U.S. Navy Fuels "Green Strike Force" with $12 Million Biofuels Contract

"This purchase [is] an important vote of confidence for an industry that is developing drop-in biofuels at a national scale to supply our military with a more secure source of fuel, create jobs across the country, and provide consumers with an alternative to imported oil,” said Mary Rosenthal, executive director of the Algal Biomass Association, in a written statement.

Though the order fills only a small portion of the Navy’s daily use, 3.36 million gallons, the contract is an indicator of significant price decreases in the biofuels market. In October 2010, the Navy purchased 20,055 gallons on algae biofuel at $424 per gallon. And now, a year later, this $12 million order costs around $26.67 per gallon. The cost remains six to eight times as much as traditional fuels, but the short-term drop is encouraging.

“This is still research and development,” Mabus said during a teleconference. “It is half of what we were paying this time last year. It shows that as the market develops you’re going to see costs come down.”

The fuels will be mixed in a 50/50 blend of biofuel and traditional petroleum, which will cost around $15 per gallon. The Navy expects to use the fuel next summer during a demonstration at a Rim of the Pacific Exercise off the coast of Hawaii. According to Navy Secretary Ray Mabus, the Navy hopes to fuel an entire mission with the blend by 2016.

The Navy has pledged to use 50 percent fossil fuel alternatives by 2020, which equates to around 613 million gallons of biofuel each year.

“Just as the Navy went from sail to coal, coal to oil and pioneered nuclear in the 1950s, we are going to lead again by helping to establish a market for biofuels… It’s a major step for energy independence for the U.S. and for the U.S. Navy, to reduce our dependence on unstable sources of foreign energy, as well as preventing budget shocks that come from buying energy from volatile sources,” said Mabus.