Economics of Military Energy Use

After the Solyndra Corporation’s bankruptcy and the loss of over a half-billion dollars in federal clean energy loan guarantees, Congress has become more wary of subsidizing commercially risky energy projects. A new question, however, has arisen over whether our military’s operational energy vulnerabilities might justify Defense Department “investment” in energy innovation. Interest in using the military to support everything from biofuels to the deployment of small modular reactors, though, raises several questions.

What difference, if any, might there be between investment in energy innovation (research and development) and in the commercialization of technically proven energy technologies? When might it make sense for the Defense Department to do either? Are there meaningful metrics with which to compare costs and reductions in operational energy vulnerabilities among alternative technologies that can support sound rules of thumb? How might these metrics apply to the most recent examples of biofuels for military airplanes and ships to reduce their reliance on conventional fuels? To small reactors, for key U.S. military bases to reduce their dependence on a potentially vulnerable electrical grid?

On Sept. 24, 2012, the Nonproliferation Policy Education Center and the Marshall Institute hosted a private, off-the-record dinner seminar. Dr. Michael Canes, a leading economist who specializes in military use of energy, shared his insights, including those gained from his work in support of the 2008 Defense Science Board report, More Fight, Less Fuel.  Doug Koplow, a nationally recognized energy economist who has done extensive work costing nuclear energy, biofuels, and their related subsidies, provided comment.

Dr. Canes’ powerpoint presentation is provided on the link below.

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