It appears that the Obama Administration is close to formally announcing a nominee for the Department of Defense (DOD) Director of Operational Energy Plans and Programs. The Director of this office will have the opportunity to significantly impact the energy security for our military and the entire country, which makes swift confirmation by the Senate all the more important.
The DOD energy director position was created by the Duncan Hunter National Defense Authorization Act of 2009 and was signed into law on October 14, 2008. In creating this new office, Congress intended for the military, the largest energy consumer in the federal government, to lead by example as it has in the past on many social and technological fronts. Though both parties continue to rail against our dependence on foreign oil, Sharon Burke of CNAS was nominated in 2009 for the position, but still awaits Senate confirmation.
With more than 28 million acres of land and 1.9 billion square feet of buildings occupied by the military across the country, many in renewable energy rich environments, there is a tremendous untapped resource for our country to become more energy secure. These projects include the full-gamut of energy resources from solar, wind, geothermal, and waste-to-energy.
The military’s energy security projects will be highly dependent upon the private sector for financing and development because there is no new money budgeted for energy security. The unfunded federal mandates for energy efficiency, renewable energy, and alternative fuels are coming out of current military budgets during a time of war. In this respect, the private sector will have an excellent opportunity to provide a critical financing bridge through the use of public/private ventures or partnerships. In just the past two years, private sector companies have made possible the 14Mw solar project at Nellis Air Force Base, Nev. and the planned 500Mw solar thermal project at Fort Irwin, Calif.
For ambitious energy security goals to be attained, future energy projects need to be more attractive to the private sector, which means the reduction of risk and delays inherent to our budget, energy, and environmental regulatory system. DOD’s new energy director will have the opportunity to address these impediments to enhance private sector financing of future military energy projects. By doing so, the military will become more energy secure and the nation will benefit from the new jobs and businesses created, and the renewable energy added to the grid.
The major issues that merit immediate attention are:
- Define “Energy Security” and what it is worth to the military and fund it. The DOD budget is facing pressure from all sides; the ability to implement energy security programs for installations or efficiency Key Performance Parameters for tactical equipment acquisition will become secondary when weighed against “higher mission critical priorities.”
- Establish long-term contracting authority for domestically produced synthetic or alternative fuels. This authority would enable the Defense Energy Support Center to contract with the private sector for clean, synthetic or alternative fuels; and, for industry to finance the construction of plants with favorable financing. (Current law limits DESC to five-year contract authority with five, one-year options.)
- Review and modification of the Office of Management and Budget (OMB) scoring of energy projects on military bases. Since the 1990’s OMB has required long-term government contracts to be paid, for the full amount, in the year of execution. This makes long-term contracts for renewable energy projects difficult to develop on military bases. Enabling the military to contract with the private sector for renewable or alternative energy projects that are budgeted and funded over the life of the contract would greatly expedite job creation and the growth of clean energy.
- DOD needs to work with Congress and Department of Energy (DOE) to have “Energy Policy Credits” awarded to the military in place of Renewable Energy Credits (RECs). There is a value associated with the ownership of RECs that the private sector needs to make projects financially feasible. REC ownership also is used by DOE to determine if a federal department is meeting renewable energy goals. Since the economic value of the REC remains with the private sector financier of the project, the military also should receive credit towards meeting renewable energy goals. This legislative or regulatory fix may impact how carbon credits are accounted for in the future.
- DOD should establish an energy savings fund that allows for installations to share in the savings generated by more energy efficient operations. The Navy has a program that benchmarks the energy consumption of non-nuclear ships on an annual basis. Captains who operate their ships in an energy efficient manner can meet or beat the fuel consumption benchmark and become eligible for an “energy bonus” that comes back as additional “quality of life” funds for the ship.
The new DOD energy director must recognize and appreciate our war fighters for making the ultimate commitment and who now are challenged to make the military more energy secure. By resolving these project financing impediments the director will provide the military with the opportunity to once again lead our nation in a new direction of energy self-sufficiency.
Paul P. Bollinger Jr. was the first Deputy Assistant Secretary of the Army for Energy and Partnerships; and, the former Special Assistant to the Senior Energy Executive in the Air Force during President George W. Bush’s Administration. He is an Adjunct Energy Fellow at the National Defense University.