[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]
[H.A.S.C. No. 112-128]
WHAT IS THE PRICE OF ENERGY
SECURITY: FROM BATTLEFIELDS
TO BASES
__________
HEARING
BEFORE THE
SUBCOMMITTEE ON READINESS
OF THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
HEARING HELD
MARCH 29, 2012
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SUBCOMMITTEE ON READINESS
J. RANDY FORBES, Virginia, Chairman
MIKE ROGERS, Alabama MADELEINE Z. BORDALLO, Guam
JOE HECK, Nevada SILVESTRE REYES, Texas
AUSTIN SCOTT, Georgia JOE COURTNEY, Connecticut
FRANK A. LoBIONDO, New Jersey DAVE LOEBSACK, Iowa
CHRIS GIBSON, New York LARRY KISSELL, North Carolina
VICKY HARTZLER, Missouri BILL OWENS, New York
BOBBY SCHILLING, Illinois TIM RYAN, Ohio
JON RUNYAN, New Jersey COLLEEN HANABUSA, Hawaii
TIM GRIFFIN, Arkansas JACKIE SPEIER, California
STEVEN PALAZZO, Mississippi
MARTHA ROBY, Alabama
Jamie Lynch, Professional Staff Member
Debra Wada, Professional Staff Member
Nicholas Rodman, Staff Assistant
C O N T E N T S
----------
CHRONOLOGICAL LIST OF HEARINGS
2012
Page
Hearing:
Thursday, March 29, 2012, What Is the Price of Energy Security:
From Battlefields to Bases..................................... 1
Appendix:
Thursday, March 29, 2012......................................... 43
----------
THURSDAY, MARCH 29, 2012
WHAT IS THE PRICE OF ENERGY SECURITY: FROM BATTLEFIELDS TO BASES
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Bordallo, Hon. Madeleine Z., a Delegate from Guam, Ranking
Member, Subcommittee on Readiness.............................. 4
Forbes, Hon. J. Randy, a Representative from Virginia, Chairman,
Subcommittee on Readiness...................................... 1
WITNESSES
Burke, Hon. Sharon, Assistant Secretary of Defense for
Operational Energy, U.S. Department of Defense................. 6
Hammack, Hon. Katherine, Assistant Secretary of the Army,
Installations, Energy and Environment.......................... 11
Pfannenstiel, Hon. Jackalyne, Assistant Secretary of the Navy,
Energy, Installations and Environment.......................... 13
Robyn, Dr. Dorothy, Deputy Under Secretary of Defense for
Installations and Environment, U.S. Department of Defense...... 8
Yonkers, Hon. Terry, Assistant Secretary of the Air Force,
Installations, Environment and Logistics....................... 14
APPENDIX
Prepared Statements:
Burke, Hon. Sharon........................................... 54
Forbes, Hon. J. Randy........................................ 47
Hammack, Hon. Katherine...................................... 79
Pfannenstiel, Hon. Jackalyne................................. 97
Robyn, Dr. Dorothy........................................... 62
Yonkers, Hon. Terry.......................................... 108
Documents Submitted for the Record:
Letter from Operation Free to Hon. Silvestre Reyes........... 129
Testimony for the Record of the Hearing Submitted by Senator
John Warner................................................ 130
Witness Responses to Questions Asked During the Hearing:
Mr. Forbes................................................... 135
Questions Submitted by Members Post Hearing:
Mr. Bartlett................................................. 166
Ms. Bordallo................................................. 148
Mr. Forbes................................................... 139
Mr. Kissell.................................................. 163
Mr. Palazzo.................................................. 154
Mr. Reyes.................................................... 160
Mrs. Roby.................................................... 162
WHAT IS THE PRICE OF ENERGY SECURITY: FROM BATTLEFIELDS TO BASES
----------
House of Representatives,
Committee on Armed Services,
Subcommittee on Readiness,
Washington, DC, Thursday, March 29, 2012.
The subcommittee met, pursuant to call, at 12:07 p.m. in
room 2212, Rayburn House Office Building, Hon. J. Randy Forbes
(chairman of the subcommittee) presiding.
OPENING STATEMENT OF HON. J. RANDY FORBES, A REPRESENTATIVE
FROM VIRGINIA, CHAIRMAN, SUBCOMMITTEE ON READINESS
Mr. Forbes. We are going to get started. And I want to,
first of all, thank you for your patience in putting up with us
through this vote series that we just had, and also any that
may come up as we go through today. It is a necessary part of
the process here, and you all are well aware of it.
I am going to do something a little bit different today.
Instead of some prepared remarks, I want to start off by
introducing our panel members.
We have with us the Honorable Sharon Burke, the first
Assistant Secretary of Defense for Operational Energy Plans and
Programs. We also have Dr. Dorothy Robyn, the Deputy Under
Secretary of Defense for Installations and Environment; the
Honorable Katherine Hammack, Assistant Secretary of the Army
for Installations, Energy and the Environment; the Honorable
Jackalyne Pfannenstiel, Assistant Secretary of the Navy for
Energy, Installations and Environment; and the Honorable Terry
Yonkers, Assistant Secretary of the Air Force for
Installations, Environment and Logistics; Commander, Naval Air
Systems Command.
I want to say at the outset, Terry, you are going to have
to hold up your end because you have got a lot of ladies here
today that outnumber you on that panel in there.
But I want to start by thanking each of you, not just for
being here, but for the service that you give to our country.
And also something even more. You know, a few years ago it
seemed like when we would look over at the Department of
Defense it looked like they had kind of pulled the drapes shut,
they had disconnected the phones and locked the doors, and we
couldn't get any information on so many issues.
And to the person, you all have been so wonderful in being
willing to come over and talk to us about some very difficult,
sometime controversial, issues. And I want to just tell you how
much we appreciate you doing that. And also we know how much
you have on your plate. You have got a lot to carry. And all of
you have a great deal to brag about in what you have done in
terms of energy. And we want to hear some of that from you
today.
I told many of you personally I wish that we could have a
hearing on nothing but all the good things that we could have
each of you tell because it is a wonderful story. But, you
know, we don't have that in the amount of time that we have.
One of the things that I also would like to tell you is
this. Privately, all of you have shared with us the importance
of bringing the private sector in as partners in everything
that you are doing, and I think that is exciting. I think we
also realize that is important to do.
We realize also that your biggest investors are the
taxpayers across the Commonwealth of Virginia. And like it or
not--or not Virginia, but the country--for me it is Virginia,
for Madeleine it is Guam, and other different localities--but
corporately, the country.
And one of the things that we try to do in this hearing is,
like any other good investor, we try to justify why we are
investing in the things that we do. And sometimes it is just a
matter of scratching our head and say, ``What are the facts,
and how we can get those facts?''
And just because one investment is good doesn't mean they
are all good. And so we have to constantly do that due
diligence role, and we appreciate you helping us do that today.
The other thing I realize is that a lot of these things you
just happen to be the card holder. You didn't get to dictate
the cards you have to play with. You come in here and you have
got a lot on your plate to have to deal with.
So I want to, if I can, also put up a couple of charts and
kind of tell you where I think we are today.
And, Nicholas, can we get those put up, when you can?
[Start slideshow.]
Mr. Forbes. The first thing is, why are we here? A lot of
different reasons. But the big thing are these two gaps. And
the only thing these numbers represent, it shows how volatile
energy prices are. We see back in I think it is 2005, you know,
what a gallon of gas was. We know it spiked up in June of 2008,
and we see where they are today. And also what electricity
costs are. And you guys have to live with that.
And, you know, that is a big thing. And that is something
that anybody watching this hearing at home understands and
knows.
And Nicholas, if we could go to the next chart.
This is the other big reason we are here. You guys jointly
sit on a lot of expenditures for energy, about $19.4 billion.
Seventy-nine percent of that, or $15.3 billion of it, is
operational; and 21 percent of it, 4.1 percent of it, is
facilities energy. We tend to sometimes blend them all
together. We know they are two different stacks. We want to
look at them. But corporately, they come together. That is the
big-picture item that we are looking at.
Then if we could flip to this next chart. As I mentioned
earlier, we are representatives of the investors across
America, hardworking taxpayers. And our role is to do due
diligence. And when we look across the spectrum of not what we
are consuming, but what we are investing in, in the Department
of Energy, that chart looks a little confusing to anybody that
looks at it. It is confusing. It is so many different things we
are investing in.
And it is very difficult for us, as a Congress, to get our
hands around how much we are investing in all these programs
and where they are. So part of what we have to do--we won't do
all that today--but through our written questions to you and
your continued dialogue with us, is finding out what that
dollar amount is so that we can justify that to the true
investors, the taxpayers across America.
And then one last chart. When we talk about energy, we
sometimes tend to be like a ``Casablanca'' movie, where at the
end we say, ``Round up all the usual suspects.''
We bring in a number of different things, and it is kind of
rotational. If you say, ``Why are we doing this investment?''
first thing we do is round up all the usual suspects. But if
one of those don't justify the investment, we kind of spin off
to the other one.
But as I have listed to you and pulled off these
justifications, they normally come down to about four. And if
you want to add another one to it, you are the experts. We
would love to hear from you.
[End slideshow.]
But the first one and the top one of all them is this
volatility of fuel prices. I mean, they are going up and down
and all over. And somehow or other we have to get a peg on
that. The second one is the safety of the warfighter. And by
that we mean--and I think some of you have correctly said
that--if we are having to logistically carry fuel, that puts
somebody at risk. And Secretary Hammack, you have talked about
that quite a bit.
And so one of the things we look at is safety to the
warfighter by having less fuel consumption so they have less
that they have to distribute. Third thing is being just good
environmental stewards, and we all certainly want to do that.
And then the final thing is the flexibility of the warfighter.
And by that, I mean can they fight an extra month with the
resources they have, can they fight an extra hour in the air.
All that is important.
And so today, as we look at these investments, one of the
things we will try to do is peg which one of these categories
we are trying to accomplish by the investment and what is the
premium we are willing to pay to get that.
I would like to ask unanimous consent for me to put my
written comments in the record. And without objection, we will
so order that. In addition to that, we had a request by Senator
John Warner, former Senator John Warner, a member of the
Senate, chairman of the Senate Armed Services Committee.
[The information referred to can be found in the Appendix
on page 130.]
Mr. Forbes. And one of the things, Senator Warner has
always been a great friend of mine. He is an icon. We all
respect him tremendously. And when Senator Warner wants
anything put in the record, I am willing to put it in the
record. So I just want to make sure we have no objection to
that and, without objection, we are going to put that in the
record, as well.
And now I would like to turn to my good friend, Ms.
Bordallo from Guam, for any comments that she might have.
[The prepared statement of Mr. Forbes can be found in the
Appendix on page 47.]
STATEMENT OF HON. MADELEINE Z. BORDALLO, A DELEGATE FROM GUAM,
RANKING MEMBER, SUBCOMMITTEE ON READINESS
Ms. Bordallo. Thank you very much, Mr. Chairman, and to all
our witnesses I thank you for your testimony. And welcome back,
Ms. Burke--a special welcome--as I think this is the first time
you have testified before our committee. And Mr. Chairman, I
think we are in good shape with all the women as witnesses
today. Of course, I know that the Honorable Yonkers will hold
his own. Yes.
I appreciate that Chairman Forbes has called the hearing on
this important topic. Energy security is critical to the future
of our military and our economy in the long run. Over the next
three decades, the United States Department of Energy expects
energy consumption to increase by 53 percent, which will create
additional challenges and concerns to our economy and
especially to our military.
The Department of Defense accounts for approximately 80
percent of all Federal energy consumption, including both
installation and operational energy needs. For example, energy
costs increased about 25 percent from fiscal year 2010 to
fiscal year 2011, yet consumption has declined. A significant
factor in this increase was due to fuel costs.
At a time of austere budgets, we need to make important
investments in energy so that we can stabilize energy costs
within the Department of Defense and allow those savings to be
put back to supporting our warfighter in modernization,
training, or other priorities.
It is important that we manage this endeavor for energy
security wisely. We must be careful in how and where we invest
the taxpayers dollars to ensure that our investments in energy
security pay dividends in the long run. I do appreciate that in
this fiscally constrained time that the Department of Defense
is going to rely heavily on third-party financing for a lot of
these energy investments over the coming years.
Over the next 5 years, there will be $2.4 billion in third-
party investments for facility energy programs. Without
significant third-party investment, it would be difficult for
the Department of Defense to achieve the fiscal year 2015 goal
of a 30-percent reduction in energy intensity. So I do hope our
witnesses today will elaborate on the nature of these third-
party investments and outline what authorities may be necessary
to ensure the third-party investments are successful.
The Department of Defense recently issued an operational
energy implementation plan. The plan will focus on three core
priorities. And part of achieving these core priorities will
require better measurement of consumption. Further, meeting
these core priorities will also require tremendous coordination
within the Department of Defense.
While I appreciate that each individual Service has unique
requirements and different ways of supporting the warfight, it
is imperative that implementation of this operational energy
plan is done so effectively. Unlike operational energy, there
is no comprehensive plan for reducing energy intensity to meet
statutory requirements in a reduction of energy consumption by
30 percent in 2015 from the baseline energy consumption in
2003.
However, I do hope our witnesses can elaborate on how
installation energy demand will be reduced across the
Department of Defense in a coordinated fashion. While the goals
are clear, the most efficient way to reach that goal is through
a coordinated effort amongst all of the Services and
installation commands.
In particular, I would like to highlight the Navy's
approach to these energy matters. In approaching energy
investments, the Navy looks at the full spectrum of potential
benefits from energy programs, to include meeting certain other
regulatory requirements or the sale of energy to the civilian
power grid. I believe this type of holistic approach is the
type of out-of-the-box thinking that will help the Department
in a variety of ways in the long run.
In assessing where to put investment in energy, it is
important to look at the matter as more than just a simple
equation. While it is important to quantify the monetary
benefit of certain investments, there are also other tangible
benefits of certain investments. For example, if a certain
energy project helps the Navy meet EPA [U.S. Environmental
Protection Agency] regulations, the monetary benefit may be
hard to quantify. But compliance is a significant value added
to the project. So I do hope that this type of thinking can be
looked at as a model for implementation Department-wide.
This hearing comes at an important time. We must continue
to make smart investments to reduce our energy consumption
because it is a matter of national security. Stabilizing energy
costs will help us invest in necessary modernization, training
and sustainment of assets. We must have a coordinated strategy
so we make smart investments. But these investments must be
made, or we will fall behind in this important endeavor.
So, Mr. Chairman, I again thank you for holding this
hearing. And I look forward to our witnesses' testimony and to
our question-and-answer period. Thank you.
Mr. Forbes. Well, thank you, Madeleine. Thank you for your
hard work and those remarks.
And as we discussed prior to the hearing, I ask unanimous
consent that it be made an order to depart from regular order
so that members may ask questions that follow train of thought
from the proceeding member. I think this will provide a
roundtable-type forum and will enhance the dialogue on these
very important issues. So without objection, that is so
ordered.
As we turn to the witnesses for their opening remarks, I
would like to ask each of you to take this opportunity to
highlight the good things you have done in the energy arena.
And as I mentioned, you can't do that in a few minutes. We know
that. So that is why we say highlight.
But I also welcome you to put anything else in the record
you want, and certainly your written statements will be made a
part of the record. So I want you to realize that is going to
happen.
And also to talk about any of the good work that needs to
be done in the future. But then we look forward into delving
into some of the more detailed discussions and specific areas
we would like to scrutinize for the proposed investments the
Department of Energy seeks to make.
Ms. Burke, I would ask that you lead and follow in the
order that you are in, but if you have any additional order
that is up to you. And as I have mentioned to each of you
outside of the hearing, if you need to clarify any of your
comments, statements, just let me know. We want to give you
time to do that. In the end, I am going to come back and ask if
there is anything you want to get into the record.
Final thing I am going to tell you as we start, oftentimes
we will submit written questions that members have. This is one
of those hearings. Those written questions are very important
because we just don't have the time to get all the questions
in. We will be submitting those to you, and if you don't mind
try to get back to us so we can make those a part of the
record.
And with that, Ms. Burke, we will look forward to your
comments.
STATEMENT OF HON. SHARON BURKE, ASSISTANT SECRETARY OF DEFENSE
FOR OPERATIONAL ENERGY, U.S. DEPARTMENT OF DEFENSE
Secretary Burke. Well, thank you, Chairman Forbes and
Ranking Member Bordallo, members of the subcommittee. I really
appreciate the opportunity to discuss the President's fiscal
year 2013 request for operational energy initiatives for the
Department of Defense, and to be here with my colleagues to
discuss all the energy initiatives in the Department.
And I can assure you that Secretary Yonkers does hold his
own, and he is not a token male.
[Laughter.]
Now, you have my statement for the record, so I am not
going to read it to you. But you are correct, Representative
Bordallo, this is the first time I have appeared before you,
but it is also the first time an assistant secretary of defense
for operational energy has appeared before this committee. So I
do want to spend a few minutes talking about the office, since
Congress created it, and what we have accomplished to date.
Just recently, I traveled to Pacific Command for a workshop
on how to implement the Department's operational energy
strategy. And while I was there, they took me to see Red Hill.
And I don't know if you are familiar with that facility, but it
is an extraordinary engineering feat. It is a 242-million
gallon fuel storage facility that has been tunneled into solid
volcanic rock. It is an amazing thing to see.
And if you have questions about why we would do that, all
you need to know is when we did that. It was completed in 1943,
so it was initiated even before Pearl Harbor. And that was
because we had to have a steady, reliable source of energy for
our planes, our ships, and our troops on the ground who were so
far away from home in order to prevail in the Second World War.
And that is true today, too. Every military mission today
requires a steady, reliable supply of energy. And, in fact,
General Petraeus, when he was still commanding in Afghanistan,
wrote that energy is the lifeblood of our warfighting
capability. That is why the Department of Defense in fiscal
year 2013 is requesting $16.3 billion for petroleum to support
military operations around the world.
Now, in World War II, our ability to protect those supply
lines and to interdict those of our foes was an important
comparative advantage in that war that contributed to our
victory. Today, however, our operational energy posture is
imposing costs at all levels--strategic, operational and
tactical and, of course, financial. And that is why Congress
created this office in the first place in the 2009 Defense
Authorization Act.
It is also why the Department is requesting $1.4 billion
for fiscal year 2013 for initiatives to improve the
Department's operational energy use. We want to recapture that
strategic advantage.
Now, my written statement details how I built up the office
and our progress to date, especially on rapid fielding of
energy innovations to deployed forces. And my colleagues here
have been instrumental in those efforts, so I expect that they
will tell you more about some of those efforts and what they
have done.
For this morning, what I would like to focus on is one
specific area of activity for my office--and that is the
release you mentioned, Congresswoman--the operational energy
strategy and also the implementation plan that Secretary
Panetta released earlier this month. Because this is the
framework that we have established for improving operational
energy use across the Department.
Now, the goal of that strategy is to improve energy
security for the warfighter, meaning we want to ensure that
U.S. military forces have that steady, reliable supply of
energy for that full range of 21st century military missions.
And there are three ways the Department is going to meet
this goal. First and foremost, by reducing our demand for
energy. Second, we want to diversify and secure our supplies of
energy. And finally, we want to build energy security into the
future force.
So about 90 percent of our fiscal year 2013 budget request
is for initiatives that reduce our demand for energy. And that
is very important because we have seen in Iraq and Afghanistan
that with distributed operations, asymmetric threats and
attacks, and modern military capabilities that are terrific--
but also very fuel-intensive, very energy-intensive--that we
need a great deal of fuel, and our supply line has been
vulnerable. It is in the battle space, and the opportunity cost
in lives and in dollars and in capability has been much too
high.
We believe that will continue to be a concern going forward
as we project presence and power elsewhere in the world,
particularly in a time when there is an increasing prevalence
of precision-guided missions.
Now, the other 10 percent of our budget request for fiscal
year 2013 is for supply diversification, and that is the second
objective of the strategy. So this means we want better energy
options that serve the mission. So, for example, we have been
using solar in Afghanistan for our forces who are out at the
tactical edge. This gives them better range, endurance,
resilience, independence from the supply line. It helps them do
their jobs.
Now, of course, the Department also has a significant
reliance on liquid fuels, and that will continue for the
foreseeable future. And you have directed my office to take a
lead role in setting a coherent and consistent policy for the
Department on the use of alternative fuels. We are doing that
now.
But I do want to clarify that the Department of Defense's
investments to date have been in research, development, testing
and evaluation. And also that all of the Services currently
have a policy that they will only purchase operational
quantities of alternative fuels at a time when they become
price-competitive.
So the final element of the operational energy strategy is
to build energy security into the future force. And we are
doing that by incorporating energy into the Department's
planning, into our strategic documents, our war-gaming, our
requirements generation, and our acquisition process. And, in
fact, that is why I was at Pacific Command. We were looking at
how to bring the lessons of the past, from Red Hill, to the
Northern Distribution Network into our future capabilities and
our future missions.
And in my mission, Congress, and this committee in
particular, have been very supportive of our work--and I would
like to single out your staffs as well who have been very
supportive of establishing this new office and this new
function--and supportive of our efforts to harness better
energy performance and better energy technologies for the
warfighter to make them more agile, lethal and adaptable.
So on behalf of the men and women in uniform, thank you
very much for that support and I look forward to your
questions.
[The prepared statement of Secretary Burke can be found in
the Appendix on page 54.]
Mr. Forbes. Thank you.
STATEMENT OF DR. DOROTHY ROBYN, DEPUTY UNDER SECRETARY OF
DEFENSE FOR INSTALLATIONS AND ENVIRONMENT, U.S. DEPARTMENT OF
DEFENSE
Dr. Robyn. Good morning. Thank you, Chairman Forbes,
Ranking Member Bordallo, distinguished members of the
subcommittee. Thank you for the opportunity to testify about
what the Department of Defense is doing to promote energy
security in the area of facility energy.
I want to address three questions this morning. First, why
does the Department of Defense care about facility energy?
``Why are we here?'' to use your question, Chairman Forbes.
Second, what are we doing about it? What is our facility energy
strategy? And third, what are the major challenges we face?
First of all, why are we here? We care about facility
energy for two key reasons. The first is cost--your second
chart. With over 300,000 buildings, 2.2 billion square feet of
space, we have a footprint six times that of the General
Services Administration and three times that of Wal-Mart. Our
energy bills are correspondingly large--$4 billion a year.
The second reason we care about facility energy is mission
assurance. Our installations support combat operations more
directly than ever before. We pilot UAVs [Unmanned Aerial
Vehicles]. We fly long-range bombers from our installations
here at home. These bases, in turn, rely almost entirely on a
commercial power grid that is increasingly fragile and
vulnerable to disruption.
With an eye to lowering that $4 billion a year energy bill
and to improving the energy security of our fixed
installations, we have been pursuing a three-part strategy. The
first and most important, reduce demand. We are using our
MILCON [Military Construction] and our sustainment budget,
supplemented by third-party financing, to make our buildings
more energy efficient.
Specifically, we have, in the fiscal year 2013 budget, $1.1
billion direct funding, largely for, almost entirely for,
energy efficiency retrofits of existing buildings. In addition,
we have a commitment outside of the budget, a commitment to do
more than $1 billion over the next 2 years of performance
contracts--energy savings, performance contracts, utility
energy-savings contracts--so the third-party financing of
similar energy efficiency retrofits of our buildings.
We address new construction through requirements;
requirements for LEED [Leadership in Energy and Environmental
Design] Silver, 30 percent above ASHRAE [American Society of
Heating, Refrigerating and Air-Conditioning Engineers]. And my
office will be issuing a new code, a unified facilities code,
for sustainable high-performance buildings later this year.
And then finally, an absolutely critical piece--and I will
return to this later--is metering and measurement. And my
office will be issuing an updated policy, a more ambitious
policy, on which and how many buildings we need to meter, and
laying the framework for an enterprise energy information
system that allows us to more systematically collect and
analyze data.
Second element of the strategy, expand the supply of
renewable and other forms of distributed, or on-site, energy.
Together with microgrid and storage technologies, on-base
energy generation can make our installations more secure in the
event of a major disruption to the electric grid. Many of our
bases are well suited for renewable energy. And the Services
are all pursuing this aggressively, and largely with third-
party financing.
The key issue that I want to flag here has to do with
withdrawn lands. Many of the best sites on our installations
for solar, wind, and geothermal are on land that we have
withdrawn from the Department of Interior for military use.
There are some impediments to us using these withdrawn lands
for large-scale renewable energy products. We are working
closely with the Department of Interior to overcome those
impediments. That is a key issue.
The third element of our strategy, facility energy
strategy, is to leverage advanced technology coming out of
industry and Department of Energy labs, principally by using
our installations as a distributed test bed to do demonstration
and validation of next-generation energy technologies that have
the potential to reduce our energy consumption or improve our
energy security significantly.
Emerging technologies offer a way to significantly improve
our performance and reduce our costs, but there are significant
impediments to the commercialization of these technologies;
primarily the fact that the first user bears significant costs
and risks, but does not gain any additional benefit from those
that follow.
As the owner of 300,000 buildings, we look at risk
differently. It is in our direct self-interest to help firms
overcome the barriers that inhibit innovative technologies from
being commercialized and/or deployed on our installations. And
we do this by using our installations as a distributed test bed
to demonstrate and validate the technologies in a real world.
A major focus of this demonstration and validation effort--
or Dem/Val, as we call it--is advanced microgrid technology.
Microgrids are small-scale versions of the commercial power
grid that allow for local control of supply and demand.
Combined with on-site distribution and storage technology, an
advanced microgrid system will allow an installation to
maintain critical functions on a base if the commercial power
grid goes down and stays down for some length of time.
Another major focus of our test bed activity is emerging
technologies that will significantly reduce the consumption of
energy in our buildings. And I will just give one example. At
Watervliet Arsenal in New York, the Army is testing an advanced
control system, developed by United Technologies, that could
increase boiler efficiency by 5 percent. Only 5 percent, but
when you think about how many thousands of boilers that we have
on which we could deploy this technology the savings are
meaningful.
I love to go through examples of what we are doing on our
test bed. I will refrain from doing that, but I will just say
that yesterday Sharon and I went to the rollout of a report by
two nonprofit groups called Energy Innovation at the Department
of Defense. And we were on a panel with Norm Augustine and
retired general Ron Keys.
And this report is a wonderful report. And it focuses, it
really focuses, on what this installation energy test bed is
doing. There is a chapter, a paper by the guy who runs that
program. And they flag this model as being one of the most
innovative approaches that the Department has, certainly in the
energy space.
Finally, what are the major challenges we face? Let me just
point out two. First, we do a lousy job of measuring the energy
performance of our buildings. Most of our buildings aren't
metered, and we don't have a standardized way of collecting and
analyzing the data. I will be, as I say, putting out a more
ambitious policy on metering and data collection analysis. But
we need to implement it more aggressively. The Navy is showing
us the way, in that regard.
Second, although, as I have said, our strategy calls for
heavy reliance on private financing both to retrofit our
buildings and to develop renewable energy on our bases, our
acquisition process is extremely cumbersome. We need to improve
that if we want to attract the best private firms. And here, I
would say Army is showing us the way, having taken the first
steps toward streamlining the process for energy savings
performance contracts.
In sum, facility energy is a very important issue. We have
a good strategy for improving it. We face some challenges. I
look forward to working with you in the months ahead to tackle
these and other challenges so that our investments in facility
energy are as productive and high-leverage as possible.
Thank you.
[The prepared statement of Dr. Robyn can be found in the
Appendix on page 62.]
Mr. Forbes. Thank you, Dr. Robyn.
Secretary Hammack.
STATEMENT OF HON. KATHERINE HAMMACK, ASSISTANT SECRETARY OF THE
ARMY, INSTALLATIONS, ENERGY AND ENVIRONMENT
Secretary Hammack. Thank you, Chairman Forbes, Ranking
Member Bordallo and distinguished members of the subcommittee.
On behalf of Army soldiers, families, and civilians, I want to
thank you for your support of Army programs overall and Army
energy programs.
In fiscal year 2013 our energy budget is $4.5 billion. And
of that, $2.5 billion is for operational energy. And that is
the energy we use in war, like in Afghanistan. There is a lot
that we are doing in energy to improve. We have energy
efficiency programs. That is a billion dollars of the budget.
Another billion is for our installation energy.
So overall it is a large budget. We have a lot of programs,
though, to work to manage our costs and reduce our consumption.
But what I want to talk about here is a little bit of show and
tell. But you said brag, so I am bragging about the great
things that our teams are doing in the Army.
First of all, our energy strategy is broken into three
parts. The first part is soldier power, the second is basing
power, and the third is vehicle power. For the Army, soldiers
are our platform. Soldiers are what we are about. We are a
ground force, and our soldiers carry power with them.
A soldier on patrol can carry as many as--a 3-day patrol--
as many as 70 batteries weighing about 16 pounds. And so one of
our focuses has been to reduce that. One of the ways is through
rechargeable batteries, which I can't unplug from this
recharging device. But we have rechargeable batteries. But if
you have rechargeable batteries, then you have charging
devices.
So a soldier who might have multiple kinds of batteries
might have multiple recharging devices. So we came up with a
universal charger that you can plug different kinds of
batteries into.
We followed that by having the charger able to be powered
from multiple sources, whether it is solar power, whether it is
vehicle power, or whether it is plugging into an electric
outlet. So we are empowering the soldier, increasing their
capability so that they are able to fight longer and go
further.
Our second pillar is basing power. And in basing power,
again, operational energy and installation energy. Operational
energy, what we use in theater, 40 percent of that is in
generators to generate electricity. So one of our focuses is to
have more efficient generators.
Another focus is microgrids, like Dr. Robyn talked about.
We have installed, in the last 12 months, 28 microgrids that
are saving 50 million gallons of fuel a year. That means
convoys not on the road. And we are finding one in every 46
convoys suffers a casualty, whether it is a wounded in action
or killed in action.
If our soldiers, instead of guarding convoys, are out
fighting, then we have increased the capabilities of our
warfighting force. And that is what energy security means to
the Army.
In our basing energy, as Dr. Robyn talked about, again we
have a focus on energy-saving performance contracts. And in
fiscal year 2012, we are quadrupling the number of energy-
saving performance contracts. In all of fiscal year 2011, we
executed $73 million. In just the first quarter of fiscal year
2012 we executed $93 million in contracts, and are on the path
to execute at least $400 million in energy-saving performance
contracts in fiscal year 2012.
We believe that partnering with the private sector is the
appropriate way to steward the installations that we have and
reduce our installation energy consumption. And since 2003 we
have reduced our energy consumption on installations by 13
percent where, at the same time, we have increased the size of
our force and those using Army installations.
We are leveraging the private sector in using alternative
energy on Army installations by standing up an Energy
Initiatives Task Force to work on partnering with the private
sector to bring alternative energy projects onto Army
installations, and to reduce our consumption and increase our
energy security.
Our third pillar is vehicle power, and on that we are
taking a look at vehicles. This is a fuel-efficient
demonstrator. I could have brought a big one in, but it would
take up the whole hearing room here. So I brought a small model
instead.
But what we did on the FEDs [Fuel-Efficient Demonstrators]
is, we took a look at how energy is used throughout the vehicle
and where heat is generated. You have heat in braking, you have
heat in engine systems, you have heat generated by the various
equipment on it. And heat is energy. And by studying the
various systems in the vehicle, we are able to make the
vehicles more efficient so that we can reduce the operational
energy in-theater.
I will challenge you, though, on measuring operational
energy because we always say the enemy has a vote. The amount
of operational energy we use is dependent upon the fight that
we are in.
So although I can look at systems--whether they are battery
systems, whether they are power systems, or vehicle systems--
and make those systems more efficient, I cannot guarantee to
you the amount of fuel I will use because it depends upon the
warfight. And I do not want the warfighter hampered by
restricting their access to and availability of energy.
What I want to say, in conclusion, is that I invite you to
come visit our installations where we are working on these
systems--whether it is the tank and automotive division that is
out in Detroit, where they are working on vehicles and they are
opening up a ground systems power and energy development lab
next month which is focused on hybrid technologies, thermal
technologies and battery technologies, and acts as a resource
to the entire design community in the Detroit area--or Fort
Devens, Massachusetts, where we are working on basing power for
contingency operations, where our base camps are testing
technologies, whether it is solar, whether it is microgrids or
other systems that are more efficient.
Or even out at Fort Leonard Wood, where our engineers are
working on how you put together those technologies that have
proven themselves out into a deployable force; out at Fort
Bliss, where we have the network integration event where our
soldiers are testing and training on these systems prior to
deployment.
So in conclusion, I want to thank you for your support of
the Army. I want to thank you for everything you are doing for
the Army. And I want to tell you that the Army is onboard with
energy because it increases capabilities for the warfighter.
[The prepared statement of Secretary Hammack can be found
in the Appendix on page 79.]
Mr. Forbes. Thank you, Secretary Hammack.
Secretary Pfannenstiel.
STATEMENT OF HON. JACKALYNE PFANNENSTIEL, ASSISTANT SECRETARY
OF THE NAVY, ENERGY, INSTALLATIONS AND ENVIRONMENT
Secretary Pfannenstiel. Thank you, Mr. Chairman,
Congresswoman Bordallo, distinguished members of this
committee. I appreciate the opportunity to appear before you
today to describe the Department of the Navy's energy programs.
The fundamental premise of our programs is that our energy
investment will improve our combat capabilities, increase our
mission effectiveness, reduce our vulnerability to foreign
sources of fossil fuel, and stabilize energy costs. This is not
part of an environmental or green agenda. Rather, its purpose
is to impose improvements, investments, to maintain America's
military leadership.
Without investments in alternative fuels--without
investments in alternatives to conventional fuels--the Navy
will continue to be subject to market volatility. The
volatility is caused by threats of conflict and rapid demands
from other countries. Since the beginning of this fiscal year,
political unrest has increased the per price of a barrel of oil
by $38. That is an increase of the Navy's fuel bill of a
billion dollars.
So our budget request in fiscal year 2013 is for a billion
dollars for energy investments. This will promote energy
independence and security, provide tactical benefits, and
provide for facility maintenance. Of that $1 billion, about
$600 million will go into the shore investments, which will
provide savings back to the Department through efficiencies.
It will be, as Dr. Robyn mentioned, 27,000 advanced meters,
such that we are moving towards a day when almost of all our
usage in both the Navy and Marine Corps will be metered on
advance meters. We will provide for energy audits, which then
give back a stream off of efficient investments that we can be
making in energy. And it will support less sexy kinds of
features as improved HVAC [heating, ventilation, and air
conditioning] systems and lighting, and energy management
systems.
Of the $1 billion, $400 million will go to operational
investments, which will directly enhance combat capabilities
through increasing the range, reducing down times, improving
the resilience of the forces. Such improvements will be the
propeller coatings on the ships and shelter liners for the
Marines, more hybrid electric drives for our destroyers, and
tests and certification of alternative fuels.
We are on track to meet our shore goals that were set by
Congress and the Department. We are applying new and existing
technologies to our shore installations, of which there are
about 100. We are increasing the diversity of power sources. We
are improving the security of the grid. And we are looking for
cost stability.
We are developing a strategy such that 50 percent of our
energy onshore will come from alternative sources, and that
will be about a gigawatt of power. This will be done through
third-party investments, and over the life of these contracts
it will be less expensive than buying conventional sources of
power.
Some examples of how we are doing this, we have done at
Twentynine Palms, China Lake and Barstow. Those three examples
will save $20 million over the life of those contracts.
We are also developing regional smart grids. And we are
having a pilot in the San Diego area which will combine some
bases so that we have the ability to use power most efficiently
among the bases that use power there such that we can reduce
our costs and provide for more secure installations.
Our operational goals will be supporting both advanced
technologies and alternative fuels. The expeditionary forward
operating bases that the Marines have been developing have used
advanced technologies in-theater already; solar generators, LED
[light-emitting diode] lights, tent liners. They have cut the
cost of fuel on base by 25 percent, and at the combat outposts
by 90 percent.
There are fewer vulnerabilities. I think Katherine
mentioned the vulnerability of transporting fuel and water. Our
figures say that for every 50 fuel-water convoys we have one
Marine casualty. That is much too high a price to pay for
moving fuel in-theater.
The Marines have recently modeled what they might be able
to achieve from using these advanced technologies, and they
have determined that by 2017 they would be able to go an
additional month of operations with no additional fuel. Our
investments in biofuels will reduce our dependence on foreign
oil and will help stabilize our energy costs. We have, so far,
tested all of our aircraft and most of our surface ships on
alternate fuels.
So I will summarize by saying that these goals--our goals,
your goals--reflect energy as a strategic and tactical
capability. We can't wait until fuel is unaffordable or not
available to pursue these alternatives.
Thank you for your support, and I look forward to your
questions.
[The prepared statement of Secretary Pfannenstiel can be
found in the Appendix on page 97.]
Mr. Forbes. Thank you for your comments. Secretary Yonkers.
STATEMENT OF HON. TERRY YONKERS, ASSISTANT SECRETARY OF THE AIR
FORCE, INSTALLATIONS, ENVIRONMENT AND LOGISTICS
Secretary Yonkers. Well, good afternoon, Chairman Forbes,
Congresswoman Bordallo, and the members of the committee.
First of all, let me say thank you for your service to our
country and to the tremendous support that I know you give our
Air Force, our airmen, civilian military, and their families
every day. It is very important to us.
And I want to say that it is a pleasure to be here today
and talk about what the Air Force is doing to reduce our energy
demand, increase the energy supply, and create that energy
security that, as all of my colleagues have talked about,
enables us to do our mission. And that is, first and foremost,
in our Air Force, fly, fight, win--air, space and cyberspace.
And we are not going to deviate from that goal.
Let me give you some statistics to kind of set the stage
here, if I may. Unfortunately--or perhaps fortunately, I am not
sure which--the Air Force is the biggest consumer of energy in
the Department of Defense, clearly 60 percent of everything
that the DOD [Department of Defense] uses. Most of that comes
in the form of jet fuel. It is more expensive to fly aircraft
than it is to run tanks or ships.
Last year--excuse me, in fiscal year 2011--we spent $9.7
billion, with a ``B,'' for fuel and electricity. And that is
$1.5 billion from what we spent in 2010. And, Mr. Chairman, you
showed some statistics in your first chart and that is exactly
what is happening here. These cost growths are a direct result
of the fluctuation of price in the marketplace for jet fuel and
aviation fuel.
And over that period of time, between 2010 and 2011, that
was a 90-cent per gallon increase. And ironically, during the
same period of time, we saved--through operational efficiencies
and other methods--nearly 75 million gallons of fuel. So in
contrast to the aviation side of the Air Force, our
installation energy expenditures are relatively stable at about
$1.1 billion a year.
A lot of that has to do with the investments that we have
made over the years in the kinds of things that my colleagues
have talked about. And that is, upgrading our HVAC systems and
these other high-energy use systems, putting in more efficient
lighting, insulation, roofs, et cetera, et cetera that help
drive down the costs of our energy expenses on our
installations. And we made an $800 million investment over the
course of the last few years in doing these kinds of things.
Concurrently with that, in our demolition program we have
demolished almost 17 million square feet of old buildings and
replaced those buildings with new facilities that are 30
percent more energy-efficient. As my colleagues have talked
about, we are also aggressively pursuing things like energy-
savings performance contracts and energy conservation
investment programs, or ECIPs.
And we have invested $143 million over the last 5 years on
70 ECIP [Energy Conservation Investment Program] projects that
are now returning $27 million a year on an annual basis.
Moreover, we are aggressively pursuing the public-private
partnerships that we have already talking about. And that is to
take, truly, advantage of these third-party investors to
construct primarily renewable energy projects such as solar,
wind and waste-to-energy to reduce the costs of grid-provided
electricity. So far we have 131 of these ECIPs in place,
generating about 80 megawatts of energy.
And we continue to look at the future, and have Air Force
goals to reduce total consumption of our jet fuel and our
facility energy. For 2013, we are focusing investments to
reduce our consumption in jet fuel by 10 percent. And when you
look at what we spend, that equates to about $2.5 billion. So
it is real money. And to, of course, hit our installation
energy objectives of 30 percent.
And specifically in 2013, we are requesting, as I think
both Dr. Robyn and Ms. Burke have talked about, specific
investments in reducing energy operationally--primarily, $530
million--invest in solutions to reduce energy demand, improve
energy efficiency, diversify the supply, and improve our
mission effectiveness.
That includes $215 million in the kinds of things that we
have talked about; on energy upgrades and HVAC systems and so
forth. Thirty-two million dollars million is going to go into
aviation efficiencies, particularly KC-135 engine upgrades and
some drag reduction on our KC-10s. And the remainder of that
money, about $330 million, will go into ADVENT [Adaptive
Versatile Engine Technology], or those things that are going to
give us much greater longevity and efficiency and
sustainability in the jet engines of the future.
And some of these kinds of investments are looking at
energy efficiency and new jet engines, or upgraded jet engines
of 30 percent. So again, monumental if we achieve those
objectives. And just like the Navy, by the end of this year we
will have all our aircraft certified to fly on alternative
fuels, particularly the Fischer-Tropsch and HRJs [Hydrotreated
Renewable Jet fuel].
Later this year, we are also going to introduce a net zero
policy, similar to what the Army has put into place, to change
the way we think and the way that we use energy. This is really
part of our cultural change in the Air Force. And our
expectations are to create as much energy as we use, manage our
waste resources and the way we work our water resources, and
reduce the amount of waste that we generate to near zero, as
well as benefit from reduction in greenhouse gases.
So, Mr. Chairman, across the board--and if I can leave you
with one thought today--we are looking at energy as a multi-
dimensional program. We are trying to take advantage of third-
party financing. We are making strategic investments from the
appropriated dollars that you give us. And we are doing this in
a business arrangement.
As Jackie mentioned, this is not about being green, it is
not about pursuing goals for the sake of pursuing goals. These
are business-driven decisions for us.
And I look forward to the debate and the discussions.
[The prepared statement of Secretary Yonkers can be found
in the Appendix on page 108.]
Mr. Forbes. Thank you, Mr. Secretary. And all of you have
heard the bells going off. If you will bear with us, we are
going to go over. I don't know if we have one or two votes.
We just have one vote, so it won't take us very long. We
will be right back and start some questions and discussion.
Thank you.
[Recess.]
Mr. Forbes. Once again I want to thank you all for your
comments, thank you for your service, thank you for putting up
with us today and being a little bit flexible. As I alluded to
in my opening comments, we want this to be a good dialogue. We
view most of what we are doing here as trying to do due
diligence to make sure that we are representing your largest
investors, the taxpayers of the United States.
And sometimes, when we do that with a limited amount of
time, it looks like we are emphasizing one thing over another.
We are really not. It is just a matter of they are the things
we are trying to delve into that particular point and time. And
secondly, because we don't talk more about particular things
sometimes it would lead one to conclude that we don't
appreciate the great work that is being done in those areas.
But I want to assure you that is not the case either.
I want to start, Secretary Hammack, with telling you how
much we appreciate all that the Army has done. I mean they
really are making differences in protecting our warfighters. We
understand that, and we know that. And thank you for your toys
that you brought in to show us today because we enjoy seeing
that. A picture is worth a thousand words and a model is, too.
And Secretary Yonkers, you did a good job in balancing this
show out okay. And also we appreciate what the Air Force is
doing, especially when it comes to some discussions you and I
have had outside of here, with the possibility of at least
looking into maybe some longer-term contracts for fuel
purchases which would help stabilize, I think, some of that
volatility.
And we want to try, as a committee, to try to help you and
support you in that because I think that makes really good
sense. Also, I am excited because we have got a great team here
today. I don't say that just to lift you up, but it is true. So
much talent sitting over there, and one of the things that is
great is we are trying to move to a coordinated effort when we
are dealing with energy and looking at our goals and our
policies.
And so we have got experts in operations and in facilities
in each of our Services. And what we tried to do today, or at
least I did, is to look back not at what I thought was a
priority, but what some of the folks that might be associated
with you look at as a priority.
And Secretary Pfannenstiel, I look at the Department of the
Navy's goals that the Secretary has picked; not me, but the one
that he has picked and highlighted and put most of his time and
effort towards. And so I thought I would ask some questions
about that if it is okay with you guys, and begin by saying we
really support alternative energy, we support biofuels. It is
just we want to make sure we have got the right business model
and business case for doing it.
On the questions that I am going to offer today, though, I
don't want to put any one person on the spot. So with this
great talented team, I want to tell you you can use a team
effort. You know, anybody that wants to answer it can answer
it. You can get together, you know, on your answers. And you
can look back at the talented people behind you and get the
answers.
We just want to get the answers. But I start with what the
Secretary has put out in the Department of Navy, and I look at
one of the goals he has put out. He says by 2020, 50 percent of
the total Department of Navy energy consumption will come from
alternative sources.
And I am sure all of you are familiar with that goal. The
President emphasized it in the State of the Union address. And
so my first question to you is this. How do we get 50 percent?
Why not 60 percent, why not 30 percent, why not 20 percent?
Where did the 50 percent come from? How did we get that?
And anybody that has that can give it to us. All eyes are
looking at you, of course, Secretary.
Secretary Pfannenstiel. Well let me start, Mr. Chairman, by
suggesting that 50 percent is both enormously aggressive and,
in our view, is achievable. It it recognizes the amount of
alternative fuel that we need to obtain by that time, the time
being 2020.
We have set ourselves strict criteria for what this
alternative fuel--certain criteria it must need. And those
criteria are it must be domestically produced. It must be drop-
in fuel. In other words, it needs to be a fuel that doesn't
require us changing the platforms in which it will be used. And
it must meet a price threshold. In other words, it must be at a
price that is competitive with the more conventional fuels.
Fuels that meet that--and in addition, we do not want a
fuel that is going to interfere with the food chain. So the
question really is, can we get to there? Can we achieve enough
fuel, sufficient quantity, at that price, in this timeframe?
And our way of achieving that is through the process that we
have laid out and we have worked with Congress on.
And using two parts of what we have going for us. One is
the ability, as a consumer, to offer to the marketplace the
quantity that we would offtake of the fuel that is available.
And then how do we get the fuel available? Well our second
strategy is using the Defense Production Act, which allows us
with partners in this case. But it is an act that allows us to
help create the market, to help start the market.
To put in some funding from the public side to be matched
by private business funding, such that those businesses out
there, those businesses around America that believe that they
can provide the fuel that meets our criteria at the price that
we need, can get a start in funding their refineries, their
businesses, their business models. And then bring to the market
the quantity of product that we need.
Mr. Forbes. And bear with me if you would. I normally defer
all my questions until the end, but today is a little different
because this is an important hearing to get this, I believe, at
the outset. And I want to make sure that I am very patient in
making sure we get to the answers, but I want to try to keep
coming back to the questions.
And the question is not what we are doing to get there, but
how did we get the goal of 50 percent, as opposed to 60
percent, 25 percent, 10 percent?
Secretary Pfannenstiel. And I will have to indicate that
when that goal was laid out, my understanding--and I wasn't
part of the team that developed that goal, but my understanding
of the goal--was that, in fact, it was as I said. It was a
number that was thought to be, and estimated to be, achievable,
but truly a stretch call.
We knew how many gallons, how many barrels of alternative
fuel we would need, and can we get there. Yes. Could it have
been 55 percent or 45 percent or 60 percent or 40 percent? I
suppose it could have been, but it would have been, again,
along the path that would force us to look at things
differently, to develop this new technology differently, to be
able to reach out there and have, at the end of the day, a
product that was going to help us protect price stability, to
balance and diversify our fuel resource, and those criteria.
Mr. Forbes. And all of you helped. So I am--this is open-
ended questions, but this is hugely important.
Help me with that concept of stretch goal that you just
said. What exactly is a stretch goal? And here is why I am
asking. Because, you know, I view this kind of like a
prospectus. I am coming back to the people I represent and
people that all my committee people represent. And we have to
say, ``Here are our goals. We are going to attain it, we are
not going to attain it.'' And it is like a prospectus that you
have.
What is a stretch goal? I heard that concept used by the
Department, but what is it?
Secretary Pfannenstiel. Well, I have used the concept in a
corporation. And in a corporation, it would be a goal that is
not easily attainable but is reasonably attainable.
Mr. Forbes. So it is not easily attainable. Do we have any
independently verifiable analysis that I could take to the full
committee that would say that 50 percent is the right number
for the stretch goal, one? And two, any independently
verifiable data that would say we have a ghost of a chance of
reaching that?
Secretary Pfannenstiel. Yes, Mr. Chairman. There is, in
fact, a report by LMI [Logistics Management Institute], a
nonprofit organization, within the last year--I don't know
exactly the publication date--which looks at the feasibility of
providing alternative fuels, in quantity, at a price that is
competitive with conventional fuels. And determines that
without any public sector intervention, that would probably
take a decade for something like that to happen.
But with public sector intervention, and it specifically
calls out like the DPA [Defense Production Act] authority, that
could be accelerated into the timeframe, into this decade.
Mr. Forbes. Okay. Thank you for your patience. It says that
it could be, but is there any independently verifiable study
that says 50 percent is the amount we should have, and that we
will attain that by 2020?
Secretary Pfannenstiel. I have to say I don't know of any
study that would say 50 percent is the amount that is
absolutely needed. I do go back to the LMI study in terms of
the viability of attaining that, though.
Mr. Forbes. Can you tell me from your information--or
anybody else on the panel--who came up with the 50 percent? Was
there analysis done? And if so, can we see the metrics that
were used in that analysis to show that 50 percent was the
right figure?
Secretary Pfannenstiel. Well, I can certainly offer to get
back to you, Mr. Chairman, on any analysis that led to the 50
percent.
[The information referred to can be found in the Appendix
on page 135.]
Mr. Forbes. As the current assistant secretary for energy
policy for the Navy, are you aware of any such analysis?
Secretary Pfannenstiel. I believe the question on
analysis--I know I have been involved in many such analytical
discussions of how much fuel do we need to achieve the 50
percent and where are we going to get it. So yes, I have taken
part in many discussions of that----
Mr. Forbes. But there is a difference----
Secretary Pfannenstiel [continuing]. In the analytical
sense.
Mr. Forbes. In all due respect, there is a difference
between discussions and between reading an analysis that shows
a), this is the right percentage, and b) that it is attainable.
And I don't argue that you have been in a lot of discussions,
but have you read any such analysis that shows that 50 percent
was the right figure, or that it is attainable by 2020?
Secretary Pfannenstiel. Well, the attainability, I again
refer back to the LMI study that would point out that it would
be attainable. Whether 50 percent as a point number, I have not
seen anything that said it had to be exactly 50 percent, and
not 45 percent and not 55 percent or not 40 percent or 60
percent.
But 50 percent, that number of barrels of oil at that
point, is, you know, really what we are working off of. And----
Mr. Forbes. Can you tell me, on that study, how much it
would cost? What was the estimated cost of reaching that goal,
whether it was the LMI study or any other study that you might
not be aware of now? When we put those kind of studies, if we
are looking at shipbuilding costs, there are goals that we
have. We always look not just at the goal, but at the price tag
of achieving that goal.
Can you tell me what the analysis says the price tag is of
achieving that goal would be?
Secretary Pfannenstiel. The price tag that we have put
towards achieving that goal----
Mr. Forbes. No, I am sorry. What I would like to know is
the price tag that the analysis says we would have to put
forward to reach that goal.
Secretary Pfannenstiel. Well, the LMI analysis said that
using our DPA, our Defense Production Act authority, can get us
to that goal.
Mr. Forbes. Again, and please, thank you for your patience
with me because I don't want to interrogate you. Just the
problem is--we put up the chart earlier--we have got to get our
hands around facts. And if I set a goal of building 10 ships, I
have got to come in and say, ``This is what it costs to build
10 ships.''
We are looking at a goal that the Department of Navy, the
Secretary of Navy has said, ``This is my big flagship.'' I
mean, he is the one that has put this up, and we don't know
where he came up with 50 percent. If he did it on the way to
work one day, if he did it talking around the water fountain.
Or if there is a study, if there is an independently verifiable
study, I need to see it.
Secondly, he says this is a goal. But it may not be a
realistic goal. It might be a stretch goal, whatever that goal
would be. And then the third thing is, we as a committee have
no idea what that will cost. In other words, saying that is a
goal without knowing the price tag for the taxpayers of the
United States doesn't make sense to me.
So my question, as humbly as I can ask it, is do we have
any independently-verified analysis, LMI or any other, that
says this is the price tag it would take to achieve that goal
by 2020?
Secretary Pfannenstiel. Mr. Chairman, if I might, it seems
like there are three questions there. One is whether there is
any analysis that said 50 percent is the exact----
Mr. Forbes. And I understand you have said you are not
aware of that.
Secretary Pfannenstiel. But I will certainly get you any
analysis that led to the number of 50 percent. The second is
whether this is, in fact, an achievable goal. And that, again,
is the LMI analysis which I will provide to you, which says
that.
And then the third part is, well, what would it cost to get
there. And what we have put forward here, and it is part of our
statement, is that it will cost the Department of the Navy $170
million. And because that $170 million will be leveraged six
times----
Mr. Forbes. But do you have for us to review--I don't doubt
your word, I am just saying do you have an independently
verifiable metric analysis that shows that that investment will
get us to that goal by 2020?
Secretary Pfannenstiel. The LMI analysis said that by using
the DPA----
Mr. Forbes. No, no. But you said it didn't say the dollar
figure. And what I am looking at is, how do we know that this
investment gets us to that goal by 2020 versus being a down
payment on more that we are going to have to expend?
Secretary Pfannenstiel. I think, from the committee's
standpoint, there is a wait-and-see, that is perfectly
legitimate, of saying the $170 million investment that we are
making, watching how that is leveraged with other departments
and then private sector money, and that, then, pool of
dollars----
Mr. Forbes. But let me--if I can, again, respectfully--just
say we are not in the business of spending that kind of money
and just waiting and seeing. You know, I don't think it is
unreasonable that we would ask could you just give us some sort
of independently verifiable study that says if we pay these
millions of dollars out of the taxpayers' money, we are going
to reach the goal.
And what I am hearing you say is that, at least to your
knowledge as the person that would know that, you are not aware
of any such study right now that would show if we spend this
money we are going to attain this goal.
Secretary Pfannenstiel. I am sorry. I must not have been
clear. I do believe that the LMI study does say that.
Mr. Forbes. It says that if we spend this amount of money
we are going to reach that goal?
Secretary Pfannenstiel. It says if we use our abilities
under the Defense Production Act----
Mr. Forbes. No, no. No, that is not what I am asking. And
again, thank you for being patient with me. I don't want to be
argumentative, and I may just not be understanding. You may be
articulating it very well.
What I am trying to say is--from what I heard you say with
the LMI study--it says if we come together we might be able to
attain this goal. But there was nothing in the study that said
X number of dollars needs to be invested by the Department of
Defense or by the Government to reach this goal. And if it does
say that, how much money does it say needs to be invested.
Secretary Pfannenstiel. Well, to the extent we were relying
on the information in that study that would lead us to the $170
million. I would suggest that perhaps we will share the study
with you, and if there are further questions----
Mr. Forbes. But as assistant secretary for energy for the
Navy, are you aware of the dollar figure that that study says
we would have to invest on behalf of the Government to reach
that goal?
Secretary Pfannenstiel. Mr. Chairman, other than the $170
million that we have put forward, I am not sure how else to
answer the question.
Mr. Forbes. And thank you for that.
Secretary Burke, could I ask you something? You said in
your statement, ``We will only purchase alternative energy when
it becomes price competitive.'' Did I misinterpret that, or was
that a fair----
Secretary Burke. At operational quantities, yes.
Mr. Forbes. In operational quantities. Have you seen--
because, again, I come back to what the Secretary of the Navy
has put out, and I know that you have looked at his goals and
all, too, and especially in relationship to his concern with
biofuels--have you seen an independently verifiable study that
shows the time period when biofuels will become price
competitive with non-biofuels?
Secretary Burke. Sir, the LMI study that Secretary
Pfannenstiel was referencing was, of course, a study that you
required us to submit. And additionally, you required us to
submit two different studies; one that was authored by the RAND
[Research and Development] Corporation and one by LMI. And LMI
looked at a variety of possibilities and questions.
And, of course, it is very difficult to speculate in this
area what is going to become available when. There are a lot of
open questions. And I think one of the things that we are
looking at, you know, all the Services have a variety of
targets and goals. And my office is looking to build a better
baseline and to collect better data so that we can have
overarching goals that are more data- and analytically-based.
And we will certainly be looking at this as we establish our--
--
Mr. Forbes. And I give you a compliment. I have bragged
about you for all that you have done. And I know you are
looking at that going forward. That is not my question.
Secretary Burke. I think you know the answer.
Mr. Forbes. But I need to get it on the record. And if I am
wrong on that--because I am not the one testifying--my concern
is this. We are asking the taxpayers of the United States of
America to pay millions of dollars. Now, that may be small in
terms of $19 billion, but it is still important.
And my question is not whether we are going to develop
metrics that may later sustain----
Secretary Burke. No, you are right, sir. The LMI study----
Mr. Forbes. My question is, do we have any independently
verifiable studies that say if we spend this money we are going
to attain this goal? And if so, when do those curves cross?
Secretary Burke. The LMI study did have a dollar figure in
there, and I believe it was $2.2 billion. So they made some
estimates about what they thought would be required as far as
public investment. And it did not look specifically at what
kind of dollar investment would be required through the Defense
Production Act, which is DOD--but also Department of
Agriculture, DOE [Department of Energy]--and private sector
match. So----
Mr. Forbes. Did, in that study, it say when it would become
competitive with non-biofuels?
Secretary Burke. I believe--and it has been awhile since I
have read their study--but I believe that was the basis for
that number, was meeting the targets of both the Air Force and
the Navy by date certain that that is what----
Mr. Forbes. So then it is your understanding that it will
be 2020 before the biofuels become a competitive price point
with non----
Secretary Burke. Sir, I don't know at this time. And I have
seen a lot of studies in this area, and I don't think anybody
knows exactly since we are still in a research, development and
demonstration phase with these alternative fuels. I think there
are a lot of very promising technologies.
And I do believe that the Defense Production Act
Investment, which is run out of Acquisition, Technology and
Logistics, will give us an opportunity to get a better feel for
these promising technologies and what their potential
trajectory----
Mr. Forbes. And if I can just tell you why this is so
important and why I am taking this time, I come back to the
concept of a stretch goal, whatever that might be. You know,
but I take it that is a huge goal and you may not be able to
get to it.
But we are willing to take a stretch goal that we cannot
justify where we come up with the figure 50 percent. I am not
saying it is not the right figure. I am saying we don't have
any independently verifiably analysis that this is the right
figure. We can't come up with the total dollar outlay it is
going to take to get there by any metrics that proves it. We
can't come up with any pricelines.
And yet when I look at shipbuilding, I see the Secretary
coming over here with a shipbuilding plan. And he won't take a
stretch goal on shipbuilding, you know, but we are coming down,
and cutting down the goal that we have had of 313 ships and
saying, ``No, 300 is enough.''
And I am just looking at the Navy and saying why in the
world, if we are going to have a stretch goal on alternative
energy, shouldn't we have a stretch goal on shipbuilding. But
let me then come back to this point. I want to come back to the
biofuels thing. Why the Navy?
I mean, the Air Force--and I am not going to get you in
this, Mr. Secretary. You can say it, but I think the Air Force
has taken a pretty good stand. They have said, ``We are going
to sit back, and if this is there we are going to be a customer
and we are going to buy it. Week are going to buy lots of it,''
you know.
Why the Navy? What makes the Navy in a better role to spend
this money than the Air Force? After all, the Air Force is the
biggest consumer of energy we have.
Secretary Burke. Well, I think the Navy should, Secretary
Pfannenstiel, should speak specifically to that. But I would
like to say that all of the Services have different roles and
missions, and they all calculate how to meet them differently.
And I would say that in my space a stretch goal is in terms of
capability, and that the Department last year used 5 billion
gallons of petroleum. And we are going to be depending on
liquid fuels for the foreseeable future.
And that in the timeframe of many of the platforms and the
capabilities that the Navy has, and that the Air Force has and
the Army has, we are going to have a problem with the
petroleum, with the volatility of the price----
Mr. Forbes. Okay, let me take you there, then. Let us look
up at this chart on volatility.
Secretary Burke. Right.
Mr. Forbes. And if we wanted to look at volatility, and we
really were concerned about that, why not do fixed-price
contracts like the Air Force has talked about? That would have
locked it in and you would have known right there. Why not do
that?
Secretary Burke. Are you talking about fixed-price
contracts for petroleum, or for----
Mr. Forbes. For fuel. Yes, for petroleum.
Secretary Burke. Actually, I would like to take that
question for the record because I have been talking to the
comptroller and to DLA [Defense Logistics Agency] Energy about
the way they manage fuels contracts. And we do try to follow
industry best practices, and it is not an industry best
practice to set a price more than, you know, 5 years in
advance, which----
[The information referred to can be found in the Appendix
on page 135.]
Mr. Forbes. But if you were talking about volatility, that
would do a better job.
Secretary Burke. Not necessarily. So that is what we are--
we are looking at that now.
Mr. Forbes. If I have a fixed contract for $4 a gallon and
it is for 5 years, why wouldn't that lock it into $4 a gallon?
Secretary Burke. When you have a fixed price on something
as volatile as fuel markets you can win or lose. And also
suppliers have a vote in that in whether or not they will take
those kinds of contracts. As I said, I would like to take that
question for the record because the comptroller and DLA Energy
are the experts in how we manage those contracts, so I would
like to get you a better answer on that.
Mr. Forbes. That is good.
Secretary Pfannenstiel, why Navy? Why are they better off
spending this money than one of the other Services?
Secretary Pfannenstiel. I wouldn't say we are better off
spending this money than the other Services, but it is our very
firm belief that by spending this money we will provide the
advantages that I have talked about in terms of reducing the
price volatility and----
Mr. Forbes. Okay, just a couple more questions, then I want
to go to other members. But let me come back to your volatility
issue. Because it is fair to say that with the biofuels aspect
we are not doing anything with the safety of the warfighter
differently. I mean, a gallon of biofuels is a gallon--it is
the same as a gallon of non-biofuels, correct?
Secretary Pfannenstiel. In terms of delivering fuel----
Mr. Forbes. In terms of delivery. And we are not
necessarily doing anything with flexibility. Could be, but we
don't have the studies to really verify that right now, do we?
We might find that to be the case. We don't know now.
Secretary Pfannenstiel. Flexibility for the warfighter.
Mr. Forbes. So we are really looking primarily at
volatility. Ninety percent of all the fuel consumed by the
Navy, with its ships and its planes in a deployed status, is
purchased overseas. Is that correct?
Secretary Pfannenstiel. Ninety percent that is used
overseas, is purchased overseas?
Mr. Forbes. No, no. All of our deployed ships and planes,
90 percent of it is purchased in foreign markets.
Secretary Pfannenstiel. I don't know that the number is 90
percent, but I will certainly take that for the record.
[The information referred to can be found in the Appendix
on page 135.]
Mr. Forbes. What do you think the number is?
Secretary Pfannenstiel. Ninety percent could be fine, but I
just don't know that personally so I have to take that for the
record.
Secretary Burke. Sir, I can tell you that a little more
than 50 percent of the fuel we consume is OCONUS [Outside of
Contiguous United States]. But----
Mr. Forbes. So that is 50 percent of----
Secretary Burke. Right.
Mr. Forbes [continuing]. All of our fuel across the board.
I am talking about deployed ships and planes.
Secretary Burke. Right. But we do consume a considerable
fuel at home for readiness----
Mr. Forbes. I understand. But of the deployed ships,
because we are talking about warfighters now----
Secretary Burke. Absolutely.
Mr. Forbes. Of deployed ships and planes, isn't it true
that 90 percent of our fuel is purchased overseas?
Secretary Burke. Yes, sir, we fuel where we fight.
Mr. Forbes. Okay. Now if that is the case, what kind of
investments are we going to make in biofuels overseas? Because
we are talking about, really, 10 percent of the fuel that we
are buying here on deployed vessels. So we are really not
talking about having much of a measurable impact on our
warfighter, are we?
Secretary Pfannenstiel. Well, we are. In fact, we will be
able to move a large chunk. And again, once we are buying in
operational quantities----
Mr. Forbes. No, no. I am saying, let us say you hit home
runs on everything you are talking about in the Navy. You fill
up your ship here, that is it. Because once that ship leaves,
90 percent of everything it is going to buy is going to be
overseas. Are we going to make any investment in biofuels
overseas?
Secretary Pfannenstiel. I am not suggesting that we are. I
would suggest two things. One is that once the biofuels market
has developed and has demonstrated itself through not just our
purchases, but through our purchases and commercial purchases,
there is no reason that there would not be biofuels overseas.
So that would be one----
Mr. Forbes. But we are not trying to build up biofuel
markets overseas, are we?
Secretary Pfannenstiel. We are not in that----
Mr. Forbes. Okay. And then when we talk--let me ask you
this last question. For our biofuels, we are talking about
cutting our costs down. But if biofuels are competitive at some
particular point in time, what lock-ins do you have to the
industry? Why won't the people who are producing the biofuels
raise their price if the competitive fossil fuels go up, as
well? How are you going to stop them from raising their prices?
Secretary Pfannenstiel. Those prices may track fuel prices
but, in fact, if we have a domestic supply----
Mr. Forbes. But couldn't we have a domestic supply equally
by having the Keystone pipeline, having additional drilling
that would take place? Or maybe changing 526 so we can use--
there are a lot of other ways we can get supply, I guess is
what I am saying. And all this is another method of supply.
Secretary Burke. Look, sir. If I may add, I would just like
to say I think we all agree. I think there is a very strong
bipartisan consensus that we need alternatives to foreign oil.
And the Department is certainly looking for our long-term
interests here as a major user of liquid fuels.
So we are looking to see, to develop the alternatives, and
to have an insurance policy to be ready. Most of our
investments have been in testing and certifying to be able to
use alternative fuels. There are plenty of studies in the
commercial sector about biofuels--not specific to the Navy's
goals, but generally--that predict the possibility of
competitiveness in 8 to 10 years. It is very difficult to say
how you are going to get there from here.
What we are looking for at a departmental level and OSD
[Office of the Secretary of Defense] level is an insurance
policy, and making sure that everyone here wants to make sure
that we have alternatives when we need them. So that is our
departmental priority that you will see reflected in the policy
that we are developing, that you directed us to develop.
Mr. Forbes. And just in my response on that, I absolutely
agree. But an insurance policy requires that we be able to come
back and say, we are going to get A when we need A. And
basically, what I am hearing at this hearing is this. We came
up with a 50 percent goal that the Secretary of the Navy
developed and there is no independent analysis, at least that
anybody can give to me today that says 50 percent was the right
number. I would like to see that if you have it.
The second thing is that we don't have a clue right now of
how much it is going to cost to reach that 50 percent goal. And
taxpayers at least need to know because there are other options
out on the table and they need to explore both. When we are
talking about capacity, I want to know is it going to cost me a
submarine, is it going to cost me a carrier. What is it going
to cost me to get there? And we don't know that.
Third is, that insurance policy is going to tell us if
particular thing happens we know we are going to get paid. But
in this particular situation, there is no independent analysis
that tells us, at this point, this is where we project these
curves to come. And then the final thing I would just share
with you, there are a lot of options for increasing supply. Why
not put all those options on the table?
And in addition to that, the bottom line is if we increase
it over here we shouldn't be kidding ourselves. Ninety percent
of what we are going to be buying is going to be overseas that
we are not going to be controlling anyway.
And so with that, I want to yield to the ranking member for
any questions she might have.
Ms. Bordallo. Thank you very much, Mr. Chairman. Again,
thank all of our witnesses.
Dr. Robyn, as you know, the President's budget anticipates
utilizing $2.4 billion in third-party energy investments over
the next 5 years to meet the mandated 30 percent decrease in
energy intensity for 2015. Now, what type of third-party
investments are we looking at, and does the Department of
Defense need authority to achieve this goal?
Dr. Robyn. Thank you for the question. And let me just
start by saying achieving a 30-percent reduction in energy
intensity by 2015 and 37.5 percent by 2020, that is a stretch
goal. So we don't have to look at biofuels to find it is a
stretch goal. And we need third-party financing to get there.
I will let Katherine talk about what the Army is doing
because they have really gotten out ahead on this. I will say a
couple of things. As I said in my opening statement, the
acquisition process is way too cumbersome. We can't get there
unless we do streamlining. Army has done a better job than
anybody--including FEMP [Federal Energy Management Program],
the DOE's Federal Energy Management Program--of streamlining
the process. But we have a ways to go.
Internally, we need to resolve some minor issues between
the Services over what can be done through an ESPC [Energy
Savings Performance Contracts]. Can you use appropriated funds?
OMB [Office of Management and Budget], I think, will give us
good guidance. We haven't seen it yet, but in terms--for
example, Army is using ESPCs to do small-scale renewable
projects, in addition to O&M [Operations and Maintenance] kinds
of retrofits.
I don't believe we need any additional authority at this
point. I think, a year from now, I may give you a different
answer. But I think it is helpful that the President made a
commitment on this because you now have OMB engaged in giving
us guidance. And they will be giving us a stoplight chart, they
will be tracking our performance on this.
So I think we are good. I think we have just got to fix the
acquisition process so companies will work with us.
Ms. Bordallo. Okay.
Could we hear from the Army how you have streamlined it,
sort of?
Secretary Hammack. Absolutely. Taking a look at the
processes, first of all there is an acquisition process that
Congress has given us as to how to appropriately contract. And
so we have to follow that, which is more lengthy than that in
the private sector.
That being said, working with our own terms and
conditions--having what we call MATOCs [Multiple Award Task
Order Contracts], which are master contracts where someone bids
in and we get them qualified like a multiple award task order
contract--and then by working to educate and train our
installations on how to use the contracts. What kind of
projects are appropriate for that versus going and asking for
MILCON dollars?
It is an educational process. It is an educational process
from the installation level, through contracting, through
attorneys, and through our own agency to ensure that we are all
appropriately tracking, monitoring, supervising, and we don't
let something linger on our desk.
We are hosting a forum next week with all of the MATOC
orders--I think there are 18 of them that are on the Army
contract--to ask them where they see challenges in working with
the Federal Government, how can we be a better partner in the
acquisition process, where they see challenges, and if they see
need for changes.
Again, by looking at ourselves and how we are managing the
process and ensuring we are educating people, we can improve
the process.
Ms. Bordallo. Great. I have a follow-up along these same
lines, and this is for any of our witnesses. Over the past
several years, to what extent has your office used appropriated
monies versus energy savings performance contracts for funding
energy efficiency projects to reduce installation energy
consumption?
And what changes in funding sources do you anticipate in
future years? To what extent is the expedited contractor
selection process being used? And what is the average length of
time for DOD's contractor selection process?
Anybody can jump in.
Secretary Hammack. There are about six questions there, so
I am going to try and----
Ms. Bordallo. Well, yes.
Secretary Hammack. Right now, it is taking us 12 to 15
months in the contracting process. It used to take 2 to 3
years. So that is an improvement in the process.
We use the multiple award task order process. We feel that
that helps to streamline things so we feel that that is
appropriate. When we do a MILCON project and use appropriated
funds for a MILCON project, quite often there is more than just
energy in that project. Energy efficiency might be part of it.
It could be part of a new building. It could be part of
replacing a failing infrastructure and putting in one that is
more energy efficient.
We are not doing it for energy efficiency reasons only. We
are doing it because we need that new infrastructure to support
current operations and potential expansions.
What we look at ESPCs for are those efforts that are truly
focused on energy efficiency as the primary driver. And it is
the ability to do things without having to go to appropriated
funds, that we have the resources in the local community. That
can be anywhere from lighting to boiler replacement to controls
technology that help us better manage our installations and
reduce our consumption.
One of the challenges, I will tell you, is that as we
reduce our consumption our focus is on reducing costs at the
same time. But we are finding that, at best, we are reducing
consumption as the cost of energy goes up. So if we are able to
maintain our utility costs, that is a good news story as we
reduce our consumption.
Ms. Bordallo. Very good. Anybody else want to jump in on
that? Pretty much you all agree? All right.
For Secretary Pfannenstiel, I know that Secretary Mabus has
set forth very aggressive energy goals and the intent to sail
the Great Green Fleet. However, can you talk about the payback
and the long-term benefits of this upfront investment? What is
the risk to the Navy and the Department broadly if we don't
make these investments now? And also how critical is biofuel in
these investments?
Secretary Pfannenstiel. Thank you, Congresswoman Bordallo.
Let me start with the end, and biofuels are critical. And they
are critical because they are an opportunity to pursue a
domestic industry with domestic American jobs and investment.
And they are also a new source, if you will, of supply that
will enable us to move forward, that will help us mitigate some
of the price volatility of the dependence that we have on
imported fuels.
The great green fleet is, in fact, a symbol. It is the
opportunity to demonstrate that, in fact, these fuels are
operationally capable. The full sailing of it is not intended
to be a commercialization, but rather it is part of our
evaluation and certification program to demonstrate that these
fuels are, in fact, capable of being operational.
And let me just point out, because I think there is some
misunderstanding about the Great Green Fleet, it is called the
Great Green Fleet to denote, to compare it to, the Great White
Fleet, which President Roosevelt sent around the world in the
early part of the 20th century to demonstrate America's
achievements and technological prowess. And that is sort of how
we are thinking about that. That is where that came from.
Did that answer all of your questions?
Ms. Bordallo. I think so. I think so, yes. And I have one
for Secretary Burke.
Can you discuss how your office and the Department is going
to ensure the operational energy plan is executed uniformly
throughout the Department? And further, how is the Department
incentivizing contractors in contingency operations to find
innovative technological solutions to reduce demand for energy
in forward locations?
Secretary Burke. Thank you, Congresswoman. First, the
operational energy strategy and the implementation plan are
both required by law. They are both new instruments. And they
do give, at the Department level, guidance and direction and
targets for the Department to meet. So they are in of
themselves one way to streamline how the Department, at the
departmental level, is making these investments.
Also, the Secretary of Defense has established the Defense
Operational Energy Board, which is co-chaired by me and also by
the Joint Staff director of logistics. The chairman put him in
charge for the Joint Staff. And we will be overseeing the
implementation of the strategy and the plan, and with all of my
colleagues here participating in that board. So that will give
us a way to improve the coordination and the tracking of the
implementation of that plan.
And then finally, I have an unusual legal authority that
you gave me, which is I have budget certification authority. I
do, every year, provide a report to the Secretary of Defense on
whether or not I can certify how well the Department, how well
the Services, are programming and budgeting to the operational
energy strategy. And so that also gives me a powerful tool for
keeping on track with those goals.
Ms. Bordallo. Yes.
Secretary Burke. As for the incentivization, I would
actually like to turn this over to my Army colleague, but I
just want to say that the Army has taken the lead in their
logistics civil augmentation--is the right plan--for logistics.
It is the LOGCAP [Logistics Civil Augmentation Program], LOGCAP
contracts in Afghanistan, in changing the incentive structure
in those contracts so that the contractors are looking at
energy efficiency and at better energy performance for military
operations.
So it changes the bias against energy performance. And we
are looking at that and watching the progress on that as the
potential for important precedent for the Department.
Ms. Bordallo. Thank you.
Secretary Hammack.
Secretary Hammack. Certainly. And it is an incentive for
the LOGCAP contractors to bring us ideas in their day-to-day
operations, ideas to reduce the amount of energy that they are
using, whether it is electricity, whether it is water or
whether it is straight fuel consumption.
And since we implemented it in the last 6 months, we have
seen 133 proposals come forward. We have implemented 40 of
those proposals. Eighteen of them were not approved because of
payback, or they were asking for improvement on a base that we
had in closing status. And we have 75 in process of evaluation.
Last summer I was over in Afghanistan. I met with them, and
we walked around and we talked about what they are doing. And
they are setting up teams with a focus on energy efficiency in
their contracting operations.
Ms. Bordallo. Are you referring to the Net Zero policy?
Secretary Hammack. No, ma'am, I am not. This is LOGCAP
contracts in-theater.
Ms. Bordallo. Can you talk on that a minute? Just how does
the Net Zero water contribute to energy security?
Secretary Hammack. Certainly. The Net Zero program is
focusing on using the amount of energy on the base that you are
able to produce on the base, and also reducing the amount of
water consumption and returning that back to the local aquifer
so that you are not depleting your groundwater aquifers.
Our primary net zero focus is in the United States on our
permanent installations, to ensure we are managing the
resources that are available. But we also have a net zero at
the edge, and that is for our forward operating bases. Some of
it is utilization of this kind of technology that you see
before here, whether it is solar or other renewable energy.
But on water security, if you think of a forward operating
base we have to get water to them. We have to pump the water,
we have to treat the water. Water uses energy in everything
that it does. We are working with technologies, one of which is
water from air. And you might find that difficult to think
about, but in the D.C. [District of Columbia] area, we have
dehumidifiers, which is water from air.
So if you take that and purify it, you can go for a period
of time without having another water supply.
We are also looking at water from vehicles. I mean, again,
you park a vehicle and you can see water running out from
underneath it, and that is condensation. There is water that is
available, and we can empower our force to fight longer or go
out further if we have alternate ways of finding water and we
use less water in our operations.
And so that is a critical focus for empowering the
warfighter.
Ms. Bordallo. Thank you. I just have one question more, Mr.
Chairman.
I don't want to leave Secretary Yonkers out of this. He has
been so silent here. No questions for him, but now I have one.
The Air Force aviation accounts for half of the U.S.
Government's total fuel consumption. Now, what steps is the Air
Force taking to reduce this demand and to look toward
alternative sources of energy?
I understand that, in the fuel market, it is a major factor
driving increased costs. So what could Congress do, or what
further can the Department do, to provide greater stability to
the market?
Secretary Yonkers. Well, again, several questions, ma'am.
And let me see if I can kind of answer them. First of all, I
think Congress as well as this president and past presidents
have done quite a lot in terms of setting the goals and
expectations.
So, right off the top of my head, I am not sure what more
could be done. We are driving towards achieving those kinds of
objectives right now for the reasons that I talked about in my
opening statement. It is the right thing to do, it enables our
mission, and it is, you know, looking at the business case
analysis and these things.
So what are we doing in the Air Force to try and reduce
that cost? And again, I sort of addressed that in the opening
remarks. But we have established a goal--and again, it is one
of those stretch goals--10 percent of reducing our jet aviation
use over the course of the next 6 or 8 years will give us
about--well, it will give us about $2 billion worth of cost
savings, based on today's fuel prices.
So what are we doing and how are we going to get there?
Well, we are looking at it from a number of different ways. We
are looking at some of our research and development dollars
going into those kinds of engines that I talked about, where we
can, you know, create a better engine, a more sustainable
engine, that gives us not only fuel efficiency on the order of
30 percent, another stretch goal, but also looking at how long
those engines might last.
So we get sort of a double bang for the buck. If we don't
have to sustain engines because they are more effective and
efficient, if we don't have to sustain them as often, we are
also looking at cost savings in our maintenance and
sustainability costs.
We are also looking at simple things like how we optimize
weight on aircraft. And right now, just from the last few
months, we have been able to achieve greater ton mile per
gallon efficiencies, on the order of 27 percent, by optimizing
how we load and the kind of things that we put on aircraft,
with only a 3 percent cost growth in that arena.
So we are looking at it from research and development, we
are looking at it from a pragmatic how do we fly differently
and better and be more conscious about the way we use energy,
and we are developing these independent stretch goals to help
us get there.
Ms. Bordallo. Thank you, Secretary.
Mr. Chairman, I yield back.
Mr. Forbes. Thank you, Madeleine. Dr. Heck is recognized
for 5 minutes.
Dr. Heck. Thank you, Mr. Chair. I want to thank all of you
for being here today and for providing the information that you
did. And at the installation level, what you are doing to make
the lives of our service men and women better at the
operational and tactical level, making our war fighters safer.
And at the strategic level, increasing our national security
from an energy perspective.
Now, Dr. Robyn, you mentioned the importance of alternative
fuels to facility security, especially in continuity of
operations and grid disruptions. And so in that regard, I want
to give a shout-out to Secretary Yonkers and the Air Force, for
Nellis Air Force Base, that has a 70,000-panel photovoltaic,
14-megawatt solar field that provides 25 percent of their base
power. I think it is a prime example of what can be done if we
put our minds to it.
Secretaries Hammack and Pfannenstiel, you both mentioned
the casualties associated with convoys and moving fuel. And I
can tell you firsthand, when I was chief of emergency services
in aeromedical evacuation at Al Asad I took care of more than
my fair share of casualties from convoy operations,
specifically moving fuel. So I appreciate that point.
Yet we know that as we continue to move technology out to
the forward edge of the battlefield there are going to be
increasing demands for more power, and with that more fuel. So,
Secretary Burke, you talked about supply diversification. We
use solar as an example in Afghanistan.
What is the penetration of alternative fuels out at the FOB
[forward operating base] and COP [combat outpost] level
currently, and how much of the budget? And what are the plans
for increased research and development for more man-portable
alternative generators?
Secretary Burke. Thank you, Congressman.
The penetration right now, we do have a number of efforts
to try to rapidly field. But as you know, when you are talking
about an ongoing operation, those things, you have to be
careful about how you are folding in new capabilities.
And they are not all innovations in materiel means, in
technology. There are also a lot of process innovations. And
the Army's rapid equipping force has done some very interesting
work in this area, in that they have gone out to some of the
farthest-flung patrol bases and forward points and looked more
carefully at how they are using energy and where there are
opportunities to improve.
And one of the things they found is that a lot of the
service members at those remote bases don't actually know how
to use their generators very well and don't have a good laydown
for the distribution. So the rapid equipping force has been
rapidly fielding information and also just distribution. And
that, in of itself, is taking a lot of fuel out of the
equation.
So we are looking for where the opportunities are. And I
think what has really been helpful in that is that General
Petraeus, and now General Allen, have both put out memos to the
forces that this is an important area of activity. They have
set up an office in U.S. Forces Afghanistan to manage it and to
look for what are the best ways to effect change in this area.
And they have begun to put into place a number of things,
including centralized power, better distribution. And, you
know, I think that the Army can talk to that. And also the
Marine Corps did a great job. They did their experimental
forward operating base, figured out what was going to work best
to give soldiers, to give marines, at the tactical edge a
capability. And then they made a program of record, and we are
fielding it to 25 battalions.
Of course, they are coming down now in their force levels
in the southwestern part of Afghanistan. So they won't be
fielding it as much as they had planned because they are coming
out. So there have been a variety of ways that we have
addressed this, and we are seeing it increasingly brought into
training.
So that is some of the ways that we are getting that done
right now in the field. And going forward, what we really want
to do is get into the requirements and acquisition process. So
not so much having projects that are put on afterwards, but
rather that are built into the system and how we actually
create a demand signal for energy.
Because you mentioned that the power and the fuel
requirements are going up. We need to get in early into how we
actually require and acquire systems, equipment, platforms, and
put these kinds of considerations in up front. So that is what
we are really aiming at here is how to make this part of how we
do business and not projects that we have to retrofit or figure
out how to get into the field.
Dr. Heck. Great. Thank you.
Thank you all very much. And again, I appreciate what you
are trying to do and I thank you for being here and bearing
with us during this hearing process.
I yield back, Mr. Chair.
Mr. Forbes. Jack, we thank you. And thank you for your
service to our country.
And the gentleman from North Carolina is now recognized for
5 minutes.
Mr. Kissell. Thank you, Mr. Chairman. And I appreciate our
witnesses being here today, so it is an opportunity to say
welcome ladies and gentleman. So we don't get that opportunity
very often.
And we know we have got votes coming up again in just a
couple minutes. So rather than ask a lot of questions, I really
just want to make a couple statements and maybe finish up with
a question. The chairman mentioned early on that Senator Warner
was adding something to our record. I know that Senator Warner
took a tour of a lot of our bases, with energy being
specifically what he was looking at.
I had the opportunity to join him down at Fort Bragg, and I
would like to say specifically--and I forgot to mention this--
Secretary Burke, we appreciate the position you are in. This is
a position I supported very strongly. And, Dr. Robyn and
Secretary Hammack, I appreciate the opportunity to see you guys
again, and appreciate the work that you all do and the
interaction that our offices have had.
When Secretary Warner came, we got the usual suspects
together down at Fort Bragg to talk about energy. And it
started out being one of those usual tours, where you get, you
know, the slides being shown and talking about the number of
this and number of that. And fairly quickly, the senator and I
said, ``That is not what we are here for. We want to talk about
energy. We don't want a base tour. We want to know what is
going on.''
And so we quickly got into conversations. And a young lady
there who was really heading up the energy plan, doing a great
job, got down to two things. She said it is not sexy, but
retrofitting is the best way to save energy. Even to the
percentages of, like, 30 percent of the energy can be saved.
And the best energy, we don't have to worry about new ways of
generating if we don't use it.
The other thing that was brought up that really caught me a
little bit by surprise was building maintenance. That while we
are going out and building new buildings, it was suggested that
we are not putting the amount of money into maintenance of our
buildings that we should to keep those buildings in as good a
shape as they should be. And we have seen evidence of that from
time to time in different places.
So I would encourage us to make sure that, as we are
building, that we maintain those buildings so that the energy
advantages we build in we can keep. The metering that was
mentioned. I know in one hearing once before it said about the
Navy, when they bring their ships into port they are now
putting meters on the energy being brought in. And it has
reduced the amount of energy for a ship at dock as versus not
being measured.
So I think that is very important. We talked about that at
Fort Bragg quite a bit, too, the importance of putting a meter
on.
Now, I also had some soldiers suggest to me that soldiers
like nothing better than to work around a meter. So I have an
idea that as we do this we will have to keep an eye out to make
sure that the ingenuity of our troops is kept, you know, in the
right ways.
But these are very important areas. And once again, I have
sent letters about this trip and about these concerns. And this
is an ongoing conversation we are having so I am really not
looking for an answer to this.
But one thing I want to bring up, I know at Fort Bragg they
just recently set up a third source of energy coming into the
base. We had a tornado last year that temporarily knocked the
power out to Fort Bragg. And I think at that point in time we
only had two ways in, and now a third one has been set up.
But what about cybersecurity? That is one thing that, you
know, I know that we are hearing a lot more about, you know,
not only on our base, but the surrounding sources of energy.
How well are outreach utility grids prepared to handle a cyber
attack, and how well are our bases prepared to handle a cyber
attack in terms of energy?
Obviously, other things are important, too, but
specifically today about energy. And I would leave that for
whoever would like to answer.
Dr. Robyn. I will start, and then maybe Katherine will pick
up. I think there are a lot of threats to the grid, to the
commercial power grid. And you can put a lot of them in one
category, and then cyber is in another category because it is a
harder problem. And I think there is a lot of effort going into
it. And I can't really speak to--I don't want to try to
characterize how vulnerable our grid is to cyber attack.
I think we, as a department, have concluded that there are
a number of vulnerabilities to the grid and that it is
desirable for us to gain the capability to go off the grid if
the grid goes down for a prolonged period of time. We don't
envision operating off the grid permanently. We envision
continuing to use the local commercial power grid, but we want
the ability to be able to go off the grid and maintain critical
operations off the grid if the grid goes down.
Mr. Kissell. And Dr. Robyn, my time is out. And I can
appreciate your not wanting to talk some specifics. I guess I
rest assured knowing you guys are aware of it and working on
it.
And I yield back, Mr. Chairman. Thank you so much. Good to
see you all.
Mr. Forbes. Thank you, Larry.
The gentleman from Georgia is recognized for 5 minutes.
Mr. Scott. Dr. Robyn, in a recent hearing with Secretary
Mabus I asked him some very specific questions with regard to
the one gigabyte of power that the Navy was going to deliver
for shore power. He assured me that that was going to be a
public-private sector initiative and that there was going to be
no taxpayer dollar initiatives in that.
Yet as I read some of the other testimony, it says that it
may be a joint venture or enhanced-use leases. Can you explain
to me the difference in what I was told and what I am reading?
Dr. Robyn. Did you mean to direct that to me or to
Jackalyne Pfannenstiel?
Mr. Scott. I meant to direct it to you. I know what--I have
met with her already.
Dr. Robyn. Oh, okay. Okay. Well, Navy, my understanding of
their plan and what they have done so far is to use third-party
financing to achieve the large-scale renewable energy projects.
And the Navy has been the first to use what we call 2922(a)
authority. That is a power purchase agreement authority that we
have. That is different than an enhanced-use lease.
Mr. Scott. Just to make it clear, it is not going to be an
enhanced-use lease and it is not going to be a joint venture by
the Navy.
Dr. Robyn. Well, the term ``joint venture'' can mean a lot
of different things.
Mr. Scott. Yes, ma'am. It can.
Dr. Robyn. But a power purchase agreement is basically an
arrangement where an outside entity, a private entity, finances
a project. We provide the land, and we say we will be a
customer for the power that is produced. And in exchange, they
pay to build it. They can take advantage of tax incentives that
are not available to the Federal Government. So it is the
logical way for all of the Services to do large-scale renewable
energy projects.
Mr. Scott. Okay. So they will be taking advantage, then, of
tax incentives that would be taxpayer funds.
Dr. Robyn. Developers will. The developers will, sure. I
mean, we----
Mr. Scott. So the taxpayers will have paid----
Dr. Robyn. Well, these are decisions by the Federal
Government and by the Congress to provide tax incentives to
develop alternative forms of energy. The Federal Government,
Federal agencies, are doing power-purchase agreements that take
advantage of that. We would be crazy not to.
Mr. Scott. We are getting very short on time. Can you tell
me, though, as I looked through all the things that you have
presented to us it is very apparent, very apparent that there
is an anti-fossil fuel attitude with the Department of Defense.
We have abundant supplies of natural gas and many other
reserves that we could tap that this Administration will not
allow us to tap.
But with all of the cuts that are coming to the military,
132,000 uniformed personnel, why is the DOD taking an anti-
fossil fuel position when you could clearly, clearly save a
tremendous amount cost on the energy if you used things that
were readily available, the technology was already there like
natural gas.
Can you explain that to me?
Dr. Robyn. Let me start by saying I don't agree with the
premise. One of the first things that I did when I got there--
--
Mr. Scott. Ma'am, I asked you a question, so it is my turn
to ask the questions.
Dr. Robyn. Okay, but I----
Mr. Scott. What are you doing to expand the use of natural
gas in your----
Dr. Robyn. Okay, let me--great, I will. I will tell you
what we are doing to expand offshore drilling. We had
historically--the Department of Defense, every 5 years, would
tell the Department of Interior where drilling was compatible
and where it was not with Department of Defense activities. And
it was either yes or no, and most of the land was off the
table.
When we came in, we took another look at it. We did a more
sophisticated analysis. That is what allowed President Obama to
announce, on March 31, 2010, drilling in the eastern Gulf of
Mexico. That was not a popular decision with some members of
Congress, but this was drilling in the eastern Gulf of Mexico
where we have operations, conditional on certain things.
We are all for drilling in the outer continental shelf if
it is compatible with our activities. We are all for--we have
peaking plants at Robins. Well, you know. You are familiar
with--you represent Robins, so you are familiar with that.
Mr. Scott. Absolutely.
Dr. Robyn. That is a terrific solution. We would like to--
--
Mr. Scott. I am familiar with what your energy mandates are
doing with increasing the cost of operating the bases. And I am
just saying that right now, in the budget times that we are in,
when you are going to eliminate 132,000 soldiers from having a
position--a position that they and their families have paid a
very dear price for--why are you embarking on such extremely
costly measures which you have no guarantee of a return?
Secretary Burke. Congressman, if I may say, the Department,
over the future-year defense program, will be purchasing $52
billion worth of petroleum, and it is absolutely essential to
our military operations. We are not anti-fossil fuel. We can't
operate without it. Ninety percent of our investment over that
time in energy initiatives in the operational space is to
reduce our consumption of fuel so that we have tactical
benefits for it.
So I would disagree with your characterization. That that
is not why we are investing in efficiency measures and
performance improvements, or in alternatives. We are looking
for operational benefits and mission capabilities.
Mr. Scott. Ma'am, you can disagree with it all you want.
But people testified here that you all were working to help
create another domestic energy through the Department; that if
you go back and listen to the tape, that was mentioned. And if
you read some of the testimony, every time the cost of a barrel
of oil goes up a dollar it costs the Department, the U.S.
taxpayer, an additional $30 million in fuel cost.
There are things that we could be doing right now, like the
Keystone pipeline, that would help reduce the cost of a barrel
of oil----
Secretary Burke. Congressman, most of our energy----
Mr. Scott. We could be drilling in ANWR [Arctic National
Wildlife Refuge], we could be drilling in----
Secretary Burke. In most of our--operations, that won't
help us. So we are looking for tactical benefits----
Mr. Scott. Ma'am, you are wrong.
Secretary Burke [continuing]. And for military
capabilities.
Mr. Scott. You are wrong. Reducing the price of a barrel of
oil will help every American out there.
Secretary Burke. Absolutely. And the President has put a
high premium on that. So the Department of Defense, we are
particularly interested in capabilities----
Mr. Scott. Ma'am, that is simply not true. This President
has done absolutely nothing to reduce the cost of a barrel of
oil or the cost of a gallon of gasoline. And I would challenge
you to go fill up your tank this weekend and feel the pain that
every American is feeling that they were not feeling before he
became the President.
Secretary Burke. Sir. I was going to say that for the first
time in 13 years we are importing less energy, under 50
percent. We have seen our production rise. These are all
important. But for the Department of Defense, what we are
looking at is defense capabilities and defense missions, and
how energy supports them or undermines them. That is our
concern. That is what we are going for. That is what we are
looking to enforce.
So for me, you know, when the President says ``all of the
above,'' for the Department of Defense that really is true. Our
number one criteria in the operational energy space, which is
where most of our energy consumption is, is the mission and the
capability. And anything that gets us mission and capability is
what we are investing in. And you will see that when you get
the budget certification report.
Mr. Scott. I look forward to you investing in fossil fuels.
Mr. Forbes. Let me say this. I appreciate all of you being
here. Thank you for what you have done. And as I began at the
beginning, or said at the beginning, I want to thank you for
all the wonderful things you are doing. And you have done a lot
of great things, and we certainly appreciate them.
I think the basic thing we want to do is to make sure that
we are doing what you said, Secretary Burke. And that is that
we are looking at capability. The bottom line, it is not the
great green fleet that matters to us, it is the great fleet
that matters. And what we don't want to do is to be making
investments that are coming out of the hide of numbers of ships
or our capability in some other area.
And we simply need facts to get our hands around that. And
so when we look at some of the goals, they are wonderful and
you have done great jobs in them. But we have to also be good
stewards of the taxpayer money, and it does bother us when we
hear about stretch goals in this regard.
I understand the concept of stretch goals. But when we
bring them to the taxpayer and say, ``This is what you are
going to get, so invest these millions of dollars,'' but then
we don't have any independently verifiable matrix to really
say, ``this is how much it's going to cost, this is the
timeline when it's going to happen,'' that does concern us, you
know.
And so I want to do this. We have got a vote that is called
now. Do any of you have anything else you would like to say on
the record? If you do, then would you just sit here? I am going
to go cast this one vote, I will come back. Think about what
you want to say. I am going to give you all the time you need
to say it.
Secretary Burke. Congressman, we can enter it for the
record.
[Recess.]
Mr. Forbes. First of all, I just want to make sure that
everybody isn't mad at Secretary Burke for wanting to say a few
more things.
Let me just emphasize something. The first chart that we
put up, we are spending $19 billion, you know. And this is
important. As tiring as it is, frustrating as it is, it is
important we get these things right, you know, to do it. So I
appreciate you wanting to say something else, and it is well
worth it for us to stay in.
And as I told all of you, this is your time. If there is
something that hasn't been clarified that you needed clarify, a
question that was unfair, tell us now at this particular point
in time. And if you don't think of it now, you can submit it
later for the record, too, because we want to get it correct.
Secretary Burke?
Secretary Burke. It was very short point. But now, yes,
drinks are on me tonight. So I was doing fine before that, but
it was actually about your last chart that you put up because
you had asked us what we think. And, you know, I think it is a
great chart, and an important one.
And I would just urge you to put one more flag on it at the
top, which is that for us this is really about capability. It
is about defense capability and the return on our capability,
and whether or not we are giving our men and women in the field
the best that they can have to get the job done.
And we believe really strongly that in doing that we are
also going to save money. But our number one goal is to serve
the mission and to advance our capabilities. So I just wanted
to urge you to put that at the top, as a banner, that whether
it is the security of our installations or the security of our
operations that that is really what we are aiming for.
Mr. Forbes. And, Madam Secretary, let me just say that I
agree with you. The one thing we emphasize, too, is just
because 80 percent of our programs are good, that doesn't mean
that all of them are. And the second thing is, saying it helps
capability doesn't mean it always helps capability. Because for
this reason--we always have to ask questions.
Everything here is a zero sum game. It is if we spend $10
million over here, it is less money we can spend over here. So
we sometimes are making choices between an aircraft carrier,
another submarine, helmets that we can get for our soldiers.
Those kind of tradeoffs we have to make.
So when we are looking at capability, the thing that
frustrates me, I have to say, is when I hear the Secretary of
the Navy saying, ``I am going to have a big stretch goal when
it comes to creating a particular energy source that I might
like,'' but then he can't document that with independently
verifiable facts. And he comes in with a shipbuilding plan that
says, ``I am not only not going to have a stretch goal here, I
am going to have a shrink goal here when it comes to ships. I
am going to have a shrink goal when it comes to our planes.''
And all we are saying is not that he is right or wrong. It
is just the thing we need to do is ask the questions and get
the facts out, you know. So I agree with you. And we will put
that up there. We will change that chart and put it up there.
Secretary Robyn?.
Dr. Robyn. Very quickly, while you are changing your
charts----
Mr. Forbes. Are you going to mess up all of my charts or
just the----
[Laughter.]
Dr. Robyn. Just one.
Mr. Forbes. Okay.
Dr. Robyn. Just this one. I would add cost. It isn't just
fuel price----
Mr. Forbes. I was thinking that was in volatility of fuel
prices----
Dr. Robyn. Right. This is operational-oriented slide, so if
you want to expand it to include facility energy you really
need to say cost. That is----
Mr. Forbes. Can I ask you two questions? When you are
talking talk about cost, you mean cost of the investment, cost
of the fuel?
Dr. Robyn. The amount of money we spend powering 300,000
buildings. We spend way too much. We are not investing enough
to bring that cost around. The only other thing, just to end on
a high note. I think you heard from all of us, what we are
doing is infused with technology in an innovative approach----
Mr. Forbes. And, Doctor, I am going to ask you if you could
say--because you made a comment to me about DOD and the role
technology plays there--could you repeat that for us?
Dr. Robyn. Yes. I mean, DOD is the most potent engine of
technological innovation in human history. And that innovation
has historically, and typically, focused on combat operations
and the warfighter, as it should. But there is no reason that
should not apply equally to our effort to improve our facility
energy performance.
I think the key role there--300,000 buildings and millions
of acres of land that are a phenomenal test bed, demonstration
and validation of next generation technology--that is a classic
role that the Department has played in the operational setting
here is a natural. It is just a natural end.
You know, the president of MIT [Massachusetts Institute of
Technology] talked about it at the ARPA-E [Advanced Research
Projects Agency-Energy] conference. She said wow, you have got
this amazing infrastructure. It is just made to be a test bed
for next-generation energy technology. You can't underestimate
the power of that for solving our problem, and then solving the
country's problem more generally.
Mr. Forbes. Secretary Hammack, anything?
Secretary Hammack. Certainly. There are just three things I
want to talk about. The first is partnerships, and I hope you
have heard here today that the Services are working together.
We are very closely working together. We share the same Army
Corps of Engineer energy-saving performance contracting
methodology.
Although it is led by the Army, we share that and we use it
together. So the military services are working very closely in
lock step. Secondarily, we work with other Federal agencies. We
work closely with the Department of Energy, we work closely
with the EPA [Environmental Protection Agency], we work closely
with the GSA [General Services Administration] to share ideas,
to share technologies.
We have memorandums on understanding on how we can work
closer together to better leverage limited taxpayer dollars
that are coming to the Federal Government. And third, we have
talked about the private sector and leveraging the private
sector, whether it is power purchase agreements, energy-saving
performance contracting, or other mechanisms.
One of those which the Army used is ASHRAE standard 189.1,
which is development of an energy proficiency high-performance
building standard in the private sector. That instead of the
Federal Government developing our own high-performance building
standard, we are utilizing that. That was developed by the
private sector, and it is guidelines and directions on how to
make a LEED building when prioritizing energy and water
efficiency.
So our goal is still to LEED-certify our buildings at the
Silver level or higher. And what we are finding is that as we
incorporate technology and strategies, as we learn better, as
the private sector learns better, we are able to get LEED Gold
or even LEED Platinum at no incremental cost because we planned
well up front.
And by integrating technologies and strategies, you can
have a very high-performance building in new construction.
Mr. Forbes. Well, we applaud you for working so closely
together. And I just want to say the Army is doing good. So
when Secretary Burke takes you out to dinner tonight do not let
her get you off track of what you are doing.
Secretary Pfannenstiel.
Secretary Pfannenstiel. Thank you Mr. Chairman. I just
wanted to make sure that in our discussion about biofuels we
didn't lose sight of two things. One is, first of all, why the
Navy is investing as it is in energy. And it is about our
combat effectiveness. Fundamentally, that is what we are trying
to improve. That is where I started today, and I just wanted to
reinforce that.
Second thing I would say on our energy programs themselves
is that most of the dollars--at least 75 percent, maybe 90
percent of the dollars--that we are budgeting for energy really
are directed toward reducing our demand, reducing the amount of
energy we are going to need in the future. And again, some of
those are building retrofits and improving the kind of
facilities that we use.
Some are shipboard, some are on planes. But we are trying
to reduce our need to buy more energy. I would also highlight--
and I think I didn't get a chance to do it, and I like to brag
on the Marines--their ability to take the kinds of new
technologies into theater and make a real difference is very
important. I think it is important for the Marines, for the
Army. We have worked together on this, and for current
operations and for future operations we have a lot of
technologies being applied.
And the last point that I would make is where we are
looking at new supplies of energy. And again, whether it is
renewable energy for our bases or future alternative fuels, we
are very conscious of making sure that, in long run, that we
will do so at prices that will be competitive with what is
available out in the marketplace.
So with that, I kind of go back to Dorothy Robyn's
comment--which I heartily endorse and think is a theme for
this--which is that DOD is the most potent engine for
technological innovation. I think we are implying that both to
demand reductions and to future supply capability.
Mr. Forbes. And we wholeheartedly agree with you on that
and thank you for the good work you are doing. The only thing
we will say is that when we need to spend millions of dollars
of taxpayers' money we just need some facts. You know, just a
few facts. And so if you get back to the office tonight, and
you find a study or any metrics that justify, you know, some of
what the Secretary--send it to us and we will put it in the
record and we will review it.
Secretary Yonkers, you get cleanup.
Secretary Yonkers. Well first, let me say how humble I am
by being here with all of these ladies.
Mr. Forbes. You are a good politician.
Secretary Yonkers. They really are great. And it has been a
lot of fun these last couple years to be working with them, and
we are moving around some pretty big rocks.
I would just make an observation. You know, when you look
at this from the 375 million of us that are make up the
constituency of this entire Nation, I don't think we are too
far apart. Certainly we are not too far apart on where we want
to try to get to and what the end game is going to be.
We can debate forever, perhaps, how we can get there. But
we are looking for energy security, we are looking for national
security, we are looking for economic security. And frankly, we
are looking at environmental security. They are not necessarily
mutually exclusive.
In fact, they tie together in my mind. So as we move down
that path, I think there are tremendous opportunities here for
us to pull these things together and integrate them in a
multidimensional point of view, that I talked a little bit
about, in our specific energy arenas to hit all of those high
notes and move down that path collectively.
The one thing I want to say about, I think, all of our
energy programs is that we are approaching this pretty
pragmatically, in my view. We are looking at third-party
investments. Because we know that the dollars aren't going to
be there to hit renewable energy, and why not develop that win-
win with the private sector? We can do that, we are committed
to it, and we are going to move aggressively in that direction.
And one final point--and I think, Mr. Chairman, it gets
right to you and the discussions we have had here today--
efficiency does equal effectiveness. So the more that we can
become efficient in our operations, and reduce our energy
footprint and reduce our energy costs by the research and
development and the other kinds of strategic investments that
we are looking at, the more dollars are available to become
effective; to buy more airplanes, to buy more bullets, to buy
whatever it is that we need that really gets to the heart of
the national security mission of the Department of Defense.
Mr. Forbes. And, Mr. Secretary, I agree with you. The only
little caveat I will put there is, every time I hear that
statement made, when they cut out the Joint Forces Command,
they use the same rationale. They say, ``We are going to use
this to buy more ships and do more repairs. That's why we are
saving it.'' It didn't happen. Four months later that money was
gone.
And then we have to go again by the facts. And when I see a
shipbuilding plan that comes in that doesn't increase our
ships, that reduces it, you start saying, ``Well, where is that
money going?'' You know, that is the only thing. We agree with
the premise. We just want to make sure that we are making that
in the implementation stage, too.
Let me look at my partner in all of this and see if she has
any additional questions that she has.
Ms. Bordallo. Mr. Chairman, I couldn't possibly have any
further questions. But I want to thank the witnesses again. I
think they did extremely well. And I think it has been a very
interesting public hearing, and I thank you for calling it.
Mr. Forbes. Well, thank you all. And, Secretary Burke, we
will let you know where dinner is going to be tonight. You guys
have a great day. We are adjourned.
[Whereupon, at 2:50 p.m., the subcommittee was adjourned.]
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A P P E N D I X
March 29, 2012
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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
March 29, 2012
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Statement of Hon. J. Randy Forbes
Chairman, House Subcommittee on Readiness
Hearing on
What Is the Price of Energy Security:
From Battlefields to Bases
March 29, 2012
I want to welcome all of our members and our distinguished
panel of experts to today's hearing that will focus on ``What
Is the Price of Energy Security: From Battlefields to Bases.''
I welcome this discussion and the opportunity to dive into
the details across some of the Department of Defense's energy
priorities and investments.
Energy security is one of my top priorities, and while one
of the greatest challenges for the Department of Defense, it is
also an area for enormous potential. The term ``energy
security'' as defined in the FY12 National Defense
Authorization Act means ``having assured access to reliable
supplies of energy and the ability to protect and deliver
sufficient energy to meet mission essential requirements.''
DOD is the single largest consumer of energy in the Nation
at a cost of $19.4 billion in FY11. Approximately 79% of this
cost, which equates to roughly $15.3 billion, is for
operational energy, that is, the energy required to train,
move, and sustain military operations. The remaining 21% or
$4.1 billion is for installation energy which is the energy
required to run the installations predominantly comprised of
electricity, natural gas, fuel, steam, and coal.
In an era of declining budgets and increased costs, I want
to take a moment to reflect on two graphs--historical petroleum
prices and electricity prices. These charts are from the U.S.
Energy Information Administration, the DOE's statistical and
analytical agency, from February 2012. This is why we are here
today. No one can debate the fact that costs are increasing.
The question is, What are we doing to reduce consumption, and
make wise choices with taxpayer investments without
compromising warfighter capability?
I am deeply concerned by fuel price fluctuations. In FY12,
the current execution year, there have already been two price
adjustments that have resulted in a DOD shortfall of $3.5
billion. I would like to discuss what options are available to
mitigate this in the future. And, why has DOD not considered
longer term contracting with the private sector to lock in
rates similar to the commercial aviation industry?
I fully support any initiatives that will help diversify
the options for fuel supply and reduce the DOD's consumption.
This includes offshore drilling, oil sands, and biofuels among
others. And, I believe that all of these tools should be
available to the DOD, and that Section 526 of the Energy
Independence and Security Act currently precludes the full
availability of all options for the DOD. However, I want to
clearly state that I have serious concerns about DOD
investments that seek to advance markets and develop
technologies that are not a core defense competency and may not
demonstrate a reasonable rate of return. Specifically, I am
referring to the Navy's proposed $70 million investment for
biofuel through the Defense Production Act. And, while I do not
disagree with the promise of biofuel and the industrial
innovation, DOD has not adequately justified the budget
request, especially in an era where DOD does not have
sufficient funds to support the size of its fleet let alone
make money available to promote an energy industry which should
otherwise be the focus of the Department of Energy. I look
forward to discussing this in the context of the hearing.
There are many great accomplishments the DOD has made with
its investments. We have an operational energy strategy and the
fully burdened cost of energy has become central to the
acquisition and requirements process. The Army has reduced
demand through modifications to contingency contracts and rapid
fielding of more efficient technologies. The Air Force and Navy
are looking at route optimization and platform modifications to
reduce demand for fuel. And, the Marine Corps is deploying
capabilities through its Experimental Forward Operating Base
that will extend combat reach by one additional month in a 365-
day period. These are huge wins in an area of greatest demand,
which represents almost $15.3 billion of consumption in FY11.
On the installation energy side, all of the Services are
forging ahead to meet the targets and goals for energy
reductions and renewable energy generation. There is a lot of
innovative work being done, and while the DOD is being
proactive about meeting its goals, I want to be sure that it is
not moving too quickly.
There are multiple different policies driving the
installations to improve their energy efficiency and
sustainable design standards. I am troubled by the diversity of
guidance and the incongruous standards across the Services. I
want to fully understand the analysis that was conducted that
demonstrates the savings associated with those decisions. Of
note, I want to understand why the Navy would elect LEED Gold
as its standard, and the Army has determined that Net Zero
Waste, Water, and Energy is the best way to go. How do you
reconcile this? If there are savings associated with particular
policies, why are all of the Services not adopting them
consistently? And, how much are we paying to get a plaque, or
to reach that final target of Net Zero? Does it make sense and
where is the Return on Investment--or the cost curve--that
demonstrates that we are saving money by becoming fully net
zero?
I would be remiss if I did not mention energy encroachment
issues on military installations and their potential to impact
military readiness. The renewable energy market continues to
rapidly expand and provide an alternative means for domestic
energy generation. I am fully supportive of renewable energy
and the value it provides to the DOD and to the Nation.
However, let me be very clear--I do not support renewable
energy development at the expense of military readiness.
I believe there is a lot of merit in many of the
investments that are being made. The level of sustained
leadership attention on the issue, the progress that has been
made, the innovation that is reflected, and the hard work being
done across the DOD to reduce consumption is all commendable.
That being said, I want to ensure that we as Congress receive
an accurate assessment of how the DOD is currently investing in
energy, and the analysis that underpins some of the decisions
that have been made to date in order that we can exercise our
role in an oversight capacity. I would like to reflect on the
graphs that I projected at the start, coupled with the $3.5
billion shortfall for fuel and use those as the basis for why
we are having this discussion today.
Joining us today to discuss the DOD's Energy Security
investments are five distinguished witnesses:
LThe Honorable Sharon Burke, the first
Assistant Secretary of Defense for Operational Energy
Plans and Programs;
LDr. Dorothy Robyn, Deputy Under Secretary of
Defense for Installations and Environment;
LThe Honorable Katherine Hammack, Assistant
Secretary of the Army for Installations, Energy, and
the Environment;
LThe Honorable Jackalyne Pfannestiel,
Assistant Secretary of the Navy for Energy,
Installations and Environment; and
LThe Honorable Terry Yonkers, Assistant
Secretary of the Air Force for Installations,
Environment and Logistics and Commander, Naval Air
Systems Command.
Ladies and Gentleman, thank you all for being here.
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DOCUMENTS SUBMITTED FOR THE RECORD
March 29, 2012
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WITNESS RESPONSES TO QUESTIONS ASKED DURING
THE HEARING
March 29, 2012
=======================================================================
RESPONSES TO QUESTIONS SUBMITTED BY MR. FORBES
Secretary Burke. The primary means the Department currently uses
for managing fuel price volatility is the Defense Working Capital Fund
(DWCF). On February 1 of each year, the Office of Management and
Budget, (OMB) in consultation with the Department, projects the per
gallon fuel cost the Department will pay in the following fiscal year.
When market prices increase during the fiscal year, funds are drawn
from the DWCF to cover the increase and provide year-of-execution
budget stability for the Services. Conversely, when market prices fall
below the projection, customer payments in excess of the cost of the
fuel are used to replenish the fund. Until 2004, the DWCF cash balance
was sufficient to sustain budgeted fuel prices in the execution year.
Since 2004, market conditions have driven price changes in every
execution year, and the Department currently anticipates an unfunded
requirement for fuel in FY12.
It is clear the Department could benefit from additional capacity
to absorb short term fuel price volatility and there are a number of
options that may be worth pursuing. In January, the Department
submitted a congressionally-requested report describing the
relationship of fuel volatility, cash balances, and price
stabilization, and how that relationship affects the Services.
The report included three recommendations:
1. Increase the ceiling allowed in the DWCF: Allow the Department
to reserve cash beyond current levels to mitigate the impact of market
volatility.
2. Expand funding sources for DWCF: Allow the Department to
transfer expiring unobligated balances from appropriated accounts to
fund the DWCF.
3. The Department proposed legislation in previous years that
would allow Treasury to provide the difference between the budgeted
amount for fuel and the actual cost of fuel for a fiscal year, to be
paid back in the budget year by the Department setting its standard
price to generate the necessary funds.
The Defense Business Board (DBB) also recently recommended the
Department utilize techniques that involve market-based financial
instruments, which would be a departure from a long-standing Government
policy of self insurance. I believe it is in the Department's best
interests to consider a range of approaches to this challenge and that
the best approach at this time is (3) above. [See page 24.]
Secretary Pfannenstiel. In consideration of the fact that 17% of
DON's energy use is nuclear based, which DON considers alternative
energy, and in consultation with the CNO and Commandant, the SECNAV
established a challenging, but achievable goal that by 2020, 50% of
DON's energy to power the Fleet would come from alternative sources. In
light of the increasing volatility of conventional fossil fuels, which
have resulted in a $1.2B additional bill in FY12 on top of a $300M
additional bill in the last quarter of FY11, the need to secure more
domestically produced, renewable sourced fuels is imperative. Without
more domestically produced fuels, the DON will continue to be subjected
to fuel price volatility and be compelled to trade training, facility
sustainment, and needed programs to pay for unplanned bills. [See page
19.]
Secretary Pfannenstiel. Deployed U.S. Navy warships and aircraft
receive fuel from two general sources, directly from barges and trucks
in foreign ports and airfields and from Fleet Oilers operated by the
Military Sealift Command (MSC). Deployed MSC Fleet Oilers obtain fuel
from the following ports:
Seventh Fleet: Singapore, Guam, Sasebo
Fifth Fleet: Jebel Ali, Fujairah, Djibouti
Sixth Fleet: Rota, Souda Bay, Augusta Bay
With the exception of Guam, all could be characterized as ``foreign
sources'' since they are delivered to the U.S. Navy in a foreign
location, however fuel oil is a global commodity and the point of
origin (extraction and/or refinement) is unknown.
U.S. Navy warships and tactical aircraft burn an average of 18
million barrels of fuel per year. 50% of that fuel is burned while
deployed. 95% of the fuel burned while deployed is received from
foreign fuel sources therefore 48% of all fuel burned by U.S. Navy
warships and tactical aircraft is received from foreign fuel sources.
Deployed: 9,000,000 Bbls; Foreign Sourced 95%
Non-Deployed: 9,000,000 Bbls; Foreign Sourced 0%
Total Average Annual Fuel: 18,000,000 Bbls; Foreign Sourced 48%
[See page 25.]
?
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QUESTIONS SUBMITTED BY MEMBERS POST HEARING
March 29, 2012
=======================================================================
QUESTIONS SUBMITTED BY MR. FORBES
Mr. Forbes. 1) What is DOD's position on supporting Lattice
Assisted Nuclear Reactions as a fuel additive and alternative, safe
nuclear reactor technology for solving DOD's energy challenges?
Secretary Burke. I think the Department should be open to
investigating a wide variety of technologies to address its energy
challenges. The question in all cases should be, ``What are the
advantages and disadvantages, costs and benefits of a specific
technology in specific circumstances?'' While there has been scientific
controversy around Lattice Assisted Nuclear Reactions, one of the
reasons DOD has a large technical community is to help resolve such
controversies over time. I trust they will do so, leveraging the
expertise of the Department of Energy, which is the primary steward and
arbiter of such technologies. And the idea of small modular reactors
for use in deployed locations has been suggested--an idea that presents
some interesting opportunities but also poses significant challenges
and key questions, particularly given the large capital costs required.
Before deciding to acquire or deploy any such reactors we'd need to
take a close look at all the issues involved, but I don't think we
should prejudge the answers.
Mr. Forbes. 2) How much are the DOD and each military service
spending on energy in Fiscal Year 2013 and across the FYDP? How does
the Department of Defense define and track its energy investments? And
where are the investments made--across what funding lines and types of
activities?
Secretary Burke. In regards to operational energy, the Department's
FY13 request includes $16.3B in FY13 and approximately $52B across the
FYDP for petroleum for operational purposes. For the FY13 request,
$11.9B is requested in the base budget and $4.4B is requested in
Overseas Contingency Operations (OCO) funds. No OCO funding for
petroleum is requested past FY 2013.
Operational energy investments reduce demand for energy in military
operations and training, expand and secure energy supplies for military
operations and training, and build energy security into the future
force. DOD requests approximately $1.6B for FY13 and $9.0B over the
FYDP for these initiatives. These investments include improvements that
lessen weight, improve thermal dynamics, or decrease volume, all which
result in energy efficiencies. Although there is no single operational
energy program element, DOD tracks operational energy investments with
a Select & Native Programming (SNaP) Operational Energy Resources
exhibit. The soon to be published FY 2013 Operational Energy Budget
Certification, which Congress assigned to my office in the FY 2009
NDAA, will provide detailed information on DOD's requested FY13
operational energy investments.
Mr. Forbes. 3) How will energy reductions in contingency operations
lead to increased readiness? How does the Department plan to track the
energy consumption to accurately account for reductions? What
innovative technologies are being pursued, and how quickly can they be
fielded in order to provide maximum impact?
Secretary Burke. Energy demand reductions in military operations
increase readiness through improved range, endurance, and reliability
of air, ground and naval forces.
The Department of Defense has established the Defense Operational
Energy Board (DOEB), which is co-chaired by the Assistant Secretary of
Defense for Operational Energy Plans and Programs and the Joint Staff
Director for Logistics. The DOEB has chartered a task group to develop
a baseline of operational energy consumption to inform energy
performance metrics. Once developed, DOD will apply these metrics to
measure and manage improvements in energy security for the warfighter.
The Department's innovation efforts include technologies that
improve power generation and distribution, batteries and battery
charging, building materials and design, and shelter systems (lighting,
heating, ventilation, air conditioning). To rapidly field these
technologies, the Services have a variety of mechanisms, such as Army's
Rapid Equipping Force (REF). The REF strives to field equipping
solutions to operational commanders within 180 days of a validated
requirement.
Mr. Forbes. 4) What action is the Department of Defense taking to
reduce energy consumption at ``Enduring Locations''?
Secretary Burke. DOD is employing several different methods to
reduce energy consumption at ``Enduring Locations.'' The 2012 U.S.
Global Defense Posture Report to Congress describes these installations
as ones ``where DOD intends to maintain access and/or use of that
location for the foreseeable future.'' Because these locations will be
used by U.S. military forces over a longer period of time, we are able
to plan for and employ more effective energy solutions.
One of the most effective ways to reduce energy consumption is to
improve the quality of facility construction. DOD is pursuing this at
many of enduring locations, which in many cases is most effectively
done by upgrading the structures from expeditionary tents to better-
insulated modular or temporary buildings. DOD is also reducing fuel
consumption by being more efficient in the way we generate electricity
at these locations. This typically involves converting the electricity
generation systems from individual spot generation to a more efficient
centralized electrical generation and distribution grid.
Mr. Forbes. 5) How is the Department of Defense incentivizing
contractors in contingency operations to employ innovative processes
and technology solutions to reduce their demand for energy?
Secretary Burke. In May 2011, my office partnered with U.S. Central
Command to identify the best near-term opportunities to reduce
battlefield fuel demand through changes in operational contract
support. In June 2011, the Army launched the Logistics Civil
Augmentation Program (LOGCAP) Energy Savings Initiative (ESI), which
uses the prospect of increased award fees to incentivize power
optimization assessments for over 6,500 spot generators located on more
than 119 bases in Afghanistan. In response, LOGCAP contactors in
Afghanistan have completed or started 78 initiatives to date, which are
estimated to save over five million gallons of fuel through
optimization of spot power generation and the use of centralized
utilities power generators. The number and status of these contractor
recommendations for optimized power generation will be tracked and
subsequently used in contractor performance evaluation boards to
determine award fees. The Department also is working to adapt its
broader range of operational contract support agreements to employ
similar incentives and initiatives.
Mr. Forbes. 6) In Section 2841 of the FY 2010 National Defense
Authorization Act (NDAA), the Department of Defense (DOD) was directed
to develop and adopt a ``Unified Energy Monitoring and Utility Control
System Specification for Military Construction and Military Family
Housing Activities.'' What progress has been made in the past 2 years
to develop and adopt a single, DOD unified specification for energy
monitoring and utility control systems?
Dr. Robyn. The Department of Defense has made significant progress
in developing and adopting a single unified specification for energy
monitoring and utility control systems. The Unified Facility Guide
Specification (UFGS) 25-10-10, Utility Monitoring and Control System
(UMCS) was sent for stakeholder review in late 2011. It is currently
being revised to include an additional protocol, which will ensure that
all Services have a total solution. The revised draft is expected to be
released in late October 2012.
The protocol is being developed in conjunction with Unified
Facilities Criteria (UFC) documents. The UFC's tells the designers what
to do, and the UFGS tells them how they must do it. The first UFC (UFC
3-470-01) was issued in May 2012 and additional UFC's for the other
protocols are in development. The UFC's and UFGS are being closely
coordinated with National Institute of Standards and Department of
Homeland Security to ensure the documents contain the most current
guidance for cyber and operations security.
Mr. Forbes. 7) How much is the DOD and each military service
spending on energy in Fiscal Year 2013 and across the FYDP? How does
the Department of Defense define and track its energy investments? And
where are the investments made--across what funding lines and types of
activities?
Dr. Robyn. With respect to facility energy, the Department's FY13
budget request includes more than $1.1 billion for investments in
conservation and energy efficiency, and almost all of that is directed
to existing buildings. The majority of this funding is in the Military
Services operations and maintenance accounts, to be used for
sustainment and recapitalization projects. Such projects typically
involve retrofits to incorporate improved lighting, high-efficiency
HVAC systems, double-pane windows, energy management control systems
and new roofs. DOD tracks facility energy investments through budget
exhibits required by the Department's Financial Management Regulation.
Mr. Forbes. 8) In Fiscal Year 2013, how much is the Department of
Defense investing in installation energy programs, and what is the
payback associated with those investments? How are these savings
manifested in the Fiscal Year 2013 budget request and in future years?
Dr. Robyn. The Department is reducing its demand for traditional
forms of facility energy through conservation and improved energy
efficiency. The Department's FY13 budget includes more than $1.1
billion for investments in conservation and energy efficiency, and
almost all of that is directed to existing buildings. The lion's share
($968 million) is in the Military Components' operations and
maintenance accounts, to be used for sustainment and recapitalization
projects. Such projects typically involve retrofits to incorporate
improved lighting, high-efficiency HVAC systems, double-pane windows,
energy management control systems and new roofs. The remainder ($150
million) is for the Energy Conservation Investment Program (ECIP), a
flexible Military Construction account that my office allocates to the
Services for energy infrastructure construction, improvements, and
repairs.
Although the return on investment varies with the nature of the
project, we estimate the average payback is 7-8 years. For ECIP-funded
investments, for which we have the best historical record, every dollar
invested typically saves about two dollars over the lifetime of the
project. These savings take the form of reduced utility bills.
Mr. Forbes. 9) How does a fragile domestic electric grid impact
decisions for energy investments in the Department of Defense?
Dr. Robyn. Our entire strategy for facility energy is designed to
reduce the vulnerability of military installations to potential outages
of the commercial electric power grid. But we are addressing that
problem most directly through our investments in advanced, or
``smart,'' microgrid technology. Smart microgrids--combined with on-
site energy generation--and energy storage offer a more robust and cost
effective approach to ensuring installation energy security than the
current one--namely, back-up generators and (limited) supplies of on-
site fuel. Although microgrid systems are in use today, they are
relatively unsophisticated, with limited ability to integrate renewable
and other distributed energy sources, little or no energy storage
capability, uncontrolled load demands, and ``dumb'' distribution that
is subject to excessive losses. By contrast, we envision microgrids as
local power networks that can utilize distributed energy, manage local
energy supply and demand, and operate seamlessly both in parallel to
the grid and in ``island'' mode.
Advanced microgrids are a ``triple play'' for DOD's installations.
First, they will facilitate the incorporation of renewable and other
on-site energy generation. Second, they will reduce installation energy
costs on a day-to-day basis by allowing for load balancing and demand
response--i.e., the ability to curtail load or increase on-site
generation in response to a request from the grid operator. Most
important, the combination of on-site energy and storage, together with
the microgrid's ability to manage local energy supply and demand, will
allow an installation to shed non-essential loads and maintain mission-
critical loads if the grid goes down.
DOD's Installation Energy Test Bed has funded ten demonstrations of
microgrid and storage technologies to evaluate the benefits and risks
of alternative approaches and configurations. We are working with
multiple vendors so as to ensure that we can capture the benefits of
competition. Demonstrations are underway at Twentynine Palms, CA
(General Electric's advanced microgrid system); Fort Bliss, TX
(Lockheed Martin); Joint Base McGuire-Dix-Lakehurst, NJ (United
Technologies); Fort Sill, OK (Eaton); and several other installations.
In addition to funding technology demonstrations, my office has
commissioned two studies from outside experts. First, MIT's Lincoln Lab
just completed a technical review of the Department's work on
microgrids. In addition to describing the range of ongoing activity,
the Lincoln Lab report classifies different microgrid architectures and
characteristics and compares their relative cost-effectiveness. (For a
summary of the study, see: http://www.serdp.org/News-and-Events/News-
Announcements/Program-News/DOD-study-finds-microgrids-offer-improved-
energy-security-for-DOD-installations.) Second, ICF, Inc. is just
beginning a financial analysis of the opportunities for installations
to use intelligent microgrids and other energy security technologies
(on-site generation, load management, stationary energy storage and
electric vehicle-to-grid) to generate revenue. In addition, Business
Executives for National Security (BENS), a non-profit, is analyzing
alternative business models for the deployment of microgrids on
military installations. As part of that analysis, which will be
completed this fall, BENS is looking at the appropriate scale and scope
for an installation microgrid (e.g., Should it stop at the fence or
include critical activities in the adjacent community?) and at the
impediments to widespread deployment.
Mr. Forbes. 10) What is the impact of encroachment from renewable
energy projects outside of installations, is encroachment a serious
concern, and what is the Department doing to mitigate the impacts?
Also, are there any specific locations/installations that are of
particular concern based on possible degradation of military readiness?
Dr. Robyn. Expanding renewable energy infrastructure can have an
impact on DOD's use of air, land, and sea space for operations,
readiness, training, and testing missions. DOD has multiple equities
that must be considered with regard to site selection and the
development of our national renewable energy infrastructure. Over the
last 18 months, DOD has aggressively reformed its processes and
increased outreach to the industry. We established a Siting
Clearinghouse to evaluate new projects. When a new project appears to
be incompatible with military missions, we work with industry to find
possible mitigation solutions. To date, 657 proposed renewable energy
projects have undergone evaluation, and 633 of those, or 96%, have
resulted in no DOD objection.
The remaining 4% of projects with significant impact are clustered
around a few critical, unique test and training facilities. To date,
our most serious concerns involve the Nevada Test and Training Range;
R-2508 (the airspace surrounding Edwards AFB and the Navy's China Lake
facility); the White Sands Missile Range; Fort Huachuca's Buffalo
Soldier Electronic Testing Range; the Boardman Range area; and Naval
Air Station Patuxent River.
Mr. Forbes. 11) As offshore energy development continues to
increase, are there any concerns for impact to military readiness? If
so, what action is the Department of Defense taking to proactively
engage on this issue? And, what leverage does the Department have, if
any, to veto projects that would severely degrade military capability?
Dr. Robyn. The Department of Defense uses extensive areas above the
Outer Continental Shelf for military training, testing and operations,
and there is significant potential for offshore energy development to
have an impact on these activities. The DOD works closely with the
Department of the Interior's Bureau of Ocean Energy Management (BOEM)
on renewable and conventional energy issues and with BOEM led coastal
state task forces on renewable energy to ensure that offshore energy
development does not have an adverse impact on military activities in
the OCS areas. DOD has no direct veto authority regarding energy
development on the OCS, but BOEM can either deny a lease or place
stipulations on it at DOD request. Our ongoing collaborative work with
BOEM and the coastal state task forces is preventing any severe
degradation to our military capabilities.
Mr. Forbes. 12) The Department of Defense has an increased emphasis
on leveraging third-party investments for installation energy projects.
What is the total value of private sector financing that the Department
is leveraging? What liabilities does the Department assume by entering
into these contracts, and what flexibility is there to terminate these
contracts if conditions change?
Dr. Robyn. In FY 2011, the Department entered into $405 million
worth of facility energy efficiency performance contracts. These
include both Energy Savings Performance Contracts (ESPCs) and Utility
Energy Service Contracts (UESCs) and depend on private, third-party
capital.
The Services are using these third-party financing tools to improve
the energy efficiency of their existing buildings. In response to the
President's memorandum of 2 December, 2011, calling on the Federal
Government to initiate $2 billion worth of these performance-based
contracts over the next two years, the Department has a goal to execute
roughly $465 million in ESPCs and UESCs in FY12 and another $718
million in FY13.
The nature of the liabilities the Department assumes with a project
will depend on the terms of the individual project. The consistent
major requirement, a liability to some, is that the Department enters
into a contract for a fixed term. This includes both the requirement to
have land encumbered and to purchase power at set rates for a set
period of time. The Department cannot cancel these obligations without
assuming termination costs. A benefit of this is that it also means
that the Department can reliably plan and lock in its energy rates for
the same period of time as the contract.
To the extent that the Department is not actually purchasing any
energy from the project but is simply a passive lessor, the liability
is that the land is encumbered for the period of the lease. If the
Department wants to take the property back before the lease has
expired, it would have to pay the value of the leasehold plus
improvements. There is generally no provision for changed economic or
technological conditions. If the price of energy fluctuates, the
Department will still pay the contract rate, whether higher or lower
than the current commercial rate. If technological changes result in
obsolescence of the equipment, as is likely given the nature of
renewable energy, the Department would have no option to demand changes
unless it was willing to pay for them. That, however, is the case with
any contract that is not simply set at the market rate.
Mr. Forbes. 13) How does the Department of Defense apply and
incorporate LEED silver, ASHRAE and other building standards into its
Unified Facilities Criteria and policies to ensure maximum return on
investment while precluding investments in unnecessary building
features that provide no utility and result in no savings?
Dr. Robyn. The current DOD sustainable buildings policy (Oct 2010)
requires all Components to do four things with respect to new
construction and major renovation projects:
Comply with the Guiding Principles for High Performance Sustainable
Buildings referenced in E.O. 13514 and E.O. 13423; Achieve a LEED
Silver (or equivalent) certification; Earn at least 40% of the points
toward certification from energy and water savings measures; and
Incorporate a life-cycle cost/benefit analysis.
In addition to the existing policy, the Department is developing a
new Unified Facilities Criteria (UFC) document for high performance
buildings that will establish the minimum requirements for all new
buildings and renovations of existing buildings. The document, which
has been through a rigorous technical review process, blends aspects of
ASHRAE 189.1, references to other UFC documents, and new content to
achieve the best balance of cost-effectiveness, safety, security, and
mission harmony. In order to comply with the new UFC, projects will
have to complete a whole building life-cycle cost analysis using the
National Institute of Standards and Technology Handbook 135.
Mr. Forbes. 14) How much are the DOD and each military service
spending on energy in Fiscal Year 2013 and across the FYDP? How does
the Department of Defense define and track its energy investments? And
where are the investments made--across what funding lines and types of
activities?
Secretary Hammack. In the FY13 budget request the Army plans to
spend $4.5 billion on its energy program. This sum includes $2.5
billion for liquid fuel and $1.05 billion for utility services such as
electricity and natural gas. The Army will also invest $960 million to
reduce future energy consumption ($560 million in our operational
forces and $400 million for installations). We also anticipate
attracting well over $500 million in private sector investment through
performance contracting and power purchase agreements.
The $560 million in Operational Energy Investment includes $406
million in energy related acquisition programs and $154 million in
science and technology research. The $400 million in Installation
Energy Investment includes $343 million in the Army's Energy Program/
Utilities Modernization account, $50 million in the Department of
Defense (DOD) ``Defense-Wide'' appropriation for the Energy
Conservation Investment Program (ECIP) and $7 million of installation
related science and technology research.
Mr. Forbes. 15) What is the funding shortfall in Fiscal Year 2012
for the price of fuel, and how does each Service expect to pay for that
shortfall?
Secretary Hammack. The Army has a potential FY 2012 Operation and
Maintenance, Army (OMA) fuel shortfall of up to $630M, $219M in the
base budget and $411M in Overseas Contingency Operations.
Since the FY 2012 President's Budget (PB) submission, the
forecasted composite price increased from $131.04 per barrel in the FY
2012 PB to $161.70 per barrel, a 23% increase. The Army is closely
monitoring execution and will address any issues during its Mid-year
Review.
Mr. Forbes. 16) What is the cost savings associated with the Army's
Net Zero program, and how will the Army reach its goals and in what
timeframe?
Secretary Hammack. The Army anticipates that its Net Zero
Initiative, by taking a holistic look at energy, water and waste
systems, will result in significant savings as compared to examining
each of the systems in isolation. The pilot installations aim to
consume only as much energy as they produce, use as much water as they
collect or treat on site, and eliminate solid waste disposal in
landfills by the year 2020. While all Army installations are permitted
and encouraged to strive to achieve Net Zero, the pilot installations
are being studied to provide valuable information for other
installations to follow.
The Army does not view Net Zero as a stand-alone program. The pilot
installations will leverage existing resources and collaborations with
the private sector to strive towards the energy, water, and waste
reduction goals of Net Zero. Cost savings from Net Zero-associated
projects and efforts at the 17 pilot installations will vary based on
local utility rates, existing installation energy and water
efficiencies, and the specific projects that the pilot installations
identify. The Net Zero Initiative allows for lower installation and
facility utilities costs because of increases in efficiency that reduce
the amount of energy and water needed to provide the same level of
service while also reducing waste streams.
Mr. Forbes. 17) The Army adopted a new sustainable building
standard, ASHRAE 189.1 which prescribes standards for sustainability,
water and energy efficiency among other attributes. What cost benefit
analysis was undertaken before adopting that new standard? And, was
that validated by a third party to ensure that there is a return on
investment?
Secretary Hammack. Adoption of ASHRAE Standard 189.1 occurred
following a rigorous and peer reviewed Energy and Sustainable Design
study led by the U.S. Army Corps of Engineers to determine a life-cycle
cost-effective path for the Energy Independence and Security Act (2007)
compliance. The Department of Energy's Pacific Northwest National
Laboratory, National Renewable Energy Laboratory and select industry
leaders collaborated in the study, which the Rocky Mountain Institute
peer reviewed. The study's results found that compliance with the
ASHRAE Standard 189.1 yields an energy savings of approximately 30
percent without any additional cost.
Mr. Forbes. 18) What is DOD's position on supporting Lattice
Assisted Nuclear Reactions as a fuel additive and alternative, safe
nuclear reactor technology for solving DOD's energy challenges?
Secretary Pfannenstiel. The Department does not currently have a
specific program supporting lattice assisted nuclear reactions but is
open to investigating a wide variety of technologies that will address
energy challenges. While there has been some scientific controversy
around Lattice Assisted Nuclear Reactions, one of the reasons that DOD
has a large technical community is to help resolve such controversies
over time, leveraging the expertise of the Department of Energy.
Additionally, the use of small modular reactors for use in deployed
locations has been suggested but the idea presents some interesting
opportunities and also poses significant challenges. One of the key
concerns would be the large capital costs required. Before deciding to
acquire or deploy any such reactors the Department would need to take a
close look at all the issues involved.
Mr. Forbes. 19) How much is the DOD and each military service
spending on energy in Fiscal Year 2013 and across the FYDP? How does
the Department of Defense define and track its energy investments? And
where are the investments made--across what funding lines and types of
activities?
Secretary Pfannenstiel. The Department of Navy has budgeted $1B on
energy for FY2013:
$338M for Navy tactical energy requirements. $438M for Navy
shore energy requirements. $64M for Marine Corps tactical
energy requirements. $161M for Marine Corps shore energy
requirements.
Across the FYDP the Department has budgeted:
$1.9B for Navy tactical energy requirements. $1.7B for Navy
shore energy requirements. $.4B for Marine Corps tactical
energy requirements. $.4B for Marine Corps shore energy
requirements.
Investments are made across all ship, aviation and shore
procurement, O&M, and RDT&E accounts.
DON energy goals and statutory requirements define the Department's
energy investments and are tracked using Navy systems Claimant
Financial Management System (CFMS) and Program Budget Information
System (PBIS).
Navy and Marine tactical energy initiatives include:
Aviation simulator upgrades (to reduce aircraft flying hours
needed). Advanced propulsion and power efforts, such as
variable cycle engines, hybrid electric drives for destroyers,
and alternative fuels testing and certification. Increased
efficiency measures, including stern flaps on ships, propeller
coatings, shipboard solid state lighting, waterwash of ships'
gas turbines. Energy management systems such as the energy
dashboard for ships. Cultural change efforts such as Air ENCON
and i-ENCON. Advanced energy sources for ground troops,
including solar energy devices to reduce the fuel reliance of
deployed Marines and its logistical tail. More fuel efficient
medium tactical vehicle replacement for ground troops.
Navy and Marine shore initiatives include:
Efficiency upgrades such as lighting and HVAC improvements,
roof retrofits, and efficient window film installation.
Advanced metering and energy management. Non-tactical vehicle
efforts, to include implementing relevant technologies and
alternative fuel vehicles. Renewable energy projects such as
landfill gas, solar, and wind energy projects.
Mr. Forbes. 20) What is the funding shortfall in Fiscal Year 2012
for the price of fuel, and how does each Service expect to pay for that
shortfall?
Secretary Pfannenstiel. At PB12, the budgeted fuel rate was $131.04
per barrel, but this was subsequently increased to $165.90 on 1 October
and reduced to $160.44 on 1 January. The result is an average fuel rate
of $161.70 for FY12, and this creates an overall fuel price shortfall
of $908 million for Operation & Maintenance, Navy (OMN) and $61 million
for Operation & Maintenance, Navy Reserve (OMNR). This shortfall will
be funded through anticipated reprogramming actions, below threshold
realignments, or curtailment of operations.
Mr. Forbes. 21) How much will it cost the Navy to achieve the
President's recently announced goal of one gigawatt of power by 2020?
Secretary Pfannenstiel. The Department of the Navy expects no new
capital outlays to meet the President's renewable energy goal. The
majority of projects undertaken will be executed using existing third-
party mechanisms such as power purchase agreements, enhanced use
leases, joint ventures, energy savings performance contracts and
utility energy savings contracts wherein developers bear construction
costs and risks for individual projects. The cost of energy from these
projects must be equal to or less than, on a life cycle basis, the cost
of conventional power. As an example, recently DON has executed three
power purchase agreements: a 13.8 MW solar project at NAWS China Lake,
a 1.5 MW solar project at MCLB Barstow, and a 1.2 MW solar project at
MCAGCC Twentynine Palms. The power produced by each of these three
projects will be cheaper than available conventional power and will
save DON approximately $20M over the 20-year life of the contracts.
Administrative costs to develop DON's renewable energy strategy
will include fees associated with hosting a small number of industry
forums, soliciting studies, and possibly contractor/staff support. DON
has funds available to cover these costs.
Mr. Forbes. 22) How much has the Navy spent on the purchase of
biofuel to date? And, how has the price changed over that period? What
are the biofuel requirements (in quantities and cost) in order for the
Navy to sail the Great Green Fleet in 2016?
Secretary Pfannenstiel. The table below contains contracts awarded
for hydrotreated renewable (HR) fuel that have been procured for use in
Navy's alternative fuel test and certification program which amounts to
a total of $30.37M.
----------------------------------------------------------------------------------------------------------------
50/50 Blended Biofuel Cost
Product Date of Contract per Gallon Quantity (gal)
----------------------------------------------------------------------------------------------------------------
HRJ5 8/31/2009 $34.03 80,000
----------------------------------------------------------------------------------------------------------------
HRJ5 9/1/2009 $75.58 3,000
----------------------------------------------------------------------------------------------------------------
HRJ5 6/29/2010 $18.65 300,000
----------------------------------------------------------------------------------------------------------------
HRD76 8/30/2010 $35.44 300,000
----------------------------------------------------------------------------------------------------------------
HRJ5 11/30/2011 $15.36 200,000
----------------------------------------------------------------------------------------------------------------
HRD76 11/30/2011 $15.35 700,000
----------------------------------------------------------------------------------------------------------------
In order to perform the test and evaluation event over a week's
time period in the Great Green Fleet demonstration in July 2012, and
gather the appropriate performance data, Navy determined that 700,000
gallons of 50/50 blended marine biofuel/petroleum and 200,000 gallons
of 50/50 blended aviation biofuel/petroleum would provide the
sufficient volumes for this process. For the Great Green Fleet
deployment in 2016, Navy anticipates it will need approximately
3,360,000 gallons of 50/50 blended marine biofuel/petroleum and
3,360,000 gallons of 50/50 blended aviation biofuel/petroleum. For
future operational purchases of advanced biofuels, the Navy anticipates
buying those that are cost competitive with conventional fuels.
[GRAPHIC] [TIFF OMITTED] 73800.080
As the above chart indicates, biofuel prices have decreased
significantly from when Navy first started its test and certification
process. Navy anticipates that as demand increases and the supply base
expands further reductions in biofuel prices will occur.
Further, when looking at the alternative fuel purchases over the
past three years, the Navy has spent approximately 0.17% of their
entire fuel budget for those three years.
There are a number of studies that state the case that biofuels
will be cost competitive in the 2018-2025 timeframe without Government
investment. These studies are from LMI, MIT, and Bloomberg New Energy
Finance. The LMI report also states that authorities like the Defense
Production Act Title III, could accelerate the development of a mature
alternative fuel market.
Mr. Forbes. 23) How will the market be affected with the
Government's $1 billion proposed investment in biofuels through the
Defense Production Act? And, what would be the implications if the
Department of Defense does not make that investment? How does the Navy
balance this proposed investment against shortfalls and decrements in
other key accounts such as Operation & Maintenance and Procurement?
Secretary Pfannenstiel. The Navy does not plan to invest $1 billion
into the Defense Production Act (DPA) Title III effort. The Navy plans
only to invest $170 million, which is to be matched by $170 million
from both the Department of Energy and the Department of Agriculture.
This total planned investment is $510 million, which would be required
to be matched at least 50:50 by private industry to make a minimum
project value of in excess of $1 billion.
The uncertainty in fuel prices and their continued volatility makes
this investment crucial to ensuring accounts such as O&M can pay for
the activities for which they were programmed, rather than being forced
to reprogram funds mid-year from O&M accounts to cover budget
shortfalls due to unforecasted rises in fuel prices. Alternative fuels
investment is a method for obtaining an assured, secure, domestic
energy source that is not wholly subject to the vagaries of the
international petroleum markets and thus will eventually allow for more
certainty in budgetary planning.
Mr. Forbes. 24) How much is the DOD and each military service
spending on energy in Fiscal Year 2013 and across the FYDP? How does
the Department of Defense define and track its energy investments? And
where are the investments made--across what funding lines and types of
activities?
Secretary Yonkers. The Air Force expects to spend over $10 billion
to purchase electricity and fuel in Fiscal Year 2013 (FY13), and
anticipates that expenditure to increase in the future. To reduce its
energy consumption, the Air Force is investing in both material and
non-material solutions in infrastructure and aviation, as well as
conducting RDT&E where appropriate. Given the critical role of energy
in Air Force operations, the benefits of energy investments are
carefully weighed against the initial and recurring costs, enabling
energy initiatives to be evaluated and appropriately funded along with
other Air Force priorities in order to maximize the use of Air Force
resources. Energy investments, as well as all other initiatives, are
evaluated by the Air Force Corporate Structure (AFCS), which makes
decisions based on the needs of the Air Force with the support of
business case analyses. The Air Force identifies projects that have
significant impacts on energy use and tracks them throughout the AFCS
process by assigning an energy tag to the appropriate line item.
The Air Force is requesting more than $530 million in Fiscal Year
(FY) 2013 for aviation, infrastructure, and research, development, test
and evaluation (RDT&E) energy initiatives to reduce demand, improve
efficiency, diversify supply, and enhance mission effectiveness. The
majority of these funds would be executed to improve the energy
efficiency of Air Force installations and RDT&E projects.
Included in the FY13 budget request is $215 million for energy
conservation projects on Air Force installations, a continuation of the
nearly $800 million the Air Force has invested in such projects over
the last four years. As a result of those energy conservation efforts,
the Air Force has cumulatively avoided $1.1 billion in facility energy
costs since 2003. FY12 investments to improve facility energy
efficiency and reduce energy requirements are expected to start
generating savings in FY14, and the majority is expected to payback
before or just shortly after the FYDP.
From an RDT&E perspective, the Air Force is taking a lead, follow,
and watch approach, where the Air Force is a lead investor and creates
or invents novel technologies in areas that are critical enablers of
Air Force core missions and associated platforms, such as aircraft
engines. In the follower role, the Air Force rapidly adopts and/or, as
needed, adapts or accelerates technologies originating from external
organizations who are leaders and primary investors in focused S&T
areas as part of their core mission, while in the watcher role, the Air
Force uses and leverages others` S&T investments in areas that are not
primary or core missions. In FY13, the Air Force is requesting more
than $300 million in energy RDT&E.
Mr. Forbes. 25) What is the funding shortfall in Fiscal Year 2012
for the price of fuel, and how does each Service expect to pay for that
shortfall?
Secretary Yonkers. The Air Force projects a shortfall of
approximately $1.4 billion due to the increased price of fuel from the
FY12 budgeted rate of $131.04 per barrel ($3.12 per gallon) to $161.70
per barrel ($3.82 per gallon). This shortfall will be funded through
below threshold realignments, anticipated reprogramming actions, or
curtailment of operations.
Mr. Forbes. 26) Since Air Force aviation accounts for half of the
total U.S. Government's fuel consumption, what are you doing to become
more efficient, change the culture, and integrate technology to reduce
the demand for fuel, particularly with the volatility in the fuel
market?
Secretary Yonkers. Broadly speaking, the Air Force is seeking to
reduce aviation fuel demand and change the culture through material and
non-material, or policy, solutions. This includes investing in
research, development, test and evaluation (RDT&E) opportunities and
include energy as a factor in the acquisition process.
From a material solutions perspective, the Air Force has several
initiatives underway or in development that will reduce the demand for
aviation fuel. For example, in the FY13 budget request, the Air Force
is requesting funding for the KC-135 tanker CFM engine Propulsion
Upgrade Program, which seeks to upgrade the engine's high-pressure
components. These components improve each engine's efficiency,
reliability, and maintainability. It requires a total investment of
$278 million through FY28, starting with an investment in the
President's budget of $29 million. The investment is expected to yield
a reduction of 1.5% in fuel consumption, or around 56 million gallons
($150 million), through FY46. The maintenance savings are not expected
until FY25 and should save an additional $1.3 billion.
Another example is the KC-10 drag cleanup initiative, which will
modify wing and fuselage components to reduce their resistance to the
airflow in flight. A total investment of $28.1 million, starting with
$2.1 million in FY13, will buy the complete drag cleanup of all 59 KC-
10s in the inventory. The investment yields a fuel reduction of 1.4% or
about $5 million per year. This is a low risk venture as these
modifications have already been made in the commercial MD-11, a similar
aircraft to the KC-10.
The Air Force is focusing its RDT&E efforts primarily to meet
unique aviation, space, and cyberspace missions, as opposed to areas
where there is significant overlap with its Sister Services or private
industry. For example, in FY13 the Air Force is requesting more than
$300 million in energy RDT&E, which includes $214 million for the
Adaptive Engine Technology Development (AETD) initiative. This
initiative will build upon the Adaptive Versatile Engine Technology
(ADVENT) effort to reduce energy consumption and improve efficiency and
reliability of future and legacy aircraft, and current estimates are
that it will be as much as 25% more fuel efficient than current
technology.
From a policy solutions perspective, the Air Force has introduced
multiple no- or low-cost initiatives that helped avoid 54.5 million
gallons in fuel consumption, or $208.1 million in fuel costs, in FY13
alone. For example, in October 2011, Air Mobility Command eliminated
the extra fuel carried while still maintaining safety standards.
Category 1 fuel requirements existed for decades as an added amount of
reserve fuel equal to 10% of the time over water (outside of ground-
based navigation systems) to account for inaccurate navigation systems.
With technological advances and current on-board navigation systems
requirements, this additional fuel is unnecessary, and by eliminating
the requirement (and associated excess weight), the Air Force estimates
it saves 5 million gallons in fuel annually.
Mr. Forbes. 27) If the Air Force is, in essence, taking a strategic
pause in its Military Construction account in Fiscal Year 2013, why
would there be continued investment in installation energy projects
through both appropriated funds and commitments to leverage third-party
financing?
Secretary Yonkers. The Air Force took a deliberate pause in MILCON
to ensure the right capital investment decisions were made while
adjusting force structure in line with the emerging defense strategy.
10 USC Sec. 2915 requires the military services to consider renewable
energy as a source of energy during the design phase of construction,
repair, or renovation if the renewable energy is cost effective. There
are no military construction projects exclusively for renewable energy.
This funding pause does not impact facilities sustainment, restoration,
and modernization (SRM) funding, which can be use to improve energy
security and avoid future costs. The Air Force needs to continue to
make the right investment, in the right asset, at the right time to
meet the challenges of a complex global environment.
______
QUESTIONS SUBMITTED BY MS. BORDALLO
Ms. Bordallo. 28) It is my understanding that among the biggest
challenges we face in achieving greater energy security is the
Department's procurement process, which may sometimes preclude or, at a
minimum, doesn't consider better integration of energy saving equipment
and products when procuring expeditionary infrastructure for deployed
forces or forward operating bases that could ultimately achieve more
significant savings and efficiencies. DOD's procurement officers lack
any meaningful coordination or incentives to achieve better energy
savings in their purchases or to consider how integration of a number
of energy enhancing products can make a sizeable difference in a unit,
battalion or forward operating base energy footprint.
Question: What efforts are you undertaking to encourage or even
require that, in addition to procurement costs, energy efficiency and
logistics efficiencies are factors when purchasing equipment and
products that support the Department's and the warfighter's mission and
operational readiness posture?
What can your offices and the services do to ensure that a systems-
level procurement approach is taken to capitalize on the synergies of
various energy-saving components and products, rather than procuring
items separately?
Secretary Burke. Formal revisions to DOD policy emphasizing the
need to procure more energy efficient materiel for deployments are in
coordination, but actions to deploy more energy efficient equipment are
already underway. My office is supporting Army and Joint Staff efforts
to reform requirements guidance on temporary base camp design and
related policies including procurement of fuel for power-demanding
equipment. The Army Operational Energy Initial Capability Document
(ICD), which will be released imminently, will provide the first
``military requirement'' to help inform decision-making on the
procurement of such items for operational forces. Similar efforts are
underway with the U.S. Marine Corps and the Joint Chiefs of Staff.
My office is also supporting Army planning for improved modeling
and simulation tools and data sets to assess the impact of different
levels of energy demand and logistics supply on the capability of a
military unit or vehicle. This will help the Army take energy
performance into account in force development.
Finally, under the Operational Energy Implementation Plan, a
Department-wide working group is identifying key energy-related
policies and guidelines that need updating, to include procurement
policies.
Ms. Bordallo. 29) Can you provide examples of Operational Energy
programs which support the current fight?
Secretary Burke. The Department has several operational programs
that support the current fight. For example, the U.S. Marine Corps,
through their Experimental Forward Operating Base (or ExFOB) program,
has equipped several battalions in southern Afghanistan with improved
tent insulation, LED lighting packages, and portable solar energy
devices. In the Army, the Rapid Equipping Force's ``Energy to the
Edge'' program is improving soldier power by fielding a range of
materiel and non-materiel energy improvements, including the Soldier-
Worn Integrated Power Equipment System, a system designed to reduce an
infantry platoon's need for batteries while on patrol. The Rapid
Equipping Force (REF), Project Manager Mobile Electric Power (PM MEP),
and Project Manager Soldier Warrior (PM SWAR) are collaborating to
train, equip, and sustain several Brigades deploying to Afghanistan
with energy-improved equipment, techniques, tactics, and procedures,
including more efficient generators. The U.S. Air Force has deployed
energy improved equipment to Central Command (CENTCOM), including solar
lighting, improved tent liners and flies, and LED (light-emitting
diode) lighting. Lastly, the Army's Research, Development and
Engineering Command's Field Assistance in Science and Technology Center
has established an ``Energy Initiatives Proving Ground'' to assess
performance and facilitate deployment of advanced shelter system
technologies. Collectively these programs and others like them
contribute to the Department's top mission priority today of supporting
our current operations.
Ms. Bordallo. 30) What are the Services doing to address fuel
consumption in its tactical vehicle fleet?
Secretary Burke. Tactical vehicles are clearly a key driver of
operational energy use and we are making progress increasing efficiency
in this area. To improve fuel efficiency of current combat vehicles,
the Army is executing engineering change proposals to add an auxiliary
power unit (APU) to the Abrams Main Battle Tank and a transmission
which provides about a three percent fuel efficiency improvement to the
Bradley Infantry Fighting Vehicle. For the on-going up-armor High
Mobility Multipurpose Wheeled Vehicle (HMMWV) recapitalization, the
Army has designed armor kits that can be removed during peacetime to
improve fuel economy and reliability.
For the future fleet of combat vehicles, the Army's Tank Automotive
Research Development and Engineering Center (TARDEC) has been quite
active in this area. They have been working on improvements such as
APUs to allow main engines to be turned off while not moving, hybrid
engines, and fuel efficient demonstrators to identify key fuel
efficiency technologies in HMMWV size vehicles. TARDEC's new Ground
Systems Power and Energy Laboratory, which will open in April 2012,
clearly demonstrates their strong commitment to this area.
Ms. Bordallo. 31) What are the Services doing to address fuel
consumption in its non-tactical vehicle fleet?
Dr. Robyn. Tactical vehicles are clearly a key driver of
operational energy use and we are making progress increasing efficiency
in this area. To improve fuel efficiency of current combat vehicles,
the Army is executing engineering change proposals to add an auxiliary
power unit (APU) to the Abrams Main Battle Tank and a transmission
which provides about a three percent fuel efficiency improvement to the
Bradley Infantry Fighting Vehicle. For the on-going up-armor High
Mobility Multipurpose Wheeled Vehicle (HMMWV) recapitalization, the
Army has designed armor kits that can be removed during peacetime to
improve fuel economy and reliability.
For the future fleet of combat vehicles, the Army's Tank Automotive
Research Development and Engineering Center (TARDEC) has been quite
active in this area. They have been working on improvements such as
APUs to allow main engines to be turned off while not moving, hybrid
engines, and fuel efficient demonstrators to identify key fuel
efficiency technologies in HMMWV size vehicles. TARDEC's new Ground
Systems Power and Energy Laboratory, which will open in April 2012,
clearly demonstrates their strong commitment to this area.
Ms. Bordallo. 32) How does LEED offer any concrete energy savings?
Dr. Robyn. LEED provides an easily accessible, uniform, and
commercially applied process for achieving the energy goals Congress
has set for DOD facilities. The LEED rating system requires every
building to meet the minimum statutory energy conservation requirements
of the Energy Independence and Security Act (EISA) of 2007. This pre-
requisite alone ensures the project will be designed to use 30% less
energy than typical buildings. In addition to the energy pre-requisite,
the mandatory integrated design process and optional credits of the
LEED system incentivize multi-disciplinary teams to save even more
energy by taking advantage of synergistic effects inherent in
complementary building systems like the HVAC system, lighting system,
and building envelope. For example, a tighter envelope that also offers
more daylighting can, in some climates, allow the team to reduce the
size of the HVAC system--a major cost driver in buildings.
Ms. Bordallo. 33) Can you provide examples of Operational Energy
programs which support the current fight?
Secretary Hammack. The Army has developed and deployed a range of
energy-related solutions to support the current operations. These
efforts are reducing fuel and water usage in theater as well as
lightening soldier loads. One example is the Army Corps of Engineers
work to replace individual spot generators with mini-grids to support
USFOR-A. These mini-grids are expected to save 50 million gallons of
fuel per year. Another example is the work of the Army Sustainment
Command and its LOGCAP contractors which have identified solutions for
USFOR-A bases that, when complete, will save 5 million gallons of fuel
per year. Finally, the Army is developing and deploying alternative
energy sources for dismounted Soldiers that reduce the numbers of
batteries Soldiers must carry through rechargeable batteries and
renewable energy recharging systems, thereby extending their mission
endurance. For example, through the Rapid Equipping Force, two Brigade
Combat Teams have received a suite of equipment such as the Rucksack
Enhanced Portable Power System (REPPS), the Soldier Worn Integrated
Power Equipment System (SWIPES) to increase unit endurance and
flexibility while performing operations in Afghanistan.
Ms. Bordallo. 34) The Army has a number of operational energy
related activities ongoing and the number of these activities is likely
to grow. Are there plans to synchronize these efforts?
Secretary Hammack. Yes. The Army designated the Office of the
Deputy Chief of Staff, G-4, as the Army Staff lead for Operational
Energy. That agency has the mission to integrate and synchronize
Operational Energy related programs across the Army and other military
services. It is currently drafting an annex to the Army Campaign Plan
that will provide direction and guidance to the Army as it moves to
achieve its operation energy goals.
Ms. Bordallo. 35) What is the Army doing to address fuel
consumption in its tactical and non-tactical vehicle fleet?
Secretary Hammack. The Army has the second largest fleet of Non-
Tactical Vehicles (NTVs) in the Federal Government consisting of over
76,000 vehicles. In FY11 the Army reduced its petroleum consumption in
its NTV fleet by more than 8 percent. The Army accomplished this
reduction by downsizing the total number of vehicles, right-sizing
vehicles with more fuel efficient models, aligning Alternative Fueled
Vehicles (AFV) to alternative fuel sources, and converting to hybrid or
electric vehicles wherever possible.
To address fuel consumption in its tactical vehicle fleet the Army
is investing in research to improve fuel efficiency in a variety of
ways. These efforts are being spearheaded by the United States Army
Tank Automotive Research, Development and Engineering Center (TARDEC),
which opened a new Ground Systems Power and Energy Laboratory in April.
These efforts include hybrid technology and fuel cell research, low
rolling resistance tires and more. In addition the Army is working to
certify its engines to burn alternative fuels.
Ms. Bordallo. 36) How do LEED and ASHRAE 189.1 offer any concrete
energy savings?
Secretary Hammack. Both the American Society of Heating,
Refrigeration and Air-Conditioning Engineers (ASHRAE) Standard 189.1
and elements of Leadership in Energy and Environmental Design (LEED)
offer concrete energy savings. Energy savings are achieved by increased
insulation values, improved window specifications, improved efficiency
of building equipment, improved lighting and energy efficiency building
system controls.
A study completed by the Pacific Northwest National Lab (PNNL)
found that Federal LEED-certified buildings cost less to operate and
used 25 percent less energy than the national average. Army analysis,
verified by the Department of Energy and reviewed by an independent
third party indicates that ASHRAE 189.1 can save up to 30 percent of
energy costs compared to current designs with little to no additional
upfront cost.
LEED is a rating tool that awards a level of certification based on
achieving certain criteria. Achieving LEED Certification requires at
least 10 percent energy savings over the baseline standard established
in energy performance tables found in ASHRAE 90.1-2007. LEED offers
additional credits for project performance when achieving higher levels
of energy savings. For example, by designer choice, LEED Optimize
Energy Performance credit (EA1), when achieved, may result in 25-30
percent energy savings over ASHRAE Standard 90.1-2007. Nearly all Army
projects achieve this credit.
ASHRAE Standard 189.1 differs from LEED in that it is an industry
building standard and compliance is achieved by meeting the minimum
performance requirements of the Standard. Within ASHRAE 189.1 there is
no requirement or credit given to exceed the specified criteria. The
level of required energy savings in ASHRAE Standard 189.1 is
approximately 30 percent below a baseline building meeting ASHRAE 90.1-
2007. The energy savings of ASHRAE Standard 189.1 was confirmed by an
independent evaluation conducted by the Pacific Northwest National
Laboratory. Starting in fiscal year 2013, all Army project will meet
the energy performance requirements of ASHRAE Standard 189.1.
Ms. Bordallo. 37) Does the Army plan to continue certifying to LEED
Silver standards?
Secretary Hammack. Yes. The Army requires certification to LEED
Silver as a third-party verification, which is consistent with Energy
Independence and Security Act of 2007 (EISA 2007) section 433. The Army
also has adopted ASHRAE Standard 189.1 starting with the FY13 military
construction programs as a minimum standard of building performance
from which energy systems are adjusted, based on life cycle cost
analysis to meet the energy efficiency requirements of EISA 2007. LEED
is a rating tool that awards a level of certification based on
achieving certain criteria. When the ASHRAE Standard 189.1 is met, the
building energy requirement savings is approximately 30 percent below a
baseline building meeting ASHRAE 90.1-2007. This equates to the credit
under LEED Optimized Energy Performance credit (EA1). Nearly all Army
projects achieve this credit from past experience as LEED Silver.
Ms. Bordallo. 38) Can you provide examples of Operational Energy
programs which support the current fight?
Secretary Pfannenstiel. The Experimental Forward Operating Base
(ExFOB) capabilities we have evaluated in CONUS and Afghanistan have
helped our Marines operate lighter, with less reliance on resupply. Our
forces today are widely dispersed across the battle space: a Company
today may cover an area of 50 square miles or more, manning multiple
outposts, and executing extensive dismounted operations. Our Marines
depend on communications gear and equipment, and rely on frequent
resupply to support fuel and battery, as well as water and food needs.
By providing a new source of power--solar and hybrid solar energy--and
reducing the power demand of equipment, we have reduced mission risk,
and increased our commanders' options. Ultimately, our goal is fewer
Marines at risk on the road hauling fuel and protecting fuel convoys.
In less than a year, through our Experimental Forward Operating
Base process, we have twice evaluated capabilities at Twenty-nine Palms
and deployed them to Afghanistan. In 2010, while engaged in nearly
constant combat, Marines of India Co. 3rd Battalion, 5th Marine
Regiment used small scale solar power, man portable solar battery
rechargers, hybrid-solar generators, plus energy efficient lighting and
shelters, with positive results:
Two patrol bases operated entirely on expeditionary solar power
generators.
Another patrol base reduced its fossil fuel need by approximately
90%--from 20 gallons of fuel a day to 2.5 gallons a day.
Using the SPACES back pack portable solar power system to recharge
their radio batteries they were able to patrol for three weeks with no
battery resupply. Typical battery resupply is every 2-3 days.
As a result of this feedback, four of these capabilities were
acquired and 5 BN sets were accelerated to Marine units in Operation
Enduring Freedom (OEF). This equipment is now Program of Record and
part of the Marine Corps equipment kit.
In fall 2011 the Marine Corps deployed hybrid power systems and
direct current powered air conditioners for evaluation at Patrol Base
Boldak. The hybrid system demonstrated an 80% reduction in generator
run time, and 55% reduction in fuel consumed. Insights from this
evaluation are being used to inform the Marine Expeditionary Energy
Hybrid Systems Analysis of Alternatives initiated in spring 2012.
The deployment of renewable energy on the battlefield has had
benefits at small and remote patrol bases where power demands are low,
usually where total power required is below 10kW. Specifically, the
challenge of larger bases is the refrigeration required for food stores
and environmental control for personnel comfort and sensitive
electronic equipment. At these larger bases, today's renewable energy
technology will have minimal impact. The Marine Corps is addressing
these challenges by investigating new environmental control
technologies.
Ms. Bordallo. 39) What are the Services doing to address fuel
consumption in its tactical and non-tactical vehicle fleet?
Secretary Pfannenstiel. The Navy and Marine Corps are pursuing
near- and long-term solutions to reduce fuel consumption in the
tactical vehicle fleet.
The Marine Corps and the Office of Naval Research are investigating
efficiency improvements for the Medium Tactical Vehicle Replacement
(MTVR) through a suite of affordable fuel efficiency enabling
technologies estimated to provide 15% fuel efficiency improvement to
the existing platform. This Future Naval Capability project is under
development, and slated for transition in FY15.
Originally funded by the Navy as part of a Research & Development
initiative for the 2009 ARRA, On-Board Vehicle Power (OBVP) is a key
initiative to reduce fuel used by the Naval tactical fleet of HMMWVs
and a select number of MTVRs. This Future Naval Capability product
provides vehicle-integrated, utility quality, 60 Hz electric power for
mobile command and control, radar, air defense sensors, and operations
centers. It replaces towed systems and reduces the logistical
footprint, improving power mobility and saving fuel. The Marine Corps
Systems Command is currently conducting final testing of this product
at the Aberdeen Test Center. The Initial Operational Capability is
scheduled for FY12.
The Department of the Navy (DON) is also taking steps to reduce
fuel consumption in the non-tactical vehicle fleet. From 2005 to 2010,
by updating our non-tactical vehicle inventory, DON reduced its
petroleum consumption by 14% and increased the percentage of
alternative fuel vehicles in the fleet to 42%. DON's FY13 budget
includes funding for the purchase of alternative fuel vehicles and
construction of alternative fuel stations.
Ms. Bordallo. 40) How does LEED offer any concrete energy savings?
Secretary Pfannenstiel. The LEED certification process provides an
objective third-party method of ensuring design compliance over a range
of factors such as energy efficiency, water efficiency, and indoor
environmental quality. LEED certification alone is not sufficient to
ensure compliance with energy saving goals. Navy facility energy
savings are achieved through use of a combination of proper operation
and maintenance, accepted building codes, industry standards, DOD
criteria (incorporating lessons learned), Navy guidance, in conjunction
with green building certification processes.
Ms. Bordallo. 41) In this environment of increasingly constrained
budgets, why is the Navy investing advanced biofuels? How much will the
Government's investment, including the Navy's portion, accelerate the
production and reduce the cost of biofuels?
Secretary Pfannenstiel. The volatility and rapidly increasing
demand growth outside the U.S., primarily China and India, clearly
illustrate the need for more domestic alternatives such as advanced
drop in alternative fuels that enhances our energy security and energy
independence. In this constrained budget environment, the uncertainty
of petroleum prices has created a nearly $1B fuel budget shortfall in
FY12 for the Navy. This $1B will largely be funded out of operational
and maintenance activities, reducing flying hours, steaming hours, and
sustainment. Assured domestic supplies of alternative fuels offer the
potential to mitigate uncertainty around our fuel budgets.
The Government's planned investment in the DPA Title III Advanced
Biofuels Production Project is intended to be the catalyst that allows
first-in-kind commercial scale advanced biorefinery production chains
to be constructed and become operational. The LMI study,
``Opportunities for DOD Use of Alternative and Renewable Fuels: FY10
NDAA Section 334 Congressional Study,'' clearly stated that the DPA
Title III authority was a potential method for accelerating development
of the alternative fuels industry. As part of this DPA effort,
alternative fuels will be required to be cost competitive with
conventional fuels.
Ms. Bordallo. 42) If the Navy investment in biofuels is successful,
when will the Navy expect advanced biofuels for military use to start
decreasing the Navy's fuel budget?
Secretary Pfannenstiel. If DPA Title III Advanced Biofuel
Production Project efforts can be implemented on the planned timing and
funding levels, commercial scale delivery at cost competitive prices
could start as early as 2016, perhaps even earlier in limited
circumstances. One of the objectives of this effort is to rapidly
accelerate the cost competitiveness of alternative fuels as compared to
conventional fuel. Thus, the Navy does not expect advanced biofuels to
decrease Navy's fuel
budget.
Ms. Bordallo. 43) Can you provide examples of Operational Energy
programs which support the current fight?
Secretary Yonkers. The Air Force's mission is to fly, fight, and
win in air, space, and cyberspace, and decreasing fuel demand by
maximizing efficiencies will increase Air Force combat capability and
enhance energy security. Despite the Air Force's operational tempo over
the last 21 years, the Air Force has emphasized and improved energy
consumption and efficiency. Our primary goal for aviation energy has
been to reduce fuel consumption 10% by 2015 against a 2006 baseline. To
date, the Air Force has reduced fuel consumption 4% since FY06. Broadly
speaking, the Air Force is seeking to reduce aviation fuel demand and
change the culture through material and non-material, or policy,
solutions. Examples include implementation of Mission Index Flying, an
ongoing initiative to upgrade aircraft flight management systems to
enable real-time route and altitude optimization based on temperatures,
winds, aircraft weight, and other factors; replacing C-5Bs with the
more fuel efficient C-5Ms; and implementing policy changes to reduce
aircraft flying weights and optimize dip clearance routing.
The Air Force is also implementing initiatives to reduce energy
consumption, help reduce energy logistics tail, and contribute to
untethering operations from Forward Operating Bases, such as improving
energy efficiency at bases in contingency environments. In partnership
with the other Services, the Air Force is evaluating the Basic
Expeditionary Airfield Resources (BEAR) System for Load and
Installation Management, which will integrate renewable energy into the
BEAR grid and enable centralized load management to reduce energy
demands.
Ms. Bordallo. 44) What are the Services doing to address fuel
consumption in its tactical and non-tactical vehicle fleet?
Secretary Yonkers. The Air Force is leading an initiative to deploy
Automated Inventory technology on our non-tactical vehicle fleet. The
objective of this project is to upgrade radio frequency identification
technology at Air Force sites worldwide using existing infrastructure
to facilitate data collection and minimize costs for Air Force vehicle
refueling. The Automated Inventory Manager automates the collection of
fuel sales transaction data for Air Force owned and General Services
Administration (GSA)/Commercially leased vehicles. The implementation
plan is underway on 30,000 stateside vehicles. This new technology will
provide more accurate odometer readings, and improved fuel consumption
accountability and data integrity. It will also help monitor and
enforce vehicle idling policy that was just recently approved to allow
passive capture of current mileage, date, time, fuel quantity, fuel
type and engine hours.
Additionally, the Air Force is pursuing conversion of its general
purpose fleet at Los Angeles Air Force Base to all plug-in electric.
This will be the first Federal facility with an all-electric vehicle
fleet. The Air Force is working with the GSA to pilot plug-in electric
vehicles at other stateside bases as well.
The Air Force is a strong proponent of alternative fuel and across
its vehicle fleet has replaced more than 1.7 million gasoline gallon
equivalents of petroleum with alternative fuel (E85, Biodiesel, and
Compressed Natural Gas). To the greatest extent possible, the Air Force
uses alternative fuels in non-tactical and tactical assets.
With regard to tactical vehicles, the Air Force has a limited
number of military design vehicles, relying predominately on
commercial-off-the-shelf vehicles to meet mission requirements across
the globe. The Air Force reduced fuel consumption by more than 700,000
gasoline gallon equivalents of petroleum between fiscal years 2008-
2012. Where commercial-off-the-shelf vehicles are used for tactical
purposes, the Air Force adheres to the acquisition principle to procure
the most fuel efficient and fit-for-purpose vehicles.
Ms. Bordallo. 45) How does LEED offer any concrete energy savings?
Secretary Yonkers. Leadership in Energy and Environmental Design
(LEED) is a tool used to verify that energy conservation goals have
been met and does not replace the requirement to make sound energy and
water conservation decisions. By setting sustainable goals based on
Federal requirements and the LEED rating system, the Air Force Military
Construction (MILCON) program was able to report in the FY11 Annual
Energy Management Report 100% compliance with EPAct 05. Every project
exceeded the 30% reduction in energy intensity set by the baseline in
American Society of Heating, Refrigerating and Air Conditioning
Engineers (ASHRAE) standard 90.1. Also, 6% of the projects exceeded a
50% reduction in energy intensity, which translates into energy
savings.
______
QUESTIONS SUBMITTED BY MR. PALAZZO
Mr. Palazzo. 46) Over the past 4 years, to what extent has DOD used
appropriated monies vs. ESPCs for funding energy efficiency projects to
reduce installation energy consumption, and what changes in funding
sources do you anticipate in future years? To what extent are all
projects you fund by appropriations accompanied by performance
guarantees, as is the case with ESPCs?
Secretary Burke. Over the past four years DOD has spent
approximately $1.5B in direct appropriations for energy efficiency
projects. Separately, it has awarded approximately $782M in ESPCs. In
the near term, to respond to the President's memo of 2 Dec 11, DOD will
significantly increase its reliance on ESPCs, with a target of $1.2B
combined in FY12 and FY13. This trend will continue beyond the timeline
defined in the President's memo as DOD leverages the power of ESPCs to
reduce our energy use without an outlay of appropriated funds. Given
the limited availability of appropriated funds in today's budget
environment and the large number of deserving projects in need of
funding, the DOD services and agencies select the biggest impact
projects--i.e., those with meaningful returns-on-investment and
reasonable payback periods. Thus, although these projects are not
accompanied by the same type of performance guarantees associated with
ESPCs, we know from careful analysis that they will generate a good
return on our investment.
Mr. Palazzo. 47) As you may know, the LEED green building system
discourages the use of wood products, thus greatly disadvantaging our
home state of Mississippi and the countless forest jobs and forest
landowners that rely on this industry in the state. It was one of the
reasons my colleagues and I included a provision in the FY12 NDAA that
required a cost based study on LEED and other rating systems.
Recently, you said that your office plans to change the
Department's green building policy. And, this new policy will be based
heavily on ASHRAE 189.1.
What elements of ASHRAE 189.1 will be included? What elements will
be excluded? Will all wood standards be able to compete for
construction projects? Regarding the study, will you solicit input from
outside organizations? If so, when and how?
Dr. Robyn. The Department of Defense embraces sustainable building
practices inasmuch as they reduce the total cost of ownership of DOD
facilities and enhance the resiliency of our installations. To that
end, the Department is currently drafting a new DOD-specific set of
criteria for high-performance buildings that will apply to new
buildings, major renovations, and leases. The new criteria are
anticipated to be based on American Society of Heating Refrigeration
and Air Conditioning Engineers (ASHRAE) 189.1, which treats all
sustainable forestry standards equally. While the new Unified
Facilities Criteria for High Performance Buildings will make reference
to ASHRAE 189.1, there are some elements of the standard that may not
be cost effective for application in the DOD and therefore will not be
incorporated in the new UFC. In a parallel effort, the Department has
partnered with the National Research Council to study the cost-
effectiveness of ASHRAE, LEED, and Green Globes as required by 2012
NDAA, Section 2830. The results of the study will be used to assess the
cost effectiveness of future capital investments.
Mr. Palazzo. 48) Over the past four years, to what extent has DOD
used appropriated monies vs. ESPCs for funding energy efficiency
projects to reduce installation energy consumption, and what changes in
funding sources do you anticipate in future years? To what extent are
all projects you fund by appropriations accompanied by performance
guarantees, as is the case with ESPCs?
Dr. Robyn. Over the past four years DOD has spent approximately
$1.5B in direct appropriations for energy efficiency projects.
Separately, it has awarded approximately $782M in ESPCs. In the near
term, to respond to the President's memo of 2 Dec 11, DOD will
significantly increase its reliance on ESPCs, with a target of $1.2B
combined in FY12 and FY13. This trend will continue beyond the timeline
defined in the President's memo as DOD leverages the power of ESPCs to
reduce our energy use without an outlay of appropriated funds. Given
the limited availability of appropriated funds in today's budget
environment and the large number of deserving projects in need of
funding, the DOD services and agencies select the biggest impact
projects--i.e., those with meaningful returns-on-investment and
reasonable payback periods. Thus, although these projects are not
accompanied by the same type of performance guarantees associated with
ESPCs, we know from careful analysis that they will generate a good
return on our investment.
Mr. Palazzo. 49) To what extent is the expedited contractor
selection process being used at DOD and what is the average length of
time for your contractor selection process for ESPC projects?
Dr. Robyn. The expedited contractor selection process is being used
for all DOD Energy Savings Performance Contracts (ESPCs), under both
the Department of Energy Super ESPC contract and the Army Corps of
Engineers Huntsville contract.
The DOD's average length of time for contractor selection for its
nine most recent ESPC awards has been 91 days. This includes two Navy
projects which averaged 120 days, five Army projects which averaged 77
days, and two Air Force projects which averaged 90 days.
Mr. Palazzo. 50) Are you confident that DOD has access to a
sufficient number of contracting officers, appropriately trained in the
ESPC contracting process, to successfully meet your goal in new ESPC
project investment over the next 24 months?
Dr. Robyn. While all three Military Departments believe they have
access to a sufficient number of appropriately trained contracting
officers to meet DOD's goal in Energy Savings Performance Contract
(ESPC) project investments by the end of 2013, this is based on the
currently accepted process time of 12-18 months to contract award.
Process improvement initiatives underway could reduce process time and
increase throughput in a way that could invalidate the above statement.
ESPC contracting officer expertise will be a topic of discussion during
our process improvement initiative to ensure this is not a limiting
factor in our ability to quickly process ESPC contracts.
Mr. Palazzo. 51) What is the specific nature and frequency of
reports and/or progress updates your office is required to provide up
the chain for command that identify delays or barriers to expeditiously
implementing ESPC projects?
Dr. Robyn. DOD is required to report monthly to OMB and DOE on
progress toward achievement of the President's goal for performance-
based contracts. While Military Services plan and execute their own
ESPC projects without approval from OSD or higher authority, the OMB
reporting process allows identification of issues that may delay a
project. In recognizing that all Services approach ESPCs differently, I
have formed a working group with stakeholders from across the
Department to identify opportunities for standardization and process
improvement with the goal of reducing the time needed to execute ESPC
projects and improving the quality of the projects.
Mr. Palazzo. 52) To what extent has the DOD completed its required
energy and water evaluations? What is the number and profile of
potential energy conservations measures (ECM) the audits have
identified to date? How many of these audit identified ECMs do you
anticipate being implemented in your effort to comply with the
President's December 2, 2011, directive?
Dr. Robyn. The Department has completed about 40% of its required
energy and water evaluations, as reported in the Federal Energy
Management Program's (FEMP) Energy Independence and Security Act (EISA)
of 2007 Section 432 Compliance Tracking System (CTS). More than 27,000
potential ECMs were identified during these audits. The total estimated
cost to implement these ECMs, as reported by the Defense Components, is
approximately $2.7 billion. The ECMs identified in CTS are a result of
initial audits. Prior to implementation (either through appropriated
funding or Energy Savings Performance Contracts (ESPC)), a more in-
depth investment-grade audit is typically conducted, where a more
refined list of ECMs is developed. Therefore, the ECM listing in CTS is
preliminary and does not directly track to the ECMs in the President's
performance contracting initiative.
Mr. Palazzo. 53) Over the past four years, to what extent has the
Army used appropriated monies vs. ESPCs for funding energy efficiency
projects to reduce installation energy consumption, and what changes in
funding sources do you anticipate in future years? To what extent are
all projects you fund by appropriations accompanied by performance
guarantees, as is the case with ESPCs?
Secretary Hammack. Over the last four years (FY08-FY11) Army has
used $398.3M in appropriated funds (including ECIP) and $540.9M in
alternatively financed investment (ESPC and UESC) to implement energy
projects on installations. The Army's current plan for FY13-17 includes
more than $1.3B in appropriated funding dedicated for energy projects
plus undetermined amounts for the ECIP program. The Army expects
funding sources through alternatively financed projects will also
increase. Use of alternative financing is increasing rapidly over
historic levels, with at least $200M of investment through ESPC's and
UESC's expected in FY12. Army is already the largest user of ESPC's in
Federal Government and second largest user of UESC.
Appropriated funds projects are typically not structured to include
performance guarantees, however, they may include performance
assurances, Measurement and Verification, and/or commissioning. UESCs
also include performance assurances rather than performance guarantees
since many state public utility commissions do not allow utilities to
provide guarantees.
Mr. Palazzo. 54) To what extent is the expedited contractor
selection process being used in the Army and what is the average length
of time for your contractor selection process for ESPC projects?
Secretary Hammack. The Army executes its ESPC Task Orders through
both the U.S. Army Corps of Engineers and Defense Logistics Agency--
Energy (DLA-Energy). The U.S. Army Corps of Engineers--Engineering and
Support Center, Huntsville (USACE-HNC) utilizes an expedited approach
to all ESPC new start activities by using a Multiple Award Task Order
Contract (MATOC) with 15 pre-qualified ESCOs and down selects to one
ESCO based on responses to the task order RFP. DLA-Energy now uses a
similar expedited process for task orders on the Department of Energy
MATOC to down-select to one contractor. That was enabled by the 2011
contract modification in response to NDAA11, section 828, which
clarified how the competition requirements for MATOCs apply to ESPCs.
Huntsville Center routinely completes ESCO selection in 90 days or
less (average over last seven selections was 80 days). While the ESPC
Task Order award schedule allowed for a large, fairly complex ESPC
under the USACE-HNC MATOC is up 480 days (16 months), the typical time
to award is 12-14 months.
DLA--Energy has recently instituted changes to their acquisition
process under the DOE ESPC MATOC that will shorten their award cycle
time including adopting the new expedited down-select process and
eliminating some redundant internal reviews. No projects have moved all
the way through to award under this new process so we cannot yet give
data on cycle time to award for this new process improvement, but it is
expected to be in the 14 month timeframe.
Five of the last eight ESPC Task Order awards done for Army were
completed or executed in less than 12 months.
Mr. Palazzo. 55) Are you confident that the Army has access to a
sufficient number of contracting officers, appropriately trained in the
ESPC contracting process, to successfully meet your goal in new ESPC
project investment over the next 24 months?
Secretary Hammack. Army is confident that it has access to a
sufficient number of contracting staff to successfully meet goals under
the Better Buildings Initiative. Army uses multiple contracting
vehicles, including the U.S. Army Corps of Engineers--Huntsville Center
(USACE-HNC) and Department of Energy (DOE) MATOCs, to ensure execution
of our program. Both USACE-HNC and Defense Logistics Agency-Energy
(DLA-Energy--used for DOE MATOC Task Orders) currently have a
sufficient number of contracting officers for the projects already in
the pipeline and have already begun adding contracting support staff to
meet future demand growth. While demand for ESPC's is not yet expected
to exceed availability of contracting personnel trained in ESPC's,
plans are also underway to expand the number of interdisciplinary teams
from related programs capable of awarding and administering an ESPC, if
necessary to meet higher than expected increased demand.
Mr. Palazzo. 56) What is the specific nature and frequency of
reports and/or progress updates your office is required to provide up
the chain for command that identify delays or barriers to expeditiously
implementing ESPC projects?
Secretary Hammack. As per guidance issued by OSD in response to the
Better Buildings Initiative, Army provides monthly ESPC & UESC project
pipeline milestone progress reports to OSD for consolidation with other
DOD elements and submission to OMB. Monthly reporting started in April
2012. The Army is using this report internally to ensure that projects
remain on track. If projects slip behind on milestone attainment, the
reports will flag this slippage, prompting oversight activity to
determine what the situation is and how it can be remediated.
Mr. Palazzo. 57) To what extent has the Army completed its required
energy and water evaluations? What is the number and profile of
potential energy conservations measures (ECM) the audits have
identified to date? How many of these audit identified ECMs do you
anticipate being implemented in your effort to comply with the
President's December 2, 2011, directive?
Secretary Hammack. The Energy Security and Independence Act of 2007
require the Army to complete annual energy and water evaluations of 25%
of covered facilities. Covered facilities include those which
constitute 75% of the agencies' total energy use, so that an evaluation
of each covered facility is completed at least once every four years.
In FY 11 the Army performed energy and water audits on approximately
30% of its total square footage covering more than 34% of its energy
usage. These audits identify potential ECMs which are incorporated into
ESPC/UESC task orders or undertaken using appropriated funds, where
life cycle cost effective. There currently is no process to count the
number of ECM's identified and implemented, nor is a profile of the
ECMs tabulated. Additionally, ESPC/UESC task orders often include
building audits that identify additional ECMs, which are then
incorporated into the contract.
Mr. Palazzo. 58) Over the past four years, to what extent have the
Navy and Marine Corps used appropriated monies vs. ESPCs for funding
energy efficiency projects to reduce installation energy consumption,
and what changes in funding sources do you anticipate in future years?
To what extent are all projects you fund by appropriations accompanied
by performance guarantees, as is the case with ESPCs?
Secretary Pfannenstiel. Navy investment in energy efficiency
projects has been supported with a mixture of funding sources. Navy
uses appropriated funds (Operations & Maintenance, Navy (OM,N),
Military Construction (MILCON), Energy Conservation Investment Program
(ECIP), and Navy Working Capital Fund (NWCF)) as well as leverages
privately-financed projects such as Energy Savings Performance
Contracts (ESPC) and Utilities Energy Savings Performance Contracts
(UESC).
A funding comparison between financed energy projects (ESCP and
UESC) and all other appropriated funding profiles is provided below:
----------------------------------------------------------------------------------------------------------------
Investment FY09 FY10 FY11 FY12 PB13
----------------------------------------------------------------------------------------------------------------
Appropriated $221.3M $46.6M $58.6 $441.4M $343.0M
Energy Efficiency
Investments
----------------------------------------------------------------------------------------------------------------
ESPC Investment* $71.5M $107.8M $12.3M -- $82.0M
----------------------------------------------------------------------------------------------------------------
UESC Investment* $72.5M $29.4M $46.1M $33.2M $9.0M
----------------------------------------------------------------------------------------------------------------
*The ESPC and UESC funding amounts listed represent the financed
investment that will be paid with energy savings over the course of the
contractual agreement.
Similar to a performance guarantee, identified appropriated shore
energy efficiency investments shall undergo the same measurement and
validation process using the methodologies of the Federal Energy
Management Program (FEMP) M&V guidelines (Options A, B, C and D) that
are presently being performed for ESPC projects.
The Navy remains committed to utilizing ESPCs and UESCs to leverage
the high-level of expertise of Energy Savings Companies.
Mr. Palazzo. 59) To what extent is the expedited contractor
selection process being used in the Navy and Marine Corps and what is
the average length of time for your contractor selection process for
ESPC projects?
Secretary Pfannenstiel. The expedited contractor selection process
is being used for 100% of all Navy ESPC efforts under the Department of
Energy (DOE) Super ESPC contract. The ESPC contractor selection
process, incorporated into the NAVFAC Business Management System allows
for contractor selection based on contractor statement of
qualifications (fair opportunity assessment) and a down selection to
one or more energy services contractors to perform the preliminary
assessment in accordance with the DOE contracts.
Two projects have been initiated since the process has been enacted
and the time to down selection has been five months for one project and
three months for the second. Two new fair opportunity assessments are
about to be issued. Goal moving forward is to decrease the original
down-select timeframe to about two months to include any headquarters
or legal reviews.
Mr. Palazzo. 60) Are you confident that the Navy and Marine Corps
have access to a sufficient number of contracting officers,
appropriately trained in the ESPC contracting process, to successfully
meet your goal in new ESPC project investment over the next 24 months?
Secretary Pfannenstiel. Depending on the number of new contract
actions over the next 24 months, there may be a need for more
contracting officers trained in ESPC to expedite contract awards.
Currently navy contracting for ESPC is centralized in one location.
There are sufficient contracting personnel to handle the current ESPC
contract actions projected through FY-13.
Mr. Palazzo. 61) What is the specific nature and frequency of
reports and/or progress updates your office is required to provide up
the chain for command that identify delays or barriers to expeditiously
implementing ESPC projects?
Secretary Pfannenstiel. Navy is compliant with 10 U.S.C. Sec. 2925
which requires all services to report annually the performance of
installations energy management through the Secretary of Defense to the
congressional defense committees. As such, the Annual Energy Managers
Report (AEMR) is the vehicle utilized to collect and report the
Department's energy performance.
Section 8.1 of the AEMR Reporting Guidance directs Navy to, ``list
all projects funded through third-party financing to include energy
savings performance contracts (ESPC), enhanced use leases (EUL),
utility energy service contracts (UESC), utility privatization (UP)
agreements, and power purchase agreements (PPA). Appropriated projects
should include all projects funded through military construction
(MILCON), the Energy Conservation and Investment Program (ECIP),
operations and maintenance (O&M), sustainment, restoration and
modernization (SRM), and working capital funds.''
There is no requirement to identify delays or barriers to
expeditiously implementing ESPC contracts.
Mr. Palazzo. 62) To what extent have the Navy and Marine Corps
completed their required energy and water evaluations? What is the
number and profile of potential energy conservations measures (ECM) the
audits have identified to date? How many of these audit identified ECMs
do you anticipate being implemented in your effort to comply with the
President's December 2, 2011, directive?
Secretary Pfannenstiel. The Navy has consistently met the EISA 2007
requirement for comprehensive energy and water auditing 25% of covered
facilities annually. Audits have resulted in recommended energy and
water ECMs inside the covered facility envelope. The energy audits
completed to date report over 70 types of ECM's. The most frequently
reported ECM's fall into the following categories:
1. Retro-commissioning
2. Energy Management Control Systems
3. Temperature Setbacks
4. Boiler Replacement
5. Chiller Replacement
6. Insulate Roofs, Walls, Attics, Piping
7. HVAC Controls Upgrades
8. Lighting Upgrades
9. Lighting Controls and Occupancy Sensors
10. High Efficiency DX Heat Pumps
11. Solar Domestic Hot Water
12. Water Conservation Improvements
13. Weatherization
14. High Efficiency Motors, Fans and Condensing Units
15. Convert Constant Volume Air Handling Units to Variable Air
Volume (VAV)
The ECM's identified in the energy audits will be used to inform
DON investment strategy to meet energy consumption reduction and
renewable energy goals across all available funding mechanisms (i.e.
Energy Savings Performance Contracts (ESPC), Utility Energy Savings
Contracts (UESC), Restoration and Modernization (RM energy), Energy
Conservation Incentive Program (ECIP), etc.). The Installation Planners
and Installation Energy Managers responsible for using the audit
results for future project development have to consider a wide variety
of installation specific factors such as local facility condition and
utility costs, as well as previous implementation of ECMs and approved
energy projects. It is difficult to anticipate the decisions being made
in the field for which ECMs will be included in performance based
contracts and which ECMs will be included in other project types.
Furthermore, performance based contract development is an interactive
process which includes input from both contractors and installation
personnel. Performance-based contracts currently in development include
the following ECM categories in the scope of work:
HVAC Controls Upgrades
Lighting Upgrades
Lighting Controls and Occupancy Sensors
Data Center Upgrades and Controls
Chiller Replacement
Insulate Roofs, Walls, Attics
Building Envelope Weatherization
Energy Management System
Biomass (landfill gas)
Boiler Replacement
Backwash Water Recycling in Waste Water Plant
Install Direct Digital Control (DDC) Systems
Temperature Set Backs
Water Conservation Measures
Mr. Palazzo. 63) Over the past four years, to what extent has the
Air Force used appropriated monies vs. ESPCs for funding energy
efficiency projects to reduce installation energy consumption, and what
changes in funding sources do you anticipate in future years? To what
extent are all projects you fund by appropriations accompanied by
performance guarantees, as is the case with ESPCs?
Secretary Yonkers. Over the past four years, the Air Force spent
more than $500 million in appropriated dollars compared to an
investment cost of $59 million in Energy Savings Performance Contracts
(ESPC) for funding energy efficiency projects to reduce installation
energy consumption.
The Air Force has budgeted approximately $200 million per year for
FY12-15 for appropriated energy conservation projects but is also
increasing emphasis on the use of ESPC and Utility Energy Service
Contracts (UESC) authorities. We anticipate awarding ESPC and UESC
contracts valued at approximately $300 million over the next 2 years
and are escalating our capability to identify and develop more projects
in future years.
Although our appropriated projects do not normally include
performance guarantees in the contracts, the Air Force has instituted a
policy to measure and verify energy savings on those projects. The
AFCESA Capital Investment Project Measurement and Verification (M&V)
program is designed to provide feedback and validity to these projects.
Data collected will be used to document energy and financial savings,
support future energy programs funding, improve engineering efforts
(design, operations, maintenance), and aid in future financial
budgeting and energy forecasting.
Mr. Palazzo. 64) To what extent is the expedited contractor
selection process being used in the Air Force and what is the average
length of time for your contractor selection process for ESPC projects?
Secretary Yonkers. The Air Force plans to execute all future Energy
Savings Performance Contracts (ESPC) projects via the Department of
Energy's Federal Energy Management Program (DoE-FEMP) Super ESPC
Indefinite Delivery Indefinite Quantity (IDIQ). This IDIQ contract
provides competition and streamlines the process. The Air Force follows
the DoE-FEMP timeline for ESPC development and reviews, and took
approximately 90 days to select the first two contractors using the
DoE-FEMP Super ESPC IDIQ.
Mr. Palazzo. 65) Are you confident that DOD (or substitute military
service) has access to a sufficient number of contracting officers,
appropriately trained in the ESPC contracting process, to successfully
meet your goal in new ESPC project investment over the next 24 months?
Secretary Yonkers. Yes, the Air Force has access to a sufficient
number of contracting officers. The Air Force uses installation
contracting officers, trained by the Federal Energy Management Program
(FEMP), to award our Energy Savings Performance Contracts (ESPC) Task
Orders.
Mr. Palazzo. 66) What is the specific nature and frequency of
reports and/or progress updates your office is required to provide up
the chain for command that identify delays or barriers to expeditiously
implementing ESPC projects?
Secretary Yonkers. In April 2012, the Department of Defense
implemented the Department of Energy's ESPC project reporting tool that
provides a month-by-month view of targets and milestones toward
achieving performance-based contract goals. Use of the tool tracks the
progress of projects that will identify changes in the schedule and the
ability to determine the causes of any delays. Air Force submitted the
first report to the Office of the Secretary of Defense in May.
Mr. Palazzo. 67) To what extent has the Air Force completed its
required energy and water evaluations? What is the number and profile
of potential energy conservations measures (ECM) the audits have
identified to date? How many of these audit identified ECMs do you
anticipate being implemented in your effort to comply with the
President's December 2, 2011 directive?
Secretary Yonkers. To date, the Air Force is approximately 50%
complete with energy audits for covered facilities as defined by the
Energy Independence and Security Act of 2007 (EISA07). In 2010, forty
installations covering 84 million square feet identified 15,000 energy
and water conservation opportunities. Potentially these ECMs can save
six trillion BTUs of energy. The 2011 energy audits are nearly complete
and these audits will identify similar quantities of ECMs.
To comply with the President's December 2, 2011 directive, the Air
Force validates and prioritizes all potential ECMs, evaluates them for
the most effective contracting method and executes them as quickly and
efficiently as possible. The Air Force anticipates entering into Energy
Savings Performance Contracts (ESPC) and Utility Energy Service
Contracts (UESC) valued around $300 million over the next two years
with an additional $400 million identified for evaluation over the next
five years. In addition to third-party funding, the Air Force is
committing approximately $200 million in appropriated funding annually
in FY10-15 to execute identified energy conservation measures.
______
QUESTIONS SUBMITTED BY MR. REYES
Mr. Reyes. 68) Energy security is an increasingly complex and
pressing issue. How does energy security affect military readiness, and
what new solutions are you developing to meet those challenges?
Secretary Burke. The 2010 Quadrennial Defense Review and FY 2011
NDAA define energy security as ``assured access to reliable supplies of
energy and the ability to protect and deliver sufficient energy to meet
operational needs.'' Operational energy is an essential enabler of
military operations, so it is an integral part of military readiness.
Threats to our ability to provide operational energy undermine our
ability to deploy, sustain, and employ military forces around the
globe. In an era of growing irregular and anti-access/area denial
threats, the size and scale of our fuel storage, transportation, and
distribution networks raise risks to our military operations and
readiness.
The Department's Operational Energy Strategy and supporting
Implementation Plan provide a framework for reducing these risks,
improving warfighting capability, and enhancing military energy
security. The Department has initiated a series of initiatives to
reduce the demand for energy in military operations, assure the supply
of energy, and adapt our future force development.
Mr. Reyes. 69) Energy security is an increasingly complex and
pressing issue. How does energy security affect military readiness, and
what new solutions are you developing to meet those challenges?
Dr. Robyn. The 2010 Quadrennial Defense Review and FY 2011 NDAA
define energy security as ``assured access to reliable supplies of
energy and the ability to protect and deliver sufficient energy to meet
operational needs.'' Operational energy is an essential enabler of
military operations, so it is an integral part of military readiness.
Threats to our ability to provide operational energy undermine our
ability to deploy, sustain, and employ military forces around the
globe. In an era of growing irregular and anti-access/area denial
threats, the size and scale of our fuel storage, transportation, and
distribution networks raise risks to our military operations and
readiness.
The Department's Operational Energy Strategy and supporting
Implementation Plan provide a framework for reducing these risks,
improving warfighting capability, and enhancing military energy
security. The Department has initiated a series of initiatives to
reduce the demand for energy in military operations, assure the supply
of energy, and adapt our future force development.
Mr. Reyes. 70) Energy security is an increasingly complex and
pressing issue. How does energy security affect military readiness, and
what new solutions are you developing to meet those challenges?
Secretary Hammack. Energy is fundamental to Army capabilities and
performance, over reliance on fossil fuels and connection to a
vulnerable electrical power grid jeopardize the security of Army
installations and mission capabilities. To meet these challenges the
Army is developing solutions in three areas; basing power, soldier
power and vehicle power.
On its permanent installations, the Army is working to improve
energy efficiency, install alternative energy sources and develop grid
security projects. On its contingency bases, the Army is implementing
efficient grid technologies and deploying more efficient generators and
alternative energy technologies. In the area of Soldier power, the Army
is deploying advanced Soldier power capabilities such as power
management devices, fuel cells, and renewable energy alternatives that
helped to reduce the volume and weight of Soldier's energy loads.
Finally, to address vehicle power in its tactical fleet the Army focus
is on better fuel consumption management, thermal systems management
and materials development that will help to improve fuel efficiency.
Mr. Reyes. 71) The Army Improved Turbine Engine Program (ITEP)
envisions a significantly more fuel efficient and powerful engine for
the Black Hawk and Apache helicopter fleet as well as the next
generation Joint Multi-Role helicopter. Bringing 25% more fuel
efficiency and 50% more power to the fleet is a has enormous
operational and energy benefit throughout the DOD. Can you please
elaborate on the benefits you see and the importance of the ITEP
program within the Department of Defense?
Secretary Hammack. The increased power of the ITEP engine will
allow the Black Hawk and Apache helicopters to carry more payload and
fly faster across a wider range of environmental conditions that
currently limit these helicopters with their currently installed
engines. In some combinations of pressure and temperature, the same
mission may take multiple aircraft or multiple lifts or both to
accomplish the mission in the conditions and time required. These
aircraft with an ITEP installed, will more often be able to accomplish
those missions with fewer aircraft in fewer lifts. At the same time,
with the engine being more fuel efficient, it will dramatically
decrease the fuel requirement across these fleets. The ITEP is
tremendously important to the Department of Defense, not only does it
increase the capability of the Black Hawk and Apache helicopters to
provide the war fighter with rotary wing support, it does so while
requiring less fuel per engine.
Mr. Reyes. 72) Energy security is an increasingly complex and
pressing issue. How does energy security affect military readiness, and
what new solutions are you developing to meet those challenges?
Secretary Pfannenstiel. There is an undeniable link between energy
security and military readiness. For the Navy, energy security means
having assured access to a reliable, secure, and affordable supply of
energy for Navy missions, both today and in the future. The Navy's
efforts to reduce energy consumption and improve the energy efficiency
of our platforms/installations, in concert with increased use of non-
petroleum sources, turn our energy usage from a vulnerability into a
combat multiplier.
Afloat, testing and evaluation of numerous technologies to improve
fuel economy and reduce maintenance requirements for existing ships and
aircraft is complete, and we continue to make targeted investments for
the future. We are developing best practices for reducing fuel
consumption by ships and aircraft, as well as investing in simulator
upgrades.
Navy's small investment in biofuel `fit-for-use' testing provides
an off-ramp from conventional fuel sources when those fuels are
competitively priced, while buffering our fuel accounts from future
price volatility when these biofuels are competitively priced. This
advanced biofuel requires no modification to the engines in our current
inventory or changes to our fuels distribution or logistics resupply
networks.
Ashore, Navy is working to ensure reliable, resilient, redundant
power for our critical assets, improve the energy efficiency of our
buildings, reduce petroleum consumption from non-tactical vehicles, and
incorporate renewable and alternative energy technologies where
economically viable. Advanced metering and microgrid technologies will
enable better energy management and improve resiliency in emergencies.
For the Marine Corps, increased energy efficiency and performance
will enhance readiness by providing Marines more time to focus on the
mission, and less time focused on logistics and sustainment. Lower
requirements for fuel translate to reduce requirements for resupply and
sustainment missions.
The Marine Corps is developing models to understand demand, and the
impact of equipment investments on the force. Initial findings indicate
that with our $350M investment over the FYDP we estimate this
investment will improve the energy efficiency of our Marine
Expeditionary Brigades (MEB) by nine percent, enabling our forces to
sustain longer and go further, incurring less risk. The MEB of 2017
will be able to operate an estimated one month longer on the same
amount of fuel that we plan to use today, and it will need 208 fewer
fuel trucks, thereby saving seven million gallons of fuel per year.
The Marine Corps has deployed energy efficient and renewable energy
systems to five Battalion-equivalents in the Helmand Province of
Afghanistan: energy efficient shelter liners, low power LED lights,
plus the GREENS and SPACES renewable energy power systems for
recharging batteries and running equipment at small outposts at the
forward edge. At remote locations these systems eliminate the need for
fuel or battery resupply. Proven through the USMC Experimental Forward
Base process, this gear is now `program of record' and integrated into
the Marine Corps kit.
The Marine Corps FY13 plan includes additional investment in
renewable energy systems GREENS and SPACES, as well as investment in
energy efficient generators and environmental control units, the two
largest ground users for power, and efficiency improvements to the
MTVR.
Mr. Reyes. 73) Navy/Air Force related: I understand that there is
approximately $1 billion budgeted for FY13 for energy efficiency and
renewable energy acquisition. I also am aware of the private financing
vehicles available to you for both upgrading the energy efficiency and
installing renewable capacity. Why then is the Department using
appropriated dollars for short payback energy efficiency measures when
you could leverage more energy efficiency by including these in an
Energy Savings Performance Contract (ESPC)? Would appropriated dollars
be more wisely used as a part of an ESPC?
Secretary Pfannenstiel. Navy invests in energy efficiency through a
mixture of funding sources to optimize our shore energy investment
portfolio and provide maximum return-on-investment. We use appropriated
funds--such as Operations & Maintenance, Navy (OM,N), Military
Construction (MILCON), Energy Conservation Investment Program (ECIP),
and Navy Working Capital Fund (NWCF))--as well as leverage privately-
financed projects such as Energy Savings Performance Contracts (ESPC)
and Utilities Energy Savings Performance Contracts (UESC). The decision
to use appropriated or financed funding is based upon availability of
funds, and technical complexity of the project.
The Navy remains committed to utilizing ESPCs and UESCs to leverage
the high-level of expertise of Energy Savings Companies.
Mr. Reyes. 74) Energy security is an increasingly complex and
pressing issue. How does energy security affect military readiness, and
what new solutions are you developing to meet those challenges?
Secretary Yonkers. From aviation operations to installations, both
within the homeland and abroad, energy is a strategic imperative for
Air Force operations and is key to our national and economic security.
Every aspect of our mission--ISR, communications, space, medevac, air
defense, mobility operations--is dependent on access to reliable
sources of energy. We realize that access to energy can come at great
cost in treasure and lives; therefore, the Air Force strives to reduce
consumption and increase our preparedness to exploit available
alternatives. Through improvements in our weapon systems (e.g., drag
reduction) and by changes in our techniques, tactics, and procedures
(e.g., cargo loads, flight approach profiles, etc.), we are reducing
our demand. Through activities such as our alternative fuels
certification program--aviation and vehicle--and our 1000 megawatt
renewable energy initiatives, we are increasing our preparedness to
exploit available alternatives. Thus reducing our dependence on fossil
fuels and enhancing our energy security posture.
Mr. Reyes. 75) Navy/Air Force related: I understand that there is
approximately $1 billion budgeted for FY13 for energy efficiency and
renewable energy acquisition. I also am aware of the private financing
vehicles available to you for both upgrading the energy efficiency and
installing renewable capacity. Why then is the Department using
appropriated dollars for short payback energy efficiency measures when
you could leverage more energy efficiency by including these in an
Energy Savings Performance Contract (ESPC)? Would appropriated dollars
be more wisely used as a part of an ESPC?
Secretary Yonkers. The Air Force is currently developing an energy
investment strategy that will emphasize the combined use of funding
streams to maximize Air Force appropriations and provide the best value
for the Department. As part of this strategy, the Air Force is
requesting more than $530 million in Fiscal Year (FY) 2013 for
aviation, infrastructure, and research, development, test and
evaluation (RDT&E) energy initiatives to reduce demand, improve
efficiency, diversify supply, and enhance mission effectiveness. This
includes over $215 million specifically to reduce facility energy
consumption. As the Department of Energy found, using ESPCs to fund
energy conservation measures (ECMs) with shorter payback while using
appropriated dollars as part of an ESPC to fund ECMs with longer
payback resulted in 22% more value in facility improvements.
______
QUESTIONS SUBMITTED BY MRS. ROBY
Mrs. Roby. 76) As you may know, the LEED green building system
discourages the use of wood products, thus greatly disadvantaging my
home state of Alabama and the countless forest jobs and forest
landowners that rely on this industry in the state. It was one of the
reasons my colleagues and I included a provision in the FY12 NDAA that
required a cost based study on LEED and other rating systems.
Recently, you said that your office plans to change the
Department's green building policy. And, this new policy will be based
heavily on ASHRAE 189.1.
What elements of ASHRAE 189.1 will be included and excluded?
Dr. Robyn. The Department of Defense embraces sustainable building
practices inasmuch as they reduce the total cost of ownership of DOD
facilities and enhance the resiliency of our installations. To that
end, the Department is currently drafting a new DOD-specific set of
criteria for high-performance buildings that will apply to new
buildings, major renovations, and leases. The new criteria are
anticipated to be based on American Society of Heating Refrigeration
and Air Conditioning Engineers (ASHRAE) 189.1, which treats all
sustainable forestry standards equally. While the new Unified
Facilities Criteria for High Performance Buildings will make reference
to ASHRAE 189.1, there are some elements of the standard that may not
be cost effective for application in the DOD and therefore will not be
incorporated in the new UFC. In a parallel effort, the Department has
partnered with the National Research Council to study the cost-
effectiveness of ASHRAE, LEED, and Green Globes as required by 2012
NDAA, Section 2830. The results of the study will be used to assess the
cost effectiveness of future capital investments.
Mrs. Roby. 77) Will all wood standards be able to compete for
construction projects?
Dr. Robyn. The Department of Defense embraces sustainable building
practices inasmuch as they reduce the total cost of ownership of DOD
facilities and enhance the resiliency of our installations. To that
end, the Department is currently drafting a new DOD-specific set of
criteria for high-performance buildings that will apply to new
buildings, major renovations, and leases. The new criteria are
anticipated to be based on American Society of Heating Refrigeration
and Air Conditioning Engineers (ASHRAE) 189.1, which treats all
sustainable forestry standards equally. While the new Unified
Facilities Criteria for High Performance Buildings will make reference
to ASHRAE 189.1, there are some elements of the standard that may not
be cost effective for application in the DOD and therefore will not be
incorporated in the new UFC. In a parallel effort, the Department has
partnered with the National Research Council to study the cost-
effectiveness of ASHRAE, LEED, and Green Globes as required by 2012
NDAA, Section 2830. The results of the study will be used to assess the
cost effectiveness of future capital investments.
Mrs. Roby. 78) Regarding the study, will you solicit input from
outside organizations? If so, when and how?
Dr. Robyn. In preparing the report on the energy-efficiency and
sustainability standards utilized by the Department of Defense (DOD)
for military construction and repair, required by section 2830 of the
National Defense Authorization Act for Fiscal Year 2012, the DOD has
partnered with the National Research Council (NRC). The study from this
partnership will evaluate the cost-effectiveness of American Society of
Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE),
Leadership in Energy and Environmental Design (LEED), and Green Globes
standards. The DOD chose to partner with the NRC to ensure the study is
conducted in the most transparent, objective, and unbiased manner. The
public was invited to come and speak or provide written input to the
NRC committee at its first meeting on June 28th and 29th. There will be
an additional call for public input prior to the second meeting of the
committee in mid-September.
______
QUESTIONS SUBMITTED BY MR. KISSELL
Mr. Kissell. 79) What are some of the most effective measures to
make DOD installations more efficient? And, efficiency is critical not
just to reducing electricity consumption but also oil consumption. What
impact do the rising petroleum prices have on each branch of the
military?
Secretary Burke. In regards to the impact of the rising petroleum
prices on each branch of the military, higher fuel bills have on
opportunity cost for DOD in two ways. In the long term, without growth
in the defense budget, the DOD will have to shift funds from other
priorities to meet high and rising fuel bills. This opportunity cost is
one reason DOD's Operational Energy Strategy emphasizes the importance
of reducing the demand for fuel (the primary reason is to improve
military effectiveness). In the near term, volatile oil prices with the
year of execution have become a challenge to DOD, with the potential to
affect training and readiness. In the past, DOD has asked Congress for
new authorities to better manage this price volatility.
Mr. Kissell. 80) The wood products industry is extremely important
to my home state, supporting thousands of rural jobs and encouraging
strong investments in my state's forests, to keep them healthy and
intact. This is why I was pleased to hear you recently say, ``This year
my office will issue a new construction code for high-performance,
sustainable buildings, which will govern all new construction, major
renovations and leased space acquisition. This new code, based heavily
on ASHRAE 189.1 . . . ''
I'd be interested to know exactly what parts of ASHRAE 189.1 will
be incorporated? Will the new policy continue to certify buildings
through rating systems that discourage the use of wood produced in my
state? Will all wood products from my state be able to compete in RFP
bids?
Dr. Robyn. The Department of Defense embraces sustainable building
practices inasmuch as they reduce the total cost of ownership of DOD
facilities and enhance the resiliency of our installations. To that
end, the Department is currently drafting a new DOD-specific set of
criteria for high-performance buildings that will apply to new
buildings, major renovations, and leases. The new criteria are
anticipated to be based on American Society of Heating Refrigeration
and Air Conditioning Engineers (ASHRAE) 189.1, which treats all
sustainable forestry standards equally. While the new Unified
Facilities Criteria for High Performance Buildings will make reference
to ASHRAE 189.1, there are some elements of the standard that may not
be cost effective for application in the DOD and therefore will not be
incorporated in the new UFC. In a parallel effort, the Department has
partnered with the National Research Council to study the cost-
effectiveness of ASHRAE, LEED, and Green Globes as required by 2012
NDAA, Section 2830. The results of the study will be used to assess the
cost effectiveness of future capital investments.
Mr. Kissell. 81) What are some of the most effective measures to
make DOD installations more efficient? And, efficiency is critical not
just to reducing electricity consumption but also oil consumption. What
impact do the rising petroleum prices have on each branch of the
military?
Dr. Robyn. The Department's facility energy strategy, designed to
reduce the energy costs and improve the energy security of our fixed
installations, has four inter-related elements. The first element of
the facility energy strategy, reducing the demand for traditional
energy through conservation and energy efficiency, is critical to
reduce electricity consumption and to make DOD installations more
energy efficient.
The Department continues to reduce its demand for traditional forms
of facility energy through conservation and improved energy efficiency.
Its Fiscal Year (FY) 2013 budget includes more than $1.1 billion for
investments in conservation and energy efficiency, and almost all of
that is directed to existing buildings. The majority of this funding is
in the Military Services operations and maintenance accounts, to be
used for sustainment and recapitalization projects. Such projects
typically involve retrofits to incorporate improved lighting, high-
efficiency HVAC systems, double-pane windows, energy management control
systems and new roofs. As DOD strives to improve its energy efficiency,
accurate, real-time facility energy information is becoming essential.
Therefore, metering a larger fraction of the Department's buildings to
standardize processes and integrate systems will be needed to
systematically track, analyze and benchmark our facility energy and
water use and the related costs.
Mr. Kissell. 82) What are some of the most effective measures to
make DOD installations more efficient? And, efficiency is critical not
just to reducing electricity consumption but also oil consumption. What
impact do the rising petroleum prices have on each branch of the
military?
Secretary Hammack. The Army is taking several measures to improve
the energy efficiency of its facilities. The Army is investing in
improving all aspects of its buildings from more efficient heating and
cooling units to energy efficient lighting. The Army has the most
robust energy savings performance contract (ESPC) program in the
Federal Government. To Date, the Army has secured more than $1.5B in
ESPC and Utilities Energy Savings Contracts (UESC) investment. These
past investments have resulted in annual cost avoidance to the Army of
$148 million and an energy savings of 7.986 trillion British thermal
units (Btu).
Over the past several years the Army has made significant
improvement in energy efficiency. Since 2003 the Army has decreased its
facility energy usage by 13%, while at the same time its energy costs
have increased by more than 50%. In addition, the Army reduced its
petroleum usage in its non-tactical vehicle fleet by 8% in FY11.
Rising petroleum costs and rising energy costs in general are
squeezing Army budgets. As both fuel and electricity costs continue to
increase, it is critical that the Army invest in energy efficiency in
its buildings and vehicle fleet and continue investment in renewable
energy projects to lower costs over the long-term.
Mr. Kissell. 83) What are some of the most effective measures to
make DOD installations more efficient? And, efficiency is critical not
just to reducing electricity consumption but also oil consumption. What
impact do the rising petroleum prices have on each branch of the
military?
Secretary Pfannenstiel. The Department of the Navy is investing
aggressively in energy efficiency to reduce total energy consumption
afloat and ashore. We are conducting facility energy audits while
completing installation of advanced meters to implement a wide range of
facility energy efficiency measures. By the end of this year, over
27,000 meters will be installed in existing facilities to provide the
means to better measure the amount of energy we are consuming. We will
continue to invest in energy-efficient building upgrades and cost-
effective renewable systems; install advanced meters and energy
management systems; procure alternative fuel vehicles; achieve
sustainable building standards; and transform our energy culture and
behavior for long-term sustainability.
In FY11, the price of petroleum went up by $38/bbls, an increase of
30%. Already in this fiscal year, fuel price increases present a $900M
bill to Navy's operational accounts that we must resolve within our
operating budget. This extreme price volatility and upward trend of
fuel prices significantly impacts our readiness in execution years.
Mr. Kissell. 84) What are some of the most effective measures to
make DOD installations more efficient? And, efficiency is critical not
just to reducing electricity consumption but also oil consumption. What
impact do the rising petroleum prices have on each branch of the
military?
Secretary Yonkers. Overall, the Air Force's focus is to reduce our
energy footprint across all operations, including installations and
aviation operations. The Air Force has reduced its overall facility
energy consumption by nearly 20% and reduced energy intensity by more
than 16% since FY03. Included in the FY13 budget request is $215
million for energy conservation projects on our installations, a
continuation of the nearly $800 million the Air Force has invested in
such projects over the last four years. As a result of the initiatives
put in place over the last eight years, the Air Force has cumulatively
avoided $1.1 billion in facility energy costs since FY03.
One example of the Air Force efforts is the heat plant
decentralization project at Dover Air Force Base, Delaware. This
project, which replaces a 1950's era system with natural gas fired
boilers and electric water heaters, is estimated to save about $2
million a year by reducing energy use by more than 15% per year. All
new building projects on base are also having new boilers installed, so
no new specialized training will be required. The project is scheduled
to be completed in December 2012, and the Air Force anticipates
recovering its costs in 12 years. Additionally, the Energy Conservation
Investment Program (ECIP) is a critical element of the Air Force's
strategy to improve the energy performance of its permanent
installations. In FY11, the Air Force completed 17 ECIP projects at a
cost of under $30 million. The Air Force estimates these projects will
save more than 253 billion BTUs annually and nearly $54 million over
the life of the projects.
Efficiency is not just about aircraft improvements, but also
changing how we fly. The Air Force aviation efficiency goal is to
improve aviation energy efficiency 10% by 2020, based on a 2011
baseline. To address this, the Air Force is looking at policy changes
across our mobility, combat, and training aircraft, in addition to
investments in equipment. The Mobility Air Forces account for 64% of
aviation fuel consumption within the Air Force, and as their mission
lends itself to capturing lessons from industry, these aircraft have
been our primary focus for energy savings. For example, Air Mobility
Command (AMC) updated their policies to eliminate any extra fuel
carried, while still maintaining safety standards. Category 1 fuel
requirements existed for decades as an added amount of reserve fuel
equal to 10% of the time over water (outside of ground-based navigation
systems) to account for inaccurate navigation systems. With
technological advances and current on-board navigation systems
requirements, this additional fuel is unnecessary, and by eliminating
the requirement (and associated excess weight) the Air Force estimates
an annual savings of 5 million gallons in fuel, or more than $19
million a year based on today's fuel prices. While each one of these
policy changes is small, together they add up to 19.5 million gallons
of fuel, or $75 million, in FY11, with an expected savings of $325
million over the Future Years Defense Program (FYDP). With these
efficiencies put into practice, the cost for AMC to move 1 ton of cargo
1 mile by air is down by 21% and the Air Force was able to move 27%
more cargo on just 3% more fuel last year.
The Air Force is the largest single consumer of energy in the
Federal Government. Energy is becoming a larger share of the Air Force
budget, going from 3% of the Air Force budget in 2003 to over 8% in
2011, and it is becoming more difficult for the Air Force to forecast
and plan for volatile prices. Last year, the Air Force spent $9.7
billion on fuel and electricity, up $1.5 billion from FY10. While long-
term energy cost increases are a significant concern, short-term
fluctuations in energy prices can critically impact the budget in the
year of execution. For example, in June 2011, the price for a gallon of
JP-8 jumped 30% from $3.03 to $3.93 a gallon, and today the price is at
$3.82. The Air Force is anticipating a shortfall of approximately $1.3
billion this year due to the increased price of fuel from the FY12
budgeted rate.
______
QUESTIONS SUBMITTED BY MR. BARTLETT
Mr. Bartlett. 85) After consulting with the Services, please
identify the viable work-arounds for the assurance of JP-5, F-76, JP-8
and diesel for mobile platforms as well as to generate electricity for
critical missions in the Indian Ocean and in the Pacific Ocean--
specifically at Diego Garcia, Guam, Korea, Japan, and Hawaii in the
event that supplies and delivery of crude oil originating from the
Persian Gulf are disrupted for a period of 2 weeks to 2 months or no
longer available to the U.S. and allied militaries in those locations?
Please provide an answer for each location. Please only include work
arounds that do not rely on (a) competing with the Chinese for crude
oil or fuel; (B) That don't increase U.S. Military reliance on crude
oil or fuel from Russia; and (c) that don't rely on purchasing fuel or
oil from a secondary source that gets it from the Persian Gulf, such as
India, which gets crude oil from Iran. Please provide answers and
estimates of additional cost and impacts upon PACOM and CENTCOM
readiness compared with current operations for both short-term work
arounds (e.g. 1-3 months) and for long-term work arounds (e.g. 6 months
to 2 years.) Please include estimates of impacts upon PACOM and CENTCOM
readiness compared with current operations and the earliest year of
potential availability of access to supplies of certified, milspec JP-
5, F-76 and JP-8 that would displace 50% of crude oil feedstock with
bio-based feedstocks as a result of the proposed USN/DOE/USDA biofuels
and biorefinery initiatives utilizing DPA authority.
Secretary Burke. Historically, the Defense Logistics Agency's (DLA)
sources of JP5, F76 and JP8 for DOD customers in Guam, South Korea and
Japan are refiners located in South Korea and Singapore. DOD customers
for those products in Diego Garcia are served by refiners located in
South Korea, Singapore, Greece, Bahrain, Kuwait, and the United Arab
Emirates. Alternative sources for these areas could include refiners
located on the U.S. West Coast or in Malaysia, Greece, Spain, Ruwais
and Yanbu in Saudi Arabia, and Fujairah in the United Arab Emirates,
which is located outside the Strait of Hormuz. DOD customers in Hawaii
have traditionally procured refined products on island or from U.S.
West Coast refiners. Alternative sources for Hawaii would be refiners
located primarily on the U.S. West Coast.
The impact to CENTCOM or PACOM readiness of a disruption of oil
shipments from the Persian Gulf would depend upon the extent of the
disruption. At this point, DLA sees little impact on CENTCOM or PACOM
readiness compared to current operations for short term disruptions;
however, CENTCOM and PACOM would face increasing constraints after 8-12
months. Note that the refiners we work with buy crude oil on the global
market; although we can choose where we make purchases from, it would
be difficult to determine the effects on Chinese demand or that of
other nations. DOD's total product demand is 300,000 barrels out of 89
million barrels of daily global demand.
Regarding costs, in late December 2011 Iran threatened to close the
Strait of Hormuz. While most of the oil leaving the Strait goes to
Asia, the world oil market is interconnected. Following that threat,
Brent crude oil prices increased roughly 20% through early March 2012,
though how much of that price increase can be directly attributed to
the threat is difficult to say. Since then, Brent crude oil prices have
declined from their peak of more than $128/bbl.
Based on the above, one might project the minimum increase in crude
oil prices would be $20/bbl as an immediate reaction to any closing of
the Strait. Several analysts have publicly predicted increases between
$20/bbl and $100/bbl. If such a disruption lasted several days and even
weeks, the higher end cost increases would be possible. However, the
range of such estimates suggests how difficult it is to predict oil
prices with any precision given the many factors that can either
mitigate or exacerbate any price increase. Sustained for a year, an
increase in crude oil prices of $20/bbl would cost DOD $2.6B.
The U.S. Navy/DOE/USDA DPA authority may result in the construction
of relatively small (approximately 10 million gallons/year) domestic
bio-refineries with production capacity available in the late 2015/2016
timeframe. None of this domestic production would be expected to offset
fuel requirements for Diego Garcia, Guam, South Korea and Japan. If one
of the bio-refineries was constructed in Hawaii, the potential for a
small offset of conventional petroleum products in Hawaii exists. The
goal of the DPA is to help create U.S. industrial capacity, however, so
we anticipate the ability to increase output when the goals of this
project are met.
Mr. Bartlett. 86) The Congress last year authorized a new DOE
program for Small Modular Reactors (SMRs) which included $67M for
FY2012 ($452M over 5 years) for design and licensing of two LWR designs
of SMRs. After consulting with the Services, please provide details
about current or proposed plans at DOD to consider development and
deployment of Small Modular Reactor (SMR) at military installations.
What actions has DOD undertaken to date independently or in conjunction
with the Department of Energy (DOE), Nuclear Regulatory Commission or
the National Nuclear Labs to consider development and deployment of
SMRs at military installations? What is the budget and please identify
the personnel assigned to this effort going forward? Has DOD approved
consideration of SMRs for 30-year power purchase agreements at military
installations? If not, what are the obstacles to using this authority
for SMRs?
Dr. Robyn. The Department of Defense (DOD) continues to collaborate
with the Department of Energy (DoE) and its associated National Labs as
they investigate the potential of small modulator reactors (SMRs).
Initial meetings with DoE identified a wide variation (relative to
normal base demand) in power output among the four technologies under
consideration. DoE expects to select two primary technologies by the
end of 2012. Further meetings with DoE are planned once the
technologies are identified. At that time, DOD needs can be better
matched with SMR capabilities. Since DoE does not expect the first SMR
plant to be in commercial operation until 2022, further exploration of
possible siting locations is premature at this time.
The DOD's authority to enter into up to 30-year agreements for
energy production facilities on lands under its jurisdiction, 10 U.S.C.
2922a, would apply to an SMR the same as to any other energy production
facility. Although there are clearly issues that would have to be dealt
with because of the special considerations surrounding SMRs, section
2922a is available to use for contracting for provision of such a
facility.
Mr. Bartlett. 87) Please explain obstacles, including CBO scoring,
to DOD authority to approve long-term contracts for acquisition and
procurement of drop-in 50/50 crude oil/biofeedstock blend milspec JP-5,
F-76, and JP-8. Are there any other alternatives besides authority
under the Defense Production Act Title III Program for DOD to approve
long-term contracts for acquisition and procurement of drop-in 50/50
crude oil/biofeedstock blend milspec JP-5, F-76, and JP-8?
Secretary Pfannenstiel. As the biofuel industry is still relatively
immature, the new capital costs for large-scale production are
significant, and industry needs longer contractual terms so that those
costs can be amortized over a longer period of time. Accordingly, DON
believes that it would be beneficial to DOD to have the ability to
enter into long-term contracts for biofuels. DOD has general multiyear
contracting authority under 10 USC Sec. 2306. DOD has historically not
utilized this authority for the acquisition of fuels. Obstacles to
exercising this authority generally include OMB scoring and resulting
fiscal law concerns and budget implications.
DON and DOD have supported legislation to specifically provide
long-term contracting authority to DOD for the acquisition of
alternative fuels. DON does not have any information regarding the
methodology used by CBO to address scoring for these legislative
proposals. It is DON's opinion that longer contracts will result in
lower operating costs for suppliers and ultimately lower prices for
DOD, in which case CBO pay-go concerns should be allayed.
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