries have higher carbon dioxide emissions than conventional refineries. While many CTL industry officials say they can capture and sequester CO2, DOD acquisition officials have suggested that sequestration could increase the cost of the fuel and are weighing how to factor costs imposed by future CO2 regulation into its synthetic fuel contracts.

Wynne conceded the "big issue" with CTL technology is sequestering the CO2 generated from the production of CTL fuels.

However, Wynne noted that commercializing the technology is essential if the Air Force is to meet its goal of using a domestically produced synthetic fuel blend to satisfy 50 percent of its aviation fuel needs for aircraft based in the United States by 2016. At the existing consumption rate, this would mean acquiring 325 million gallons of a 50/50 blend of synfuel and JP-8, he added.

The Air Force is accelerating its development and use of alternative fuels, Wynne said, stressing the current volatility of oil prices and the desire to have stable prices and "an assured source of fuel." The service is particularly interested in synthetic aviation fuel derived from coal. It is also eying aviation fuels derived from natural gas, oil shale, tar sands and biomass.

This goal does not apply to fuel consumed by the Air Force in its overseas operations. About 60 percent of the Air Force's aviation fuel consumption is in the United States, while the other 40 percent is overseas, according to an Air Force official. Overseas operations buy their fuel locally; transporting fuel from the United States to overseas operations would otherwise be "ridiculously high," the official adds.

Wynne said that in looking to lower reliance on imported oil, the Air Force's first step is to make its vehicles, aircraft and facilities more energy efficient. "Alternative and renewable fuels provide options that we are only beginning to discover," he said, noting that his service is the top purchaser of renewable energy in the country.

The Federal Aviation Administration is undertaking efforts to work with the airlines and airports to quickly test and certify synfuels, according to Wynne.

FAA Administrator Marion Blakey spoke to the forum following Wynne, calling the goal of 50 percent synfuel by 2016 "about as daring as it gets." But, Blakey added, "I want all of you to know that the commercial side will be right there with you" with respect to alternative fuels.

Critics say DOD's approach of encouraging development of fuel from coal, a non-renewable energy source, is misguided. Instead, DOD should focus on lowering demand, according to the energy policy observer.

With CTL, "no matter how you cut it," it will increase carbon intensity, the observer says. This source says the "low hanging fruit" in energy savings is in getting greater energy efficiencies in mobile weapon platforms -- something the source says DOD has not focused on.

In addition to encouraging development of CTL technologies, the Air Force may turn to a biomass-synthetic fuel mix to produce a cleaner fuel and help cut CO2 emissions. The Air Force is working with the Energy Department "to find the right mix of biomass and coal to reduce CO2 emissions starting with the feedstock," Wynne said.

While the Air Force is exploring CTL fuel, Wynne said "there is no 'silver bullet,'" noting it will take combined resources to meet energy needs. While a pure biomass product currently lacks the British thermal unit concentration needed for jet engine use, the Air Force is "working with DOE to study a mixed feed stock of biomass and coal that may result in a jet-quality fuel," Wynne said.

Such a fuel could yield political backing from farm and coal states. It "has the potential to unite the farm states and coal states," the secretary said.

Bush administration officials have labeled the effort to move away from a dependency on foreign oil a matter of national security. Wynne noted various examples of potential vulnerabilities regarding the U.S. dependence on foreign oil. But, he said, "I will leave the politics of oil and its impact on our economy to the White House and State Department. However, when it comes to defending our nation and the fuel required, we must offer the nation a hedge against a future that some discount, but none can take off the table. We must look for domestic sources of alternative fuels. We must hedge against being dependent upon imported oil."

Currently, the top country from which the United States imports its oil is Canada, followed by Saudi Arabia, Mexico and Venezuela, according to Wynne.

The volatile prices of oil in recent years have forced the Air Force to request from Congress supplemental appropriations to pay for increases in fuel costs, he said.

Fuel is about 80 percent of the Air Force's costs, according to the Air Force source. In fiscal year 2006, the Air Force spent $6.6 billion on aviation fuel, $1.6 billion more than it had budgeted for this item. In FY05, it was $1.4 billion over budget in aviation fuel costs.

"We could have paid for a supplier to build a dedicated coal, natural gas, or other derived fuel plant with this $3 billion in unbudgeted expense," Wynne said. "Maybe then we could have a predictable cost for fuel."

The Air Force plans to finish its testing and certification of synthetic fuels for aircraft by 2010, according to Wynne. The Air Force source notes too that synfuel production plants are being built overseas, so once aircraft are certified, the service could potentially fuel with synfuel overseas before the fuel is even available in the United States.

In addressing aviation fuel demand, the Air Force is replacing inefficient engines in aircraft. For instance, it has replaced engines in its KC-135Rs and is preparing for new engines in its C-5 fleet, Wynne said. Airframe changes also are expected to produce fuel efficiencies, he said.

Further, the service is looking at lowering loading weight in aircraft and to optimize air routing to save in fuel costs, the secretary said.

From Inside the Pentagon and USAF
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