Observations on DOD's Investments in Alternative Fuels
Government Accountability Office
July 27, 2015
What GAO Found
The Department of Defense (DOD) has purchased small quantities of
alternative fuels—jet and naval distillate (known as F-76, to power
ships)—for testing and demonstration purposes, but has not done so yet
for military operations. DOD's testing process validates the ability of
alternative fuels to meet safety, performance, and reliability standards
for military equipment and platforms. From fiscal years 2007 through
2014, DOD purchased about 2.0 million gallons of alternative fuel for
testing purposes, at a cost of about $58.6 million. Over the same
period, it purchased about 32.0 billion gallons of petroleum fuel at a
cost of about $107.2 billion. DOD has approved alternative fuels made
from two production processes for use in certain items and is continuing
to test others.
DOD Alternative and Conventional Fuel Purchases from Fiscal Years 2007 through 2014
Note: The alternative fuel amounts include: Jet Propellant-8, Jet
Propellant-5, and Naval Distillate. The alternative fuel cost is only
the cost of fuel. The conventional fuel amounts include: Jet
Propellant-8, Jet Propellant-5, Jet A, Jet A-1, and Naval Distillate.
The conventional fuel cost reflects both fuel and non-product costs. All
costs have been adjusted for inflation to fiscal year 2015 dollars.
DOD is currently required by law to ensure alternative fuel purchases
for operational purposes are cost-competitive with conventional fuels
and has a standard process to purchase large-scale volumes of all fuels.
Proposals are evaluated according to technical acceptability and price.
To help the Navy purchase alternative jet and naval distillate fuels
blended with conventional fuels, the Department of Agriculture plans to
provide funding directly to alternative fuel vendors that meet certain
requirements and receive awards from DOD. These funds are intended to
defray some of the alternative fuel producer's extra costs—such as costs
of domestic feedstocks. Per DOD, no alternative fuel vendors have
received awards so none of these funds have been paid out yet.
DOD has used financial incentives provided for by Title III of the
Defense Production Act (DPA) to help facilitate the development of
commercially viable plants for producing biofuels for the military and
commercial sectors. To date, DOD has used this authority for two ongoing
projects: Bio-Synthetic Paraffinic Kerosene and Advanced Drop-In
Biofuels Production Project and the federal government's cost share for
these projects was about $234.1 million.
Why GAO Did This Study
DOD is the single largest consumer of energy in the federal government,
spending billions of dollars annually on petroleum fuels to support
military operations. One of DOD's strategic operational energy goals is
to expand its energy supply options. Investing in alternative
fuels—liquid fuels, derived from non-petroleum feedstocks, whose use
does not necessitate any modifications to platforms and
equipment—represents one means of potentially achieving this goal.
GAO was asked to examine aspects of DOD's investment in alternative
fuels. GAO reviewed the extent to which DOD (1) has purchased
alternative fuels, and has demonstrated these fuels can meet its safety,
performance, and reliability standards; (2) has a process for
purchasing alternative fuels for military operations that takes into
consideration any cost differences between alternative and conventional
fuels; and (3) has used the DPA authorities to promote the development
of a domestic biofuel industry.
GAO reviewed past alternative and conventional petroleum fuel
procurements, as well as statutes, regulations, and DOD guidance related
to fuel purchases. Also, GAO reviewed various documents on biofuel
projects initiated under the DPA authority and interviewed cognizant DOD
officials involved with purchasing and using fuel and administering the
GAO is not making recommendations in this report. DOD provided
technical comments on the findings, which GAO has incorporated where
For the original highlights page and a link to the full report, go to
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