The Navy's Fuzzy Green Math

Last week a bunch of "green" news surfaced all over the internet regarding a major contract with the Navy that Solazyme was about to announce regarding Algae-fuel - and given I am interested in both the Navy and algae fuel, I've been watching the DoD contract listings. But alas - nothing.

And yet CNET is saying this happened?

Algae biofuel producer Solazyme announced Wednesday it's delivered 20,000 gallons of algae-based shipboard fuel to the U.S. Navy.

Solazyme's Soladiesel Renewable Naval Distillate fuel will go toward the Navy's ambitious goal of getting 50 percent of its energy from renewable resources by 2020.

But algae fuel is not just useful for the Navy's ships.

This past summer Solazyme also delivered 1,500 gallons of algae-based jet fuel to the U.S. Navy for testing. If testing goes well, Solazyme's algae-based advance biofuel could be powering some of our nation's military aircraft.

That is the completion of an old contract, not an announcement for a new contract.

I don't know where the money is coming from, but somehow the Navy is reported to have paid $8.5 million for 20,000 gallons of algae produced marine fuel (of which they have now taken delivery), and then has this new contract for $10+ million more for "research and development of using biofuel feedstocks." That was after paying who knows how many million last year for 1,500 gallons of algae-based jet fuel last year, of which has also already been delivered so I've heard.

But something isn't right here, indeed something smells all wrong. Why are there no public contract announcements outlining exactly how much money the Navy is spending with Solazyme, and even more important - why is the Navy throwing money at this company in the first place?

Look, you don't have to convince me that algae-fuel will one day replace oil based fuels, I already believe that is true (and understand there is still a lot of skepticism). What you do have to convince me though is how in the world Solazyme is ever going to be anything other than a really neat technology that is also cost effective, because it is a really neat technology that has almost no chance of ever being cost effective. Algae-fuel companies are renowned for offering gross exaggerations with their estimations, and while Solazyme clearly has the technology to produce lots of algae-fuel - their cost models examined in the backdrop of their super electricity consuming laboratories don't even come close to passing the smell test.

It costs Solazyme more than a gallon of oil based fuel to create a gallon of biofuel, so why is the Navy investing so heavily in a company that is the antithesis of carbon neutral green energy? I think the technology Solazyme has is cool as hell - because cooking fuel just sounds cool as hell - but come on..., is 'neato' how we measure investments in government or does substance matter?

Do the math - the Navy is paying $425 per gallon for Marine biofuel from Solazyme, and the goal for Solazyme is to ramp up their production up to 1,000,000 million gallons a year. To put it in perspective, a single DDG-51 uses more than 1,000,000 gallons fuel when assigned on deployment to CTF-151 off the Horn of Africa (see USS James E Williams in FY09) - and that's the high end goes for Solazyme right now. This is the slowest possible road towards The Great Green Fleet Ray Mabus discussed.

I understand the idea that the US Navy would buy algae-fuel from Solazyme to test engines of various platforms for viability, but because I am not seeing contract money - I can only assume the money is actually part of a grant. With that said, if the United States is throwing grant money at an algae-fuel company that has no chance in hell of ever being commercially viable and competitive short of war with Iran, then our green energy priorities are really screwed up.

Solazyme either has someone in Congress in their back pocket, of the folks in the green energy section of the Navy need to explain themselves better because they are begging for criticism.

When it comes to algae-fuel, the US Navy should be looking at every single algae company doing work in ponds they can find - because if the US Navy doesn't understand why pond based algae fuel technologies will be part of the US Navy's greater disaster response package one day, then their vision of algae-based fuel technologies is remarkably limited. The US Navy green energy policies need to be about energy and food and water - and the "and food and water" part should be pretty damn important to the US Navy.

Either the Navy is not really spending the money on algae-fuel (in other words, some other government agency or budget is), or that spending is not being reported properly because there is no way someone can convince me the Navy is ordering more that 20,000 gallons from Solazyme without spending big millions. Solazyme has some of the most interesting green technology in the world, but until it takes less than 1 gallon of gasoline to produce 1 gallon of bio-gasoline I have serious questions regarding government investment - particularly the Navy who has so much more to gain from the technologies surrounding pond based algae.

I am a huge believer in green technology for algae fuels, but I am not optimistic the US will be the world leader when this technology booms in 10 years. Our energy policies at the political level are fundamentally broken in this country (and the Navy investing millions in Solazyme is part of the problem). Ridiculous solutions like Cap & Trade is only one example of just how far our nations aim is off vs what the target should be.