RAND Van Winkle: an inside look at RAND's controversial survey of military alternative fuels

February 3, 2011 |

One week ago, the RAND organization published a report assaying and critiquing the military efforts to develop advanced biofuels – in particular focusing on Fisher-Tropsch renewable fuels, fuels from algae and fuels from oilseed crops.

The renewable fuels industry and the US Navy were, in particular, aghast at the report’s findings. In particular, the algal biofuels industry was incensed at the characterization of algal biofuels as “a research project” and a range of companies were miffed by findings that actively discouraged the military’s current activities in the development of diesel and jet fuel from biomass.

The origins of the report

According to a note sent by Growth Energy and BIO to RAND’s CEO this week, the RAND Corporation was “contracted by the Department of Defense to conduct “a study on alternatives to reduce the life cycle emissions of alternative and synthetic fuels,” under the Duncan Hunter National Defense Authorization Act for FY 2009 (PL 110–417). Among other items, this study was to examine:

“The goals and progress of the military departments related to the research, testing, and certification for use of alternative or synthetic fuels in military vehicles and aircraft;” and “An analysis of trends, levels of investment, and the development of refining capacity in the alternative or synthetic fuel industry capable of meeting fuel requirements for the Department of Defense.”

The controversies over the report

Primarily, the industry was incensed at the lack of contact between fuel producers and RAND. A large number of leading companies, and industry associations, reported that they had had no contact with the RAND report team.

BIO’s Jim Greenwood and Growth Energy’s General Wes Clark (Ret.) noted, “To date, none of the companies we represent who are involved in the production of alternative fuels for military testing and certification have been contacted for information on the levels of investment and the development of refining capacity. Some of these companies have delivered significant amounts of fuel for testing in aircraft and warships, meeting timelines established by the Department of Defense to acquire 50 percent of its energy from alternative sources by 2020.”

There have been allegations that the RAND team, either through naivete or deliberately, ignored projects with more near-term commercialization prospects.

A disquieting allegation was that the RAND team suppressed information favorable to advanced biofuels.

Another allegation was that the study, relating specifically to algae, was based on skimpy research.

There were also allegations that members of the RAND team were generally unfamiliar with the technologies, and lacking in sufficient experience to draw substantive conclusions.

There were also allegations that the report’s primary research had been concluded as much as 12 months prior to the release of the report, and that the conclusions were wildly out of date.

Finally, there have been allegations that the release of the report was timed with the release of the State of the Union speech and the commencement of a major campaign by advocates of clean coal, and in some way represented part of an attempt by the United States Air Force to defend as much as $1 billion spent on coal-to-liquids technologies by smearing the US Navy’s developmental efforts with renewable diesel and jet fuel from biomass.

The Digest has been investigating the development of the report, while some other industry analysts and researchers have examined the report itself, and its conclusions. There has also been a series of responses from industry.

In today’s report, we look at the allegations, as well as the critiques of the underlying report. We’ve had a chance to conduct interviews with US Navy personnel, advanced biofuels academics, commercial project developers, industry analysts, biofuels trade association leadership, and the principal author of the RAND report.

Are the allegations true?

1. RAND has confirmed that principal research on advanced biofuels was completed 12 months ago, and that the past year has been spent in detailed review and revision of RAND’s findings, primarily within the Pentagon, including working through “hundreds of comments” offered by various defense community stakeholders.

2. We have uncovered no evidence of an attempt by the United States Air Force to time the publication of the report with the State of the Union speech, and the launch of a clean coal campaign. We do note that all three did occur at the same time.

3. We have confirmed that the RAND research team did not interview any company that is currently producing advanced biofuels for sale to the US military on their technologies, developmental milestones or targets, production capacity, timelines for commercialization, cost structures, economies of scale, price of fuel and near- or mid-term price prospects, feedstock development strategies,  or yield enhancement strategies.

4. We have found no evidence that the RAND team was unqualified to undertake the work, though we note the commentary from John Benemann, generally regarded as the harshest critic of algal biofuels “hype” among professionals with background in the field, who wrote:

“No biofuels related research is quoted, unless a handful of telephone conversations, a few news stories and press releases, a couple of promotional company presentations, and one web site (of “Solarzyme” [sic]) are considered “research”. One exception are the papers by Fargione et al., 2008, and Searchinger et al., 2008, in Science, which started the indirect land use controversy, but they are hardly related to biofuels production itself. For algae, the only quote is to a review by Wijffles and Barbosa (Science 2010) focusing on photobioreactors, inapplicable for biofuels, and a “prospectus” for a 2009 Nexant study, (did they actually read it?)  Thus, there is no evidence from the literature citations that the authors have any knowledge about algae specifically or advanced biofuels in general, clearly reflecting their ignorance of this field, and disqualifies this study from any serious consideration.  However, they are to be commended on their honesty in not weighing down their reference list with a lot of publications they have not read.  At least we know what they don’t know, which is essentially anything related to advanced, or any, biofuels.”

In particular, we note the failure of RAND to distinguish between the heterotrophic algal biofuels being purchased by the Navy, and the photoautotrophic algal biofuels, which it investigated in the report. Bottom line, as far as assaying the near-term prospects for algal biofuels for military applications, they reported on the wrong type of algae.

5. We have not been able to confirm any specific instance in which a favorable fact regarding advanced biofuels was unfairly excluded from the report, though we note that RAND made curious choices in its handling of excerpting from the Nextant study on the promise algal biofuels that open it to this sort of criticism.

Our take:

We can certainly see where the conspiracy theorems came from on this one, and we certainly heard a lot about the allegations around the Digest offices. But we are not seeing direct evidence that the report reflects a Navy-Air Force tussle over biomass-based vs coal-based fuels, or that the report is no more than a “CYA” effort by the Air Force designed to distract attention from the issues surrounding CTL technologies. Though those are entertaining theories, and we may come back to that in a later report.
We want to focus our attention on advanced biofuels.

However, we found that expert opinion regards the report, with respect to advanced biofuels, poorly researched, and out of date.

Benemann writes: “It is impossible to further comment on this report, in regards to advanced biofuels in general or algae in particular, as it lacks any shred of substance.  Stating, over and over and over again, that there are “uncertainties regarding production potential and commercial viability, especially affordability and lifecycle greenhouse gas emissions”, is just stating the obvious, if there were no uncertainties there would be no need for the DOD to support the research it is doing.  Saying, over and over again, that biofuel technologies generally, and algae in particular are “early stage” and will not happen this decade, is equally specious, nothing, not F/T, not nuclear, not electrification of transport (freeing up oil resources for the military, another suggestion made here) will happen this decade to any significant extent (if significant is producing, for example, 10% of the fuel requirements of the military).”

The RAND Report and its findings

Shoddy research does not necessarily mean, in itself, that the report drew unfair or inaccurate conclusions. Let’s look at those.

Fischer-Tropsch fuels are the most promising near-term options for meeting the Department of Defense’s needs cleanly and affordably.

The Digest comments: “The question, at the end of the day, is not what the industry produced today, or in 2009, but whether it can support the volumetric requirements offered by the Defense Logistics Agency for support of the Green Strike Fleet by 2012, and the overall military targets, such as the Navy has outlined, for 50 percent use of alternative fuels in the fleet by 2016.

“The guidance on price and timelines from numerous quarters in the industry – whether it is the camelina-based fuels offered by Targeted Growth, the jatropha-based fuels from the varietals offered by SG Biofuels, or the renewable oils from algae produced by the likes of Solazyme and BioProcess Algae, are certainly matching up with the defense community’s buying program. Since the RAND report did not audit or investigate those claims, we find this an unsupportable conclusion – but the military would benefit from a third-party report that, in fact, does look at this question and offer a more credible set of conclusions.

“We may come back to the topic of RAND’s conclusions on the feasibility and timelines of CTL technologies at a later date. ”

It is highly uncertain whether appreciable amounts of hydrotreated renewable oils can be affordably and cleanly produced within the United States or abroad.

The Digest comments: “See above, with respect to jatropha and camelina-based fuels. The guidance we are seeing from, for example, SG Biofuels, points to $1.40 per gallon jatropha oil well within the timeframes of DLA’s buying program, and those claims can be audited and rated by a third-party, if such a report were desired by Congress or the DLA.”

Concepts for forward-based alternative fuel production do not offer a military advantage.

The Digest comments: “We think RAND is way wrong on this one, although we believe the problem stems from the well-established tendency to fight the last war. RAND, in its work, interviewed officers with recent field experience, who confirmed to them the impractical nature of producing fuels in forward areas such as they were familiar with, and relying on local communities to supply biomass.

Pearl Harbor, Hawaii - home of the Pearl Harbor-Hickam naval and air forces base - is more than 2,000 miles from the nearest source of fossil fuels for military operations

“RAND appears to have considered that the only form of biofuels production in a forward area is some version of a hastily-erected biomass conversion facility somewhere in Wakiristan, supplied with biomass by Taliban-leaning poppy growers bringing in feedstock on donkeys.

“We believe that the US military is rightly looking beyond what constitutes a forward military area in 2011 – such as Afghanistan or Iraq – and considering, for example, the problem of supplying island bases with fuels, or operating under siege or blockade conditions. In those conditions, keeping local fuel resources producing can confer advantages.

“Pearl Harbor was a forward military area in 1942. The leafy landscapes of the Tiergarten in Berlin became a forward military area in 1948 with the blockade of Berlin.

“The act of continually supplying Henderson Field with aviation fuels at Guadalcanal – denied control of airspace to the Japanese, and restricted their ability to build up forces in the Solomons, leading to the end of their 1941-43 offensive and marked the turning point of the Pacific Theater in the Second World War. The fleet oilers very nearly did not get through.”

Defense Department goals for alternative fuels in tactical weapon systems should be based on potential national benefits, since the use of alternative, rather than petroleum-derived, fuels offers no direct military benefits.

The Digest comments: “See above.”

Current efforts by the services to test and certify alternative fuels are far outpacing commercial development.

The Digest comments: “RAND certainly states the obvious to note that the military is focused on testing and certification. We have suggested, and will continue to suggest, that the Navy would do more to advance its efforts by committing towards a capital program for biofuels production, by supporting the capital costs of between one and three commercial-scale biofuels facilities – that would assure the lowest cost of capital for the military and provide some assurance that scaled development would meet military timelines.

“Better to invest in supply, than simply to “wish hard” and buy fuels from the lowest cost supplier in 2016. It would be an embarrassment all around – and likely a national scandal – if the Navy is forced to buy fuels for its 2016 targets, from companies using leased fermenters, or pilot- and demonstration-scale facilities, because they simply could not hedge out enough technology risk to satisfy prospective lenders, in these nefarious economic times.”

Within the United States, the prospects for commercial production of alternative fuels that have military applications remain highly uncertain, especially over the next decade.

The Digest comments: “As Benemann states, stating the uncertainties is simply stating the obvious. The prospects for the Yankees to win the World Series in 2017 are highly uncertain. Lots of things in the next decade are highly uncertain. The real questions are to what extent can those uncertainties be reduced through action, and to what extent does that action satisfy national priorities.”

Ethanol and biodiesel are unsuitable for use in weapon systems. They pose a severe safety risk, reduce performance, unduly complicate fuel delivery and storage, and generate maintenance problems.

The Digest comments:: “Is anyone, anywhere, talking about putting ethanol into ships or jets?”

The Bottom Line:

We think the renewable fuels industry should chill just a little bit on the conspiracy theorems, though we can see where the nervousness stems from. But we do suggest that Congress should reject the report, get its money back, re-do the work and this time effectively survey the folk who propose to produce the fuel.

Read the Bio and Growth Energy letter to RAND.

The Digest hereby decrees:

For putting out a skimpy product on the public dime, we hereby sentence the RAND team to a close read of volume five of Admiral Morison’s History of United States Naval Operations in World War II (The Struggle for Guadalcanal, August 1942 – February 1943).

For making the Digest stay up late to clear our in-box of all the backchatter over the report’s findings, and overlooking the military value of diversified fuel supplies in mitigating the impact of blockade, we also sentence RAND to an excerpt from “Rammers, Raiders and Runners: Confederate Naval Operations, 1861-65” by Digest editor Jim Lane. (Other Digest readers are hereby exempted from the text that follows):

The perils of supply from across the seas – from “Rammers, Raiders and Runners

“The South survived the total blockade, after the loss of Wilmington, its last deep-water port, by just three months. Robert E. Lee found himself in the vicinity of Appomattox Court House, because he was trying to reach supplies. It was his failure to reach those supplies, and the hopelessness of finding any more, that caused him to make his appointment to see General Grant and bring the war to an effective end. He surrendered not in defeat but in starvation.

The steamer Nashville running the Union blockade at Beaufort, North Carolina in 1862

“The great river highways of the old South – the James, the Santee, the Broad, the Colleton, the Savannah, the Suwanee, the Chattahoochie and the Alabama – never intersect. In the days before the War when railroads were rare and roads were unspeakable, everything flowed to and from the Southern heartland through the ports. Large commercial fleets from England and New England typically carried the trade, and in peacetime it made perfect sense.

“In war time it was a disaster. When its ports were blockaded, the South not only lost its means to import war materiel from Europe, it had almost no way to move food or fuel from one section to another. In peacetime, a ship from Charleston could reach Savannah overnight and a bushel of rice grown along the Santee could reach Augusta, Georgia in less than a week. In war, Savannah and Charleston were connected only by a single railroad line through Tennessee and Atlanta, a 600-mile journey that was perilous in the best of times, and finally cut altogether in early 1864. A bag of rice from the Santee could take a year to reach Augusta, if it reached there at all.

“All of the leaders of the Confederacy were planters and soldiers who understood nothing about naval strategy. Even the Secretary of the Navy himself, Stephen Mallory – had never served a single day in a single ship prior to his appointment. This is the tragedy of the South, the fatal flaw, the blind eye:  they needed to win the naval war, but instead they tried to win a land war.

“Even the genius of Robert E. Lee failed him when it came to understanding the need to break the blockade. After the fall of Norfolk in 1862, rather than re-doubling the efforts of the navy to re-open the James River, Lee himself agitated successfully for naval personnel to be transferred out of the James River Squadron and into land duty with the Army of Northern Virginia. He paid the price in 1865, when his supply lines were cut and he was forced to abandon Petersburg, despite the fact that Petersburg was on the Appomattox River, with clear navigation downstream to the James, and less than 70 miles from the open Atlantic and a clear shot at the overflowing wharves of Europe. The Appomattox should have been his salvation. Instead, it has become a byword for his defeat. ”

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