Navy exercise with biofuels raises stakes in budget debate

"One of the things we've always said is that we're not going to buy large amounts of these until they're cost competitive. But, one of the ways they become cost competitive is by the military providing a market for it," he added.

A key congressional opponent of military's purchase of biofuels, Sen. John McCain, R-Ariz., dismissed the two-day exercise as the latest step in a larger "mistake" by the Navy to use its resources to advance biofuel development.

McCain, the top Republican on the Senate Armed Services Committee, included language in the Senate's annual defense authorization bill that would prohibit Pentagon purchases of alternative fuels that cost more than conventional fuels. It would also prohibit military construction of biofuels production facilities. The bill is awaiting action on the Senate floor.

"The reason the Army and the Air Force did not take part in this boondoggle is that they felt, as we do, that it's a job for the Department of Energy, not the department of the Navy," he said. "This is the cost of a destroyer. I'd rather have the destroyer and let the Department of Energy develop the alternative fuels," McCain added.

The maneuvers by a Navy carrier strike group, in which ships and aircraft were powered by fuel blends that included 450,000 gallons of biofuels derived from algae and used cooking oil, were part of the Rim of the Pacific Exercise.

McCain and Sen. James Inhofe, R-Okla., who has joined with him on the defense bill prohibition, have noted that the $12 million Navy purchase of the biofuels for the exercise came out to $27 per gallon. They note that the total cost to run the strike group on biofuels by 2016 would cost about $1.8 billion more per year compared to conventional fuel.

The development of lower-cost production of biofuels through the military has been a priority of President Barack Obama and Mabus, who contends that the Navy can lower its vulnerability to world oil price swings through greater use of domestic energy sources.

Deputy Assistant to the President for Energy and Climate Change Heather Zichal did not mention McCain by name during the news conference call with Mabus. She nonetheless chided him and other opponents of military biofuels.

"We view the efforts by some in Congress to undermine the military's ability to invest in alternative fuels as both disappointing and shortsighted. I believe that this successful demonstration by the 'Great Green Fleet' should help Congress better understand the tremendous opportunity we have with biofuels to help power our Navy, mitigate key military vulnerabilities and lead the world," Zichal said.

The president of the Advanced Biofuels Association, Mike McAdams, who attended the exercises with Mabus, said the demonstration added momentum for biofuels supporters to address the McCain language on the Senate floor.

"They had confidence that speaks volumes," McAdams said, referring to the sailors and pilots who used the biofuels. "It makes it a much better debate on the Senate floor," he added.

Agriculture Secretary Tom Vilsack said the next step is for the creation of an industry that produce non-food military-grade biofuels at much lower prices. His department, the Energy Department and the Navy have made $30 million available to companies willing to set up pilot projects that advance lower cost military fuel production, under the Defense Production Act.

Solicitations have been requested from companies for the first stage of the project with selections to be made this fall, Vilsack said.