Defense to purchase advanced biofuel

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WASHINGTON, Dec. 5 (UPI) -- The Pentagon contracted to buy 450,000 gallons of advanced drop-in biofuel, the single largest purchase of biofuel in U.S. government history, officials said.

The Defense Department's Defense Logistics Agency will buy biofuel -- a tiny fraction of the Navy's yearly fuel budget -- made from a blend of used cooking oil and algae, which will be used in the U.S. Navy's demonstration of a Green Strike Group next summer during the Rim of the Pacific Exercise, the world's largest international maritime exercise, U.S. Navy Secretary Ray Mabus and Agriculture Secretary Tom Vilsack said Monday in a joint release.

A drop-in biofuel is a bio-based fuel that is a "chemical copy" of its hydrocarbon counterpart.

The $12 million purchase translates to a per-gallon cost of about $26, Stars and Stripes reported. Mixed at a 50:50 ratio with conventional fuel means the cost would be about $15 a gallon, Mabus said.

He said the price would drop more toward that of conventional fuel as technology and demand develop.

"This is still R&D [research and development]," Mabus said. "It's half of what we were paying this time last year. It shows that as the market develops, you're going to see costs come down."

As part of his energy security goals outlined in March, President Obama directed the departments of Agriculture, Energy and Navy to work together to advance a domestic industry capable of producing drop-in biofuel substitutes for diesel and jet fuel. The three departments in August announced their intent to invest up to $510 million during the next three years in partnership with the private sector to produce advanced drop-in biofuel to power military and commercial transportation.

Half the fuel in the current purchase comes from Solazyme, which produces biodiesel from algae, and the other half is from Dynamic Fuels, a joint venture of Tyson Foods and Syntroleum Corp.