Today, private industry and government have an opportunity to invest in another new kind of fuel to provide for the national defense: sustainable aviation fuel. There are challenges, just as there were in the 1930s, but the opportunity for the United States is significant. While sustainable aviation fuel will not yet provide an equivalent performance increase as 100-octane did, it brings with it other strategic benefits meriting consideration. These benefits include increased energy security, more stable aviation fuel prices for defense consumers, and diplomatic victories. The United States has a once-a-century opportunity to position itself on the leading edge of a new energy source.
Opportunity At Doorstep
The Air Force, the Department of Defense’s largest consumer of aviation fuel, spends approximately $7 billion a year on aviation fuel. While the United States is endowed with considerable crude oil reserves, it is not immune from market dynamics. Even small fluctuations in pricing can have significant impacts on defense budgets. Sustainable aviation fuel could help lessen these problems. Today, sustainable aviation fuel is constructed out of sustainable feedstocks and then blended with regular fuel, at ratios varying from 10 percent to 50 percent, depending on the demands of consumers. Feedstocks are the building blocks of sustainable aviation fuels. Researchers have developed four major feedstock pathways: hydroprocessed esters and fatty acids (HEFA), alcohol-to-jet (AtJ), gasification / Fischer-Tropsch (gas/FT), and power-to-liquid (PtL).
Each of these is fundamentally about constructing the same hydrocarbon chains currently found in fossil fuels. For example, corporations such as Neste collect used cooking oils from food producers and refine them into aviation fuel for the commercial airline market. Today’s sustainable aviation fuel can give a slight increase in aircraft performance (on the order of 1 percent) and requires no change in logistics requirements, although there are some manageable issues with NATO interoperability. There are also tactical advantages for military aircraft. A cleaner burning fuel not only provides a small performance increase but also leads to fewer contrails; both of which translate to tactical advantages for combat aircraft.
The real short-term challenge is that sustainable aviation fuel is currently not cost-competitive with regular jet fuel because of its higher material and refining costs. The market incentives are also a challenge. Building new refineries takes significant capital investment and it is unclear exactly how much demand there will be for this fuel or whether the demand will justify the investment. Initial government investment is a theme of many new innovations, particularly those in the energy space. Demand — oftentimes stimulated by government action — interacts with innovation, investment, and new market entrants to increase supply and lower prices.
However, by the mid-1930s, the price of 100-octane had fallen to around 35 cents. By the mid-1940s, it was selling for approximately 15 cents. Similar trends existed with coal, oil, solar, wind, and other forms of renewable energy. Thus, it is reasonable to assume sustainable aviation fuel will follow a similar trend over the next several decades. Thus, looking beyond the obvious environmental impact, the national security imperatives to diversify supply and control supply chains should also encourage broader investments to bring down sustainable fuel costs.
Many of America’s staunchest allies and most valuable potential partners view climate change as one of the biggest issues of the century. This is especially true in the South Pacific, where the United States and China are competing for influence. Although many argue that America’s system of government and way of life already differentiates it from China, the benefits of capitalism or democracy are lessened if your home will be underwater soon. Thus, island nations could rationally choose to take Chinese investment in climate-change mitigation infrastructure, even if they would prefer an alliance with a democratic nation. China has already invested significantly in its diplomatic efforts in the Pacific region and is signing numerous security and aid agreements.
The United States should be a critical partner for allied and prospective partner nations investing in climate-related infrastructure. One element of this can be building out sustainable aviation fuel refineries and storage facilities to spur local development. This effort could be done in conjunction with existing energy producers to build buy-in, ensure market stability, and to leverage private capital. Investments could also be targeted toward strategically meaningful areas.
The United States has already taken many of the steps necessary to minimize risk and prove the utility of sustainable aviation fuels. For example, in 2007 the United States Air Force demonstrated the efficacy of sustainable aviation fuels on a C-17 aircraft. To build on these successes and create actual alternative energy capabilities, the Department of Defense should commit to purchasing a certain volume of sustainable aviation fuel over the next several years. Practically, this means that instead of mere pilot programs, the Department of Defense should negotiate with new and existing producers to guarantee a certain volume and price.
Here, the private sector can provide an example. For example, American Airlines recently announced it would purchase 100 million gallons of sustainable aviation fuel per year, starting in 2027, for around $5.50 per gallon. This represents a substantial increase in the total market, although the actual impact is smaller given expected production by 2027. While the cost is more than Jet A the standard fuel used by jet aircraft at current market prices, American Airlines has accomplished four things. First, it has helped stabilize its fuel prices for the future. Second, it has secured a non-oil-based source of fuel. Third, it has helped market itself as a leader in sustainability. Fourth, it has created demand certainty for sustainable fuel producers.
Critics may argue that the private sector and existing government investments preclude the need to invest Department of Defense budget dollars in buying sustainable aviation fuel. However, a minimal investment can lead to two tangible advantages: First, the military could require certain sustainable aviation fuel capabilities to be built in strategically relevant areas and with defense standards in mind. Second, Department of Defense investment would likely further encourage private sector funding, offering benefits far in excess of the initial cost.
While such a cost increase is difficult for many to stomach in the short term, the example of 100-octane illustrates the potential payoff for these types of investments. The story of energy innovations is one of opportunity. From coal to oil or from 87 octane to 100 octane, innovation in the energy space has allowed shrewd nations to improve their security.
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