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[Senate Hearing 112-389]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 112-389
 
                THE DEPARTMENT OF NAVY'S ENERGY PROGRAM

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON WATER AND POWER

                                 of the

                              COMMITTEE ON

                      ENERGY AND NATURAL RESOURCES

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   TO

 RECEIVE TESTIMONY ON SPECIFIC ENERGY AND WATER POLICIES AND PROGRAMS 
THAT THE U.S. DEPARTMENT OF NAVY IS IMPLEMENTING AS IT PERTAINS TO ITS 
                       OPERATIONS AND FACILITIES

                               __________

                      NORFOLK, VA, MARCH 12, 2012

                       Printed for the use of the
               Committee on Energy and Natural Resources

                  U.S. GOVERNMENT PRINTING OFFICE
74-184                    WASHINGTON : 2012
-----------------------------------------------------------------------
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20402-0001

               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

RON WYDEN, Oregon                    LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          JAMES E. RISCH, Idaho
MARIA CANTWELL, Washington           MIKE LEE, Utah
BERNARD SANDERS, Vermont             RAND PAUL, Kentucky
DEBBIE STABENOW, Michigan            DANIEL COATS, Indiana
MARK UDALL, Colorado                 ROB PORTMAN, Ohio
JEANNE SHAHEEN, New Hampshire        JOHN HOEVEN, North Dakota
AL FRANKEN, Minnesota                DEAN HELLER, Nevada
JOE MANCHIN, III, West Virginia      BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel
                                 ------                                

                    Subcommittee on Water and Power

                JEANNE SHAHEEN, New Hampshire, Chairman

RON WYDEN, Oregon                    MIKE LEE, Utah, Ranking
TIM JOHNSON, South Dakota            JAMES E. RISCH, Idaho
MARIA CANTWELL, Washington           DANIEL COATS, Indiana
BERNARD SANDERS, Vermont             JOHN HOEVEN, North Dakota
DEBBIE STABENOW, Michigan            DEAN HELLER, Nevada
JOE MANCHIN, III, West Virginia      BOB CORKER, Tennessee

    Jeff Bingaman and Lisa Murkowski are Ex Officio Members of the 
                              Subcommittee

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Alexander, Rear Admiral Townsend, Commander, Navy Region Mid-
  Atlantic, Department of the Navy...............................    30
Charette, Colonel Robert, Director, Marine Corps Expeditionary 
  Energy Office, Marine Corps....................................    33
Cullom, Vice Admiral Philip, Deputy Chief of Naval Operations, 
  Fleet Readiness and Logistics, Department of the Navy..........    29
Hicks, Thomas, Deputy Assistant Secretary of the Navy, Energy, 
  Department of the Navy.........................................    27
Kessler, Major General James, Commander, Marine Corps 
  Installations Command, Marine Corps............................    32
Mabus, Hon. Raymond E., Secretary of the Navy, Department of the 
  Navy...........................................................     5
Shaheen, Hon. Jeanne, U.S. Senator From New Hampshire............     1
Warner, Hon. Mark R., U.S Senator From Virginia..................     3
Warner, Hon. John, Senator (R-VA), Ret...........................    19

                                APPENDIX

Responses to additional questions................................    39

                       THE DEPARTMENT OF NAVY'S 
                             ENERGY PROGRAM

                              ----------                              

                         MONDAY, MARCH 12, 2012

                               U.S. Senate,
                   Subcommittee on Water and Power,
                 Committee on Energy and Natural Resources,
                                                 Norfolk, Virginia.
    The subcommittee met, pursuant to notice, at 2:10 p.m. at 
the U.S. Naval Station aboard the USS Kearsarge in Norfolk, 
Virginia, Hon. Jeanne Shaheen presiding.

OPENING STATEMENT OF HON. JEANNE SHAHEEN, U.S. SENATOR FROM NEW 
                           HAMPSHIRE

    Senator Shaheen. Good afternoon, everyone. I will not bang 
the gavel because we don't know what that will mean. But I 
would like to welcome all of you to this hearing of the Senate 
Energy and Natural Resources Subcommittee on Water and Power.
    I'm Jeanne Shaheen. I'm the Senator from New Hampshire. I 
chair that subcommittee.
    We're delighted to be here aboard the USS Kearsarge at 
Naval Station Norfolk to discuss the Department of the Navy's 
ongoing work in energy efficiency and alternative energy. I 
think it's important to point out that the Senate historian has 
told us that this will be the first Senate Committee hearing on 
a U.S. Navy ship since 1960. So we're making a little modern 
history today.
    I'm pleased to be joined by my good friend from the 
Commonwealth of Virginia, Senator Mark Warner and our very 
distinguished panel of experts.
    We have 2 Senator Warners here. So we're very pleased about 
that. We also have Senator John Warner, who will be joining us 
as a panelist.
    I want to give special thanks to Secretary Mabus, Secretary 
of the Navy, for joining us today and for being here to testify 
and for all of your leadership in addressing the issues that 
we're here to talk about today.
    I also want to thank Captain Jones and Rear Admiral Ann 
Phillips for hosting us as well.
    We're really pleased, I'm particularly pleased to be aboard 
the USS Kearsarge because it is the forth ship in the history 
of the Navy to be named after Mount Kearsarge which is in New 
Hampshire. I'm not quite sure how that happened, but I'm going 
to have to go back in history and find out which Senator made 
it possible to have 4 ships named after Mount Kearsarge.
    But we're delighted to be here today because this ship 
really exemplifies many of the policy initiatives that we're 
going to be discussing. We had a very impressive briefing 
earlier this morning with so many of the initiatives that 
you're using on board here described in a way that we really 
need to get the word out. That's part of what we hoped to do 
with this hearing today.
    By embracing a comprehensive approach to energy 
conservation the Kearsarge has successfully reduced its energy 
usage and recently received a 2011 SECNAV Energy Conservation 
Award.
    I know we're all part of the choir here but energy 
efficiency is the cheapest, fastest way to address our energy 
needs in this country. The benefits of energy efficient 
technologies to our domestic economy are obvious.
    They lower energy costs.
    They ultimately free up capital that allows businesses to 
expand and our economies to grow.
    It also has the potential to create thousands of new jobs 
and help protect our environment.
    I was pleased last year to work with Senator Rob Portman 
from Ohio on an inter-comprehensive energy efficiency 
legislation. We're still hoping we can get that to the floor.
    One of the things that I learned as part of that effort, 
again, that I know everyone here knows is that government is 
the biggest user of energy in America. The military is the 
biggest user of energy within the Federal Government. That's 
demonstrated by this middle circle on this chart. You can 
really see how energy use breaks down.
    Today's hearing is going to focus on the impact of energy 
efficiency and renewable energy on our national security. The 
Department of Defense has long been interested in harnessing 
new forms of power to improve our Nation's combat readiness. 
However, the proliferation of advanced technology on the 
battlefield has dramatically increased our military's energy 
needs.
    Today's service member requires an average of 22 gallons of 
fuel per day, an increase of 175 percent since the Vietnam War. 
Operations in Afghanistan alone require 20 million to 50 
million gallons of fuel per month. The total cost to secure and 
transport fuel to the battlefield, also known as the fully 
burdened cost of energy, is estimated to be as high as $40 a 
gallon.
    Most important in 2010 there were 1,100 attacks on fuel 
convoys. So as you all explained to me so eloquently this 
morning, this is not just about cost in resources. This is 
about also costs in lives. The conflicts in Iraq and 
Afghanistan have illustrated the clear need for reform of DOD 
energy policies.
    Since 2008 the Department has made notable progress toward 
that goal.
    For example, the Department of the Navy, under the 
leadership of Secretary Mabus, has committed itself to securing 
50 percent of its energy from alternative sources, reducing 50 
percent of its non-tactical petroleum use and ensuring 50 
percent of all Navy and Marine Corps installations produce as 
much energy as they consume by 2020.
    The Navy is also increasingly making use of alternative 
energy, particularly advanced biofuels. Using alternatives to 
petroleum including algae, switch grass and camelina, again, we 
had a very interesting demonstration of that this morning.
    The Navy has already powered an F/A Team Green Hornet, a 
riverine command boat and several components of the first green 
carrier strike group, dubbed the ``Great Green Fleet''.
    The Navy's development of advanced biofuels has the 
potential to dramatically improve our energy security and could 
lay the groundwork for wider utilization in our civilian 
economy.
    The Marine Corps has also committed itself to reducing 
energy demand particularly on the battlefield.
    For example, through the work of the Marine Corps 
Expeditionary Energy Office, a marine unit in Afghanistan, 
recently conducted a 3 week, foot patrol without resupplying 
batteries, saving them 700 pounds of battery weight over the 
course of the mission. Again, we got a very effective 
demonstration of that earlier this morning.
    Now I first had my introduction to some of the work that 
the Navy is doing with Senator John Warner last summer, when we 
had the opportunity to tour the Portsmouth Naval shipyard. You 
know I couldn't be in Norfolk without mentioning Portsmouth, 
which is between New Hampshire and Maine and obviously very 
important to us in Maine and New Hampshire. We were able to 
see, firsthand, the potential to reduce operating costs and 
improve mission performance through more effective energy 
management.
    Again, I was pleased to present Portsmouth Naval Shipyards 
with the 2011 SECNAV Energy and Water Management Award for 
outstanding achievement in the industrial category. So this is 
a continuation of learning more about those efforts that you 
all have underway in the Navy and throughout the military.
    I look forward to further exploring many of these issues 
today as well as additional ways that Congress can be helpful 
on this important issue. I think, as I said at the outset, one 
of the most important things we need to do is to get the word 
out about the great work that is going on here. So again, thank 
you very much to everyone who's been involved in this visit, to 
the Energy Committee staff in the Senate, who helped set it up.
    Now I would like to ask Senator Warner if he would like to 
make some opening remarks.

         STATEMENT OF HON. MARK R. WARNER, U.S SENATOR 
                         FROM VIRGINIA

    Senator Mark Warner. Thank you, Madam Chairwoman.
    Thank you Senator Shaheen for holding this hearing.
    I am not a member of this subcommittee. But when Senator 
Shaheen mentioned that she was coming to Norfolk and was going 
to focus on some of the innovation and exciting opportunities 
going on in the Navy and Marines, I wanted to be here.
    I wanted to also commend Senator Shaheen for her leadership 
in this field. She made brief mention of some legislation that 
she and Senator Portman put together last year. I'm proud to be 
a co-sponsor of as well. In terms of energy conservation, which 
is really the lowest hanging fruit in terms of how we can save 
resources, save money and lessen our dependence, particularly 
upon foreign oil sources.
    So I want to again, thank you for your work on that piece 
of legislation that actually got out of committee, 18 to 3. 
You'd think at that kind of vote it might actually get a chance 
to get a vote on the floor at some point. So we're hopeful that 
that may come to pass at some point soon.
    I also want to commend Secretary Mabus for, once again, 
being here in Virginia. We appreciate your leadership, your 
wisdom and reaffirming Norfolk as the home of our carriers on 
the East Coast of the United States. Something that is 
critically important, as you have to make the very, very tough 
choices as Secretary to make sure how, in these fiscally 
constrained times, we can do more with less.
    I think your commitment to energy efficiency and the 
commitment Senator Shaheen mentioned in terms of trying to see 
if we can move the Navy's usage to 50 percent alternative fuel 
over the next few years is a very appropriate and worthy goal. 
I don't understand how some Members of Congress just don't seem 
to get it, that this initiative is about saving money. It's 
about saving lives as we've seen some of the data shown 
particularly from the conflicts in Iraq and Afghanistan, the 
amount of harm that befalls some of our troops as we have to 
convoy up fuels to those front lines.
    So this truly is, these efforts, are about saving lives. 
It's, once again, about having the Navy be an innovator. There 
are things that you can do in terms of forward purchasing and I 
want to get to this in some questions coming up that really can 
spur innovation, not just for DOD, but across the whole energy 
field.
    Let me also make one comment. That, Madame Chair, it's a 
bit intimidating to me and any member of the Virginia 
Congressional Delegation to be on one of our great Navy vessels 
when we have Senator John Warner in the audience. It was nearly 
70 years ago that Senator Warner first signed up as a member of 
the Navy, volunteered to serve our Nation and has served our 
Nation in so many ways over those last, close to, 70 years both 
in the Navy and the Marines, as Secretary of Navy, in the U.S. 
Senate.
    I personally am looking forward to the second panel when 
I'm going to get a chance to really grill him on a number of 
issues that I've, you know, I've been on the other side of the 
podium, of the grilling, from John Warner in the past. So I'm 
looking forward to that turn about, fair play. But it is a 
real, real wonderful opportunity for me. There's no one that I 
respect more than John Warner. His presence here today is 
special for all of us.
    Let me simply again, we got to get on to the testimony. But 
I want to thank all of the sailors and the Marines, who do so 
much to keep us safe. God Bless you for what you do. Thank you 
again, for your work on this important effort as well showing 
again, how we can save dollars, save lives and play an 
incredibly important role in terms of bringing greater 
innovation to the very, very important field of energy.
    With that, Madame Chairman, I yield back.
    Senator Shaheen. Thank you.
    Just to reassure Senator Warner. I have the gavel. So fear 
not. If he gets too difficult, we'll shut him down.
    We have 3 panels this afternoon.
    The first panel really needs no introduction, obviously. 
It's the Secretary of the Navy, Ray Mabus. Thank you very much, 
again, for being us, Mr. Secretary.

  STATEMENT OF HON. RAYMOND E. MABUS, SECRETARY OF THE NAVY, 
                     DEPARTMENT OF THE NAVY

    Mr. Mabus. Senator, thank you so much.
    Senator Shaheen, Senator Mark Warner, I particularly am 
glad to be here on the Kearsarge, named for, as you pointed 
out, the mountain in your home State. I'm also particularly 
glad to be here with another Ol'Miss graduate, Senator Shaheen.
    Senator Warner, you pointed out about our carriers. I'd 
like to make one other point. Everybody thinks we have 11 
carriers in the Navy.
    This is living proof that we've got 22, that our big deck 
amphibs perform the incredibly wide range of missions, that our 
other conventional carriers perform. So our carrier force is 
larger and more dispersed than almost anything else we have. 
Projects our power and protects this country in unique ways.
    So first I want to thank the 2 members here and the members 
of your subcommittee and of the Senate for the support that you 
give our sailors and marines, the men and women in uniform, 
their families, who help us, have the best military the world 
has ever seen. Protecting our national interest is exactly what 
our efforts on reforming how we use, produce and procure energy 
are all about.
    Before I get into just a few specifics about what we're 
doing I think it's important for us to understand the 
environment we work in. The pride that the Commandant of the 
Marine Corps, General Amos and the Chief of Naval Operations, 
Admiral Greenert and I take in leading the Navy and Marine 
Corps is exceeded only by the accomplishments of the brave and 
selfless sailors, marines and civilians that we lead. Whatever 
is asked of them by the American people through their Commander 
in Chief from Afghanistan to Libya, from assisting the stricken 
people of Japan to assuring open sea lanes around the world, 
from bringing Osama Bin Laden to final justice, to rescuing 
hostages wherever they may be hidden by either terrorist or 
pirates, they answer the call. They get the job done.
    As we pivot out of 2 long ground wars it became essential 
to review our basic strategic posture. The new guidance 
developed under the leadership of the President and the 
Secretary of Defense and with the full cooperation of all the 
service secretaries and the service chiefs, responds to a very 
dynamic and complex, global security environment. Out of that 
strategy we developed a budget which is now in front of you to 
ensure the Navy and Marine Corps can execute this strategy 
while staying within the limits placed by the Budget Control 
Act.
    The CNO, the Commandant and I are absolutely confident that 
the United States Navy and the United States Marine Corps are 
well prepared to maintain their status as the most formidable 
expeditionary fighting force the world has ever known. No one 
should ever doubt the ability, the capability or the 
superiority of the Navy and Marine Corps.
    This new strategy focusing on the Western Pacific, the 
Arabian Gulf, while maintaining our global presence clearly 
increases demand on maritime capability. It requires the Navy 
and Marine Corps team that is built and ready for any 
eventuality. Land, under the sea, in the air, on the sea or in 
the vast cyber seas, and operated forward to protect American 
interest, to deter crisis and if necessary, to fight and win 
wars.
    Understandably this has drawn a lot of attention to the 
size of our fleet. I'd like to talk about that with some, few 
basic facts. On 9/11 the United States Navy had 316 ships in 
our battle fleet. That number dropped by 33 ships over the next 
7 years. Reversing that trend and rebuilding our fleet has been 
one of the top priorities of this Administration.
    We have stabilized acquisition programs for our most 
important platforms, increased competition, use many more fixed 
price contracts, insisted on better performance and taken 
tougher stands against fraud, abuse and mismanagement. Despite 
the fiscal challenges and despite decommissioning 7 cruisers 
early, our ship building plan will enable us to maintain the 
same size fleet at the end of this 5-year period that we have 
today. Before the end of this decade in 2019, we will again 
have 300 ships in our battle fleet. I must also point out that 
that fleet of 2019 will have far greater capabilities than the 
fleet of today.
    As I said the CNO, the Commandant and I are very confident 
that we can meet the demands of our new strategy today. But the 
threats we face are not static and neither is our defense 
strategy nor our plans to continue to build our capabilities 
and capacities to meet the strategy and whatever threats or 
requirements come over the horizon. It's exactly because we 
live in this ever changing, very dynamic security situation we 
can't be complacent about how the Navy and Marine Corps use, 
produce and procure energy.
    Here again, regarding these efforts it's important to talk 
about a few facts.
    Resources have always been a potential source of conflict 
throughout human history. Those who have abundant energy 
resources sometimes use that as a weapon against others. While 
those who lack energy supplies or have to depend on others to 
fulfill their needs, recognize just how vulnerable that makes 
them.
    Today the United States controls just 2 percent of known 
global oil reserves. But we consume over 20 percent of all the 
world's oil. President Obama's, ``All of the Above'' energy 
strategy, clearly advocates doing a better job of increasing 
domestic oil production as much as possible. But the math is 
very clear. Even if we used every possible source of oil 
available to us, it wouldn't be enough to supply our needs.
    That's why we rely so much on foreign sources of oil. Even 
though many of those sources of which we are absolutely 
dependent are in volatile or potentially volatile places on 
Earth. Some of those oil suppliers probably don't have our best 
interests at heart. We would never depend on those oil 
suppliers to build our ships, our aircraft, our ground 
equipment, but we give them a say in whether the ships sail, 
the aircraft fly or the ground vehicles operate because we 
depend on them for fuel.
    Supply shocks are a real strategic vulnerability for us. 
Price shocks make us equally vulnerable. For every dollar 
increase in the price in a barrel of oil the United States Navy 
gets an additional $31 million fuel bill.
    Oil prices are a global commodity. Set globally in a market 
that's often driven by rumor and speculation which can cause 
price spikes that make budgeting absolutely impossible. When 
the Libya unrest broke out last year about this time, the price 
of a barrel of oil increased $38 which increased the Navy's 
fuel bill by over a billion dollars.
    There was only one place for us to go get that and that was 
out of our operations accounts which meant that we steamed 
less. We flew less. We trained less.
    As you pointed out, Senator Shaheen, in theater fuel is 
also a tactical and operational vulnerability. Fuel and water 
are the 2 things we import the most into Afghanistan. For every 
50 convoys of fuel and water a Marine is killed or wounded. 
That is simply too high a price to pay.
    Both the Navy and the Marine Corps have to use energy more 
efficiently. We must lead in the development of alternative 
energies. If we don't we put our military readiness, we put our 
national security and we put the lives of our sailors and 
Marines at risk.
    Again, as you pointed out, nearly 3 years ago, I set 5 
ambitious energy goals for the Department. We're making real 
progress on all 5. Our efforts are already making us a lot 
better war fighters.
    Let me give you a few examples of that progress. Some of 
which I know you saw earlier today.
    By deploying to Afghanistan with solar blankets to charge 
radios and some of their other small electrical equipment the 
Marine patrol dropped 700 pounds of batteries from their packs 
and didn't have to be resupplied as often.
    Less efficient generators run all the time making noise 
that No. 1, makes it hard for our Marines to hear things going 
on outside the wire.
    Number 2 makes them easy for the enemy to target.
    More efficient generations run less often, make less noise 
and are less easy to target.
    More efficient means of powering our ships helps save money 
leaving more money for other program platforms.
    Just on the Kearsarge, stern flaps, other energy saving 
devices, save about $2 million a year in fuel costs.
    Its sister ship, the USS Makin Island, has a hybrid 
electric drive which on its initial voyage from Pascagoula, 
Mississippi, in my home State around South America to 
California to San Diego, its home port, saved $2 million in 
fuel at 2010 prices. That ship's ability over the--to use 
electric power when it's cruising at lower speeds which is most 
of the time for war ships, will mean over its life expectancy 
that in 2010 dollars it will save $250 million in fuel costs. 
That's why we're testing the same hybrid technology on our 
guided missile destroyers.
    Representatives of both the Navy and Marine Corps will 
follow me and will talk about specifics on what we're doing to 
secure greater independence, save money and save lives through 
our comprehensive effort to reduce energy demand and provide 
alternative forms of energy ashore, afloat, in the air and on 
the ground. But before I finish let me mention 2 other 
significant initiatives undertaken by Navy at the direction of 
our Commander in Chief to advance the goals that I just 
outlined.
    The first is procuring one gigawatt of renewable energy 
generation on or near our installations without any net cost to 
taxpayers by using existing third party financing mechanisms. 
So it's just a power purchase agreement. Joint ventures enhance 
use leases. While we are a sea going service Navy and Marine 
Corps has 3.3 million acres and 72,500 buildings. We believe 
leveraging these assets to promote renewable alternatives will 
help advantage our energy goals as well as increase clean 
energy jobs in America.
    The second initiative symbolizes about what you both 
discussed, our effort to demonstrate the ``Great Green Fleet'' 
has drawn some skepticism. Although I believe that a lot of 
that is based on either misunderstandings or inaccuracies. Last 
year the Navy bought what we think is the largest purchase of 
biofuel ever in America to mix in a 50/50 blend with either 
diesel fuel or AB gas to power a demonstration of how our ships 
and planes can operate on alternative, liquid fuels during the 
largest maritime exercises on Earth, the rim of the Pacific 
this summer. During this exercise alternative fuel blends will 
be used in operational activities such as refueling aircraft on 
the deck of our carrier or underway replenishments.
    We obviously dubbed this the ``Great Green Fleet'' as a 
reminder of Teddy Roosevelt's ``Great White Fleet'' which 
helped usher in America as a global power at the beginning of 
the 20th century. The ``Great Green Fleet'' doesn't have an 
environmental agenda. It's about maintaining America's military 
and economic leadership across the goal in the 21 century.
    Now it's true that biofuel blend costs us more than 
conventional diesel and aviation fuels would have. But the 
simple economics explains why. Alternative fuels can't become 
competitive with oil unless there's a demand for them. But 
demand at commercial scale will never be possible unless 
there's a supply to meet that demand.
    While our purchase was the largest single purchase ever, it 
represents just a fraction of what Navy will need. But even 
purchases of small amounts for our R and D efforts have shown 
dramatic results by lowering the cost of biofuels which cost as 
much today as they did 2 years ago.
    One of the advantages that Navy has is our ability to help 
stimulate both demand and supply. That's why the President 
directed us to work with the Department of Agriculture and 
Energy to develop a plan to create a domestic, commercially 
viable, biofuels industry. We're making real progress on that 
plan which calls for a government commitment of up to $510 
million and a matching commitment at least one to one from the 
private sector to help build this industry to provide energy 
independence and American jobs.
    When they were introduced, computers cost more than the 
typewriters they replaced. In fact, the first Apple cost in 
today's dollars about $2,440. The iPad just introduced is $499.
    Smart phones, which Senator Warner knows a lot about, cost 
more than rotary dial landlines when they were introduced. But 
once the market got large enough the cost of these new 
technologies came down dramatically. The capabilities increased 
dramatically.
    When anyone says we can't afford to invest in developing 
alternative sources of energy, my reply is we can't afford not 
to. We can't afford to wait until price shocks or supply shocks 
leave us no alternative. We can't afford to wait while other 
Nations get far ahead of us on energy reform. I don't want to 
trade one source of foreign power for another.
    We can't afford to be distracted by those who offer the 
absolutely false choice of investing in ships or planes or 
investing in more secure means of powering ships and planes. If 
we don't have or cannot afford the energy to power those 
platforms, the platforms themselves may be of little value. If 
we develop a domestic fuel source that's less vulnerable to 
price shocks we'll be able to afford more ships and planes that 
we need.
    This is not about choosing either ships or alternative 
fuels. This is about building ships and using alternative 
fuels.
    To those who question why Navy would be a leader in energy 
innovation are that its efforts are either outside or 
obstructing its real mission. I would simply remind them of our 
history.
    In the middle of the 19th century we moved from sail to 
coal.
    Nearly 20th century we move from coal to oil.
    In the 1950s we pioneered the use of nuclear.
    At every one of those transitions, every single one of 
them, there were people who questioned the need, who challenged 
the cost or who simply opposed change of any kind. Those folks 
were wrong then. The people who question the need for change 
now, I believe, will be equally wrong.
    For 236 years from sail to steam to nuclear, from the USS 
Constitution to the USS Carl Vincent, from Tripoli to Tripoli, 
our maritime warriors have upheld a proud heritage, protected 
our Nation, protected our power and provided freedom of the 
seas. Then, as now, our Navy and Marine Corps continue to 
adapt, to innovate, to assure that America comes out on top.
    Thank you all.
    [The prepared statement of Mr. Mabus follows:]

  Prepared Statement of Hon. Raymond E. Mabus, Secretary of the Navy, 
Department of the Navy, and Jackalyne Pfannenstiel, Assistant Secretary 
           of the Navy, Energy, Installations and Environment
    Chairman Shaheen, Senator Warner, and members of the Subcommittee, 
I am pleased to appear before you today to provide an overview of the 
Department of Navy's investment in its energy programs.
    It is critically important that we reform how the Navy and Marine 
Corps use, produce, and procure energy, especially in this fiscally 
constrained environment. We must use energy more efficiently and we 
must lead in the development of alternative energy; otherwise, we allow 
our military readiness to remain at risk.
    In theater, fuel is a tactical and operational vulnerability. 
Guarding fuel convoys puts our Sailors' and Marines' lives at risk and 
takes them away from what we sent them there to do: to fight and 
prevail, to engage and rebuild. For every 50 fuel convoys in theater, 
there is one Marine casualty. This is simply too high a price to pay.
    President Obama's ``All of the above'' strategy toward sources of 
energy recognizes a fundamental math problem: while the United States 
consumes 22 percent of the world's oil, we possess just two percent of 
known oil reserves.
    Oil prices are set on a global market often driven by speculation 
and rumor, leaving the Department exposed to price shocks in the global 
market.
    Every time the cost of a barrel of oil goes up a dollar, it costs 
the Department an additional $30 million in fuel costs. In FY12, in 
large part due to political unrest in oil producing regions, the price 
per barrel of oil has risen $38 over what was budgeted, raising Navy's 
fuel bill by over $1 billion. These price spikes must be paid for out 
of operations, meaning our Sailors and Marines are forced to steam 
less, fly less, and train less.
    Strategically, we are at risk because much of the fuel we use comes 
from volatile regions of the world. We would never buy aircraft or 
ships from many of the places that supply us oil because some are 
unstable and some do not necessarily have our best interests at heart.
    The Department of the Navy is committed to implementing an energy 
program that enhances our national security and our military readiness 
by reducing our dependence on imported fossil fuels. Energy security is 
national security. Our energy program is comprehensive--it involves 
both Services and contains initiatives to reduce energy demand and 
provide alternative forms of energy supplies on shore, afloat, in the 
air, and on the ground.
    Navy's leadership on energy innovation is nothing new. It was the 
Navy that shifted from sail to steam in the middle of the 19th Century, 
steam to oil in the early 20th Century, and pioneered nuclear power in 
the middle of the 20th Century. At each of those transitions, there 
were those who questioned the need, challenged the cost or simply 
opposed change of any kind.
                department of navy goals and initiatives
    Congress and previous administrations have recognized the 
imperative of energy security as demonstrated in the Energy 
Independence and Security Act of 2007, Energy Policy Act of 2005, and 
the National Defense Authorization Act of 2007 and 2010, and several 
executive orders. This administration has built on those actions, but 
the program proposed for FY13 and beyond will exceed the goals set in 
those previous laws because we must.
    As Secretary of the Navy, I set five aggressive department-wide 
goals to reduce the Department's overall consumption of energy, 
decrease its reliance on petroleum, and increase its use of alternative 
energy.
    The goals are:

   By 2020, at least 50% of total DON energy will come from 
        alternative energy resources,
   By 2020, DON will produce at least 50% of shore based energy 
        requirements from alternative resources and 50% of Department 
        installations will be net-zero,
   DON will demonstrate a Green Strike Group in local 
        operations by 2012 and sail the Great Green Fleet by 2016,
   By 2015, DON will reduce petroleum use in non-tactical 
        vehicles by 50%,
   Evaluation of energy factors will be used when awarding 
        contracts for systems and buildings.

    Meeting these goals requires that the Navy and Marine Corps value 
energy as a critical resource across maritime, aviation, expeditionary, 
and shore missions and myriad investments and activities. They will all 
foster behaviors that will reduce the Navy and Marine Corps' overall 
energy requirements and technologies that can provide adequate 
substitutes for fossil-based energy. Two significant initiatives that 
will be advanced in pursuit of the goals are:

   The development of alternative liquid fuels for our ships 
        and planes.--To meet the goal of 50% of total DON energy from 
        alternative sources, the DON has partnered with the DOE and 
        USDA to collectively pool $510M to jump start commercial 
        development of the advanced alternative fuels industry. The DON 
        intends to use the Defense Production Act (DPA) Title III for 
        its contribution. This effort will help to obtain the 8 million 
        barrels of biofuel needed by 2016 to sail the ``Great Green 
        Fleet.'' The alternative fuel that the DON will purchase must 
        be available at prices competitive with the conventional 
        petroleum fuels being replaced; it must not have negative 
        consequences for the food supplies; and it must be a ``drop-
        in'', that is, not requiring infrastructure or operational 
        changes.
   Fostering the production of one gigawatt of renewable energy 
        generation on DON installations.--To help meet the 50% shore 
        alternative energy goal, the Department will, by the end of 
        this year, design a strategy to facilitate the production and/
        or consumption of large-scale renewable power projects on or 
        near Naval installations. These projects will be developed 
        without added cost to taxpayers by using existing third-party 
        financing mechanisms such as power purchase agreements, joint 
        ventures and enhanced use leases. The energy from the projects 
        will cost less or at least no more than that from conventional 
        energy sources over their life.
                                funding

    The Department has budgeted $1.0 billion in FY13 and approximately 
$4.0 billion across the FDYP for operational and shore energy 
initiatives. The funding sources are almost entirely Navy and Marine 
Corps O&M funds and Research, Development, Test, and Evaluation (RDT&E) 
dollars.
                              achievements
    The Department is on track to meet its goals.
    Since flying the F/A18, dubbed `The Green Hornet', at MACH 1.7 in 
2010 as part of the test and certification process using a 50-50 blend 
of Camelina based JP-5, the Department has successfully conducted test 
and certification on the MH-60 Seahawk helicopter, AV-8B Harrier, E-A6B 
Prowler, MQ-8B Fire Scout, T-45C Goshawk, MV-22 Osprey. We also ran a 
Riverine Command Boat, Landing Craft Air Cushion (LCAC), Landing Craft 
Utility (LCU), 7m Rigid Hull Inflatable Boat (RHIB), the ex-USS Paul F 
Foster, and an Allison 501K turbine generator. The DON partnered with 
Maersk to run a large merchant ship on renewable biofuel. These tests 
represent real milestones that are necessary to support the use of 
alternative fuels to meet the goal of sailing the Great Green Fleet in 
2016.
    Throughout 2011 we demonstrated progress through an assortment of 
programs, partnerships, and initiatives. Last summer, the Blue Angels 
flew all six planes on biofuels during their 2-day air-show at NAS 
Patuxent River. The USS MAKIN ISLAND, which is currently deployed to 
the Pacific region, can use its electric drive 75% of the time it is 
operating, needing its gas turbines only when it requires top speeds. 
On its maiden voyage she saved $2M over predecessor steam ships and is 
estimated to provide a cost avoidance of nearly $250M over her service 
life. The Navy is continuing to move forward with installation of a 
similar system on new construction DDGs and to look at the feasibility 
of retrofitting the entire non-nuclear fleet with these systems in the 
course of routine shipyard availabilities.
    Additional energy initiatives, such as propeller and hull coatings, 
were undertaken to make the existing inventory of ships more energy 
efficient. Stern flaps will reduce energy consumption, as will some 
combustor modifications and systems to monitor ship-wide energy use. 
Energy conservation programs were put in place for both ships and 
aircraft to educate and incentivize the Fleets to reduce energy 
consumption and identify inefficient activities. The future Navy will 
use advanced materials on propellers, energy storage and power 
management systems, and advanced propulsion technology to make warships 
more efficient while allowing them to meet their combat capability.
    Last year, the Marines tested equipment that could be deployed on 
battlefields at their Experimental Forward Operating Bases (ExFOB) at 
Twenty-Nine Palms. The Third Battalion, Fifth Marines (the 3/5), 
deployed in Afghanistan, managed to cut fuel use and logistical support 
requirements by 25 percent at main operating bases and up to 90 percent 
at combat outposts by relying on alternative energy sources such as 
solar power generators and hybrid power. One three-week patrol reduced 
weight by 700 lbs and saved $40,000 due to not requiring a battery 
resupply.
    The PV-powered battery recharging technology has allowed Marine 
Patrols, which would normally require a battery re-supply every 2-3 
days, to go three weeks without a battery re-supply, enhancing the 
expeditionary nature of their missions and reducing the number of 
dangerous re-supply missions needed.
    Currently, the four most successful technologies used by the 3/5 
are being deployed across all Marine Battalions in Afghanistan at a 
cost of $25 million. These technologies will save more than $50 million 
per year; paying for themselves in roughly six months and then continue 
to return a $50 million annual savings over what we had been doing. 
More importantly, this equates to a reduction in the number of resupply 
flights by 450 or taking a total of 180 trucks off the road, reducing 
the number of young men and young women put in harm's way. Again, 
because we lose one Marine for every 50 convoys, these energy measures 
are not just saving money, they are saving lives.
    Recently, the next phase of ExFOB deployed with the Marines from 
2nd Battalion, 4th Marines. They brought renewable and energy efficient 
equipment that was identified during the ExFOB conducted during August 
2010. The equipment targets a major battlefield power user: battalion-
level command and control systems. Its capabilities include hybrid 
power systems and efficient air conditioning, which demonstrated an 83% 
savings in fuel compared to the conventional capabilities.
    The Marine Corps continues to aggressively pursue technologies that 
will increase combat effectiveness and reduce the need for fuel, water, 
and battery logistics. The Marine Corps is committed to conducting two 
ExFOBs per year (one in 29 Palms and one in Camp Lejeune) for the 
foreseeable future. The upcoming ExFOB will concentrate on wearable 
electric power systems and lightweight man-portable water purification 
systems.
    Through investments in expeditionary energy the Marine Corps will 
stay longer, go further, at reduced risk. In 2017 the Marines will be 
able to operate one month longer on the same amount of fuel they use 
today, and they will need 208 fewer fuel trucks, thereby saving seven 
million pounds of fuel per year. This translates into a lighter, more 
agile and capable Marine Corps
    In addition to these tactical applications, the DON is pursuing 
energy efficiency and renewable energy projects at our facilities 
ashore. As noted above, we are on track to secure half of our shore 
energy from alternative sources. Effective programs to reduce overall 
consumption will be necessary to manage the denominator. But, in 
addition, we'll need about a gigawatt of renewable power at the bases.
    Currently our bases support about 300 MW of renewable energy, 270 
MW of which is from a geothermal power plant at China Lake. We are 
actively exploring for additional geothermal resources.
    We have awarded three solar projects under our Solar Multiple Award 
Contracts (MAC) in the Southwest (SW) and are finalizing a similar 
solar MAC for Hawaii. The three solar power purchase agreements (PPAs) 
at China Lake, 29 Palms, and Barstow will save the Department $20 
million in total over the 20 year life of those contracts. And, in all 
three of these cases, we'll be paying less per kW-hour than 
conventional power. These projects have the added benefit of providing 
a measure of security from electric grid outages. The Hawaii solar MAC 
will install 28 MW of solar PV on DON installations, including covering 
the runway on Ford Island with PV, recreating the look of the runway as 
seen from the air.
    At Marine Corps bases in Albany, GA and Miramar, CA we have 
partnered with the local communities to harness landfill gas to power 
generators. This important technology is providing 25% of the electric 
load in Albany and will provide up to 50% of the electric load at 
Miramar when done. This is one of the most effective forms of waste-to-
energy and we are exploring other applicable technologies.
    Where the development of wind resources would be compatible with an 
installation's missions, we would favor that technology. We are 
watching with great interest the potential exploitation of the enormous 
wind resource off the Atlantic coastline. As long as the wind turbines 
can be placed at mission-compatible sites and the electricity can be 
delivered to our facilities at a price competitive with the local 
utility source, we could be a customer.
    In order to support a wide range of facility energy efficiency 
measures, we are aggressively conducting facility energy audits and 
completing installation of ``smart'' electric metering. By the end of 
this year, the over 27,000 meters installed or under contract to be 
installed in our existing facilities will begin providing the 
capability to monitor and control the amount of energy we are 
consuming. This will allow our energy managers to provide real-time 
feedback to the users and the installations' commands.
    The Department continues to promote behavior and culture change 
through education and training, to ensure that energy management is 
understood to be a priority in tactical, expeditionary, and shore 
missions. Awareness campaigns are used to encourage personal actions 
that show commitment to energy program goals. The Naval Postgraduate 
School has added an energy program to its curriculum targeting both the 
Navy's and Marine Corps' most promising young Sailors and Marines as 
well as an executive series targeting senior civilians and flag 
officers. We have collaborated with the National Defense University to 
pilot two culture change demonstrations--at MCB Camp Lejeune and NAVSTA 
Mayport--to focus on raising energy awareness in civilian and military 
personnel.
    The Department will continue to cultivate strategic partnerships to 
leverage our energy opportunities. By partnering with federal agencies, 
such as the Department of Energy, the Department of Interior, the 
Department of Agriculture, and the Small Business Administration, we 
are broadening the scope of our programs. In addition, we are working 
with academic institutions and private industry to bring innovative 
ideas and approaches to the forefront.
                               conclusion
    Our Nation's Sea Services continue to operate in an increasingly 
dispersed environment to support the maritime strategy and ensure the 
freedom of the seas. We must continue to transform the way we procure 
and consume energy.
    Thank you for the opportunity to testify before you today. I look 
forward to working with you to sustain the war fighting readiness and 
quality of life for the most formidable expeditionary fighting force in 
the world.
    For 236 years, from sail to steam to nuclear; from USS Constitution 
to USS Carl Vinson; from Tripoli to Tripoli; you have upheld a proud 
heritage, protected our nation, projected our power, and provided 
freedom of the seas. In the coming years, this new strategy and our 
plans to execute that strategy will ultimately depend on your skills, 
your talents and your well-being that will assure that our that our 
Navy and Marine Corps not only perseveres but continues to prevail.

    Senator Shaheen. Thank you very much, Mr. Secretary.
    I wonder if you could begin, if we could begin the 
questioning. You talked about the goals, the 5 goals that 
you've laid out for energy efficiency. Can you update us on 
where the Navy is in meeting those goals?
    Mr. Mabus. The goals that you refer to, the broadest one is 
by 2020 at least half of all our energy will come from non-
fossil fuel sources.
    The other goals that we will have at least half our bases 
will be net zero to the grid. The fact that our non-combat, 
non-tactical vehicles, will reduce their fuel consumption in 
half by 2015. In these goals we are just in changing the kind 
of vehicles we buy.
    We are very close to reducing that usage in half. We're 
beginning to build fueling stations for flex fuel vehicles for 
electric vehicles, for the hybrid vehicles. That while they 
start on our bases, we found technology then spreads to the 
surrounding communities and then commercially.
    We've gotten one base already to net zero to the grid. In 
fact it's net positive to the grid. China Lake in California.
    We have 120 megawatts of solar either being installed or on 
the drawing board and ready to be installed. We have identified 
things such as wind or wave action, geothermal, hydrothermal. 
We have tested all our aircraft now on biofuels, on 50/50 blend 
of biofuels. The only reason we still have to do 50/50 bio 
blends are that biofuels simply don't provide the lubrication 
yet that petroleum does. Although that's a science project 
issue and one that I think we'll be able to solve in the 
future.
    We have also tested, as you pointed out, our riverine 
craft. We are now testing our large surface combatants on 
these. We have to have a drop in fuel. We're not going to 
change the engines on a ship like the Makin Island or on our 
aircraft.
    But so far, the F-18 Green Hornet flew at 1.7 times the 
speed of sound. The Blue Angels all flew on biofuels at one of 
their air shows. The aircraft, the ships, have not noticed a 
difference.
    Senator Shaheen. Thank you.
    Senator Warner, since we have no timer, we'll just go back 
and forth. I'll do a question and Senator Warner will do one.
    Senator Warner. Thank you, Madame Chair. Let me also, 
again, thank you, Mr. Secretary, for your comments and concur 
with you about the need for innovation.
    I, as someone who managed to eke out a living in cell 
phones, I think this notion of the Navy being an innovator is 
very important. I think you rightfully pointed out when the 
Navy, back in the 1950s, decided, Admiral Rickover, decided to 
move to a nuclear Navy. I'm sure there were naysayers. Thank 
God he had the vision and the political support at that point 
to kind of make that kind of that transition.
    It's my hope as well that you'll continue to push on this. 
I personally believe that, and it pains me to say this a little 
bit as a telecom guy, that over the next 25 years they'll be 
more jobs created and wealth created in the energy field than 
any other sector in the world. Quite candidly America in so 
many areas around energy is not the leader that we should be.
    One of the things that you pointed out, for example here on 
the Kearsarge, that the stern flaps. I was anxious. I was 
pleased to see that the payback was literally less than a year. 
One of the things that I think you would be helpful for both of 
us and for our colleagues is as we add these innovations, if 
you can show us the kind of payback terms in 2 years, 3 years, 
5 years, whatever payback term it would take.
    I do want to get to one particular question here. One of 
the challenges I know we've got is when, as you look at the 
area around biofuels you made the mention of the point that 
some of the purchases, at least in the short term, were 
incrementally more expensive. However, if you were able to do a 
5-year contract at a fixed price particularly based upon the 
potential volatility of oil pricing over the next number of 
years, I believe that could both spur innovation, give 
predictability to a market and help drive toward your goals.
    Obviously one of the challenges in making those choices 
right now is the way CBO scores those kind of forward 
purchases. Do you have any suggestions to us on how or ideas 
that you may be kicking around about how we can allow you the 
flexibility to do future contracting, particularly on fuel 
purchases in a way that might be based upon more normal and 
traditional accounting methods?
    Mr. Mabus. Yes, thank you.
    To go back to what you said at first. Most of the things 
that we're putting on have a very short payback, particularly 
those in the fleet. Onshore, our projects have an average 6-
year payback. But after that initial investment the energy just 
keeps coming at much, much reduced prices for years and years 
after that.
    We can, today, as you pointed out, we can do fuel contracts 
for 5 years. But they are stored by the Congressional Budget 
Office as though we were paying all the money up front. We 
could use help in 2 areas.
    One is to allow us to sign longer contracts than just 5 
years. We can sign energy contracts for up to 30 years with a 
waiver from the Secretary of Defense. But fuel contracts are 
limited to 5 years. Lengthening that to give investors a longer 
window to get a return on their investment, to give businesses 
a more certain market, more stability would be a great help.
    The other one is the scoring that you mentioned. We don't 
use this energy, all in the first year. So if it could be 
scored over the length of that contract instead of all at the 
first of that contract.
    That actually fits into normal commercial accounting rules. 
It's a different rule that is used for the government which I 
know comes as a surprise to you. But that's used for the 
government then would be used in private industry.
    So those 2 things would be a vast help in terms of meeting 
some of these goals.
    Senator Warner. Maybe look at fuel contracts beyond a 5-
year window and again, revisiting with our friends at CBO, the 
scoring process that puts all those costs in that first year 
rather than timing them out when you actually draw down and use 
the fuel. Both would be helpful tools, right?
    Mr. Mabus. Yes.
    Senator Shaheen. I want to just follow up on that a little 
bit because certainly I think we would agree that getting CBO 
to look at its scoring is very important as we think about how 
we can better encourage more energy efficient activities. But 
how do you, given the volatility of fuel costs, how do you 
ensure to taxpayers and to Congress that those longer term 
contracts are not going to lock in place increased fuel costs 
that are happening over time.
    Mr. Mabus. You could make them variable price contracts to 
follow the market instead of a firm, fixed price forever. We, 
today, Defense Logistics Agency, which buys our fuel sets 
prices for that fuel yearly and sometimes more often depending 
on the volatility. So volatility can be provided there just 
like you would do in any fuel source or long term purchase 
that's being made today both inside the government, but 
particularly outside.
    Senator Shaheen. Thank you.
    Senator Warner. So again, you could use hedging techniques 
that any other major purchaser would use.
    Is there any way? Let me ask you one thing whether there 
has been any analysis done. As we saw in the aftermath of the 
Japanese nuclear accident, their increase then dependence upon 
more imported oil as their energy mix changed.
    With the critical role that the United States Navy plays in 
keeping shipping lanes open virtually around the world. There's 
been lots of talk and reports sometimes out there in the 
popular press. Talking about, in effect, what added additional, 
in effect, fuel tax we all play or oil tax we all pay that 
basically American taxpayers bear for the whole rest of the 
world. Since we, in effect, our great Navy, keeps shipping 
lanes free and open for, in effect, the benefit of the whole 
world.
    Is there any kind of corollary where you could actually 
draw a line of increased amounts of, particularly oil coming 
out of the Middle East, increased shipping amounts of that oil 
correlating to increasing costs in terms of keeping those 
shipping lanes free, open and safe?
    Mr. Mabus. I know there have been a couple of looks at 
various ways to slice it. But one of the easiest ways is simply 
to look at what happened when Iran simply threatened to close 
the Straits of Hormuz, what happened to oil prices. They 
spiked.
    It's estimated that if Iran ever followed through on that 
threat that regardless of how fast we cleared it, the price of 
oil could go up by 40, 50 percent immediately, overnight. That 
would have a huge impact on our economy. It would have a huge 
impact on the world.
    One of the things you pointed out is the American Navy, 
almost alone in history, when we have had naval dominance in 
the world, which we have since World War II, we have keep the 
sea lanes open for everyone. It is no accident, I think, that 
the economies of the world have done as well as they have 
because of this. Because even with the new technologies, 90 
percent of all trade still goes by sea. Ninetyfive percent of 
all telecommunication still go under the sea.
    So keeping these sea lanes open helps not only our economy, 
but the entire world. What we do devote a large number of ships 
and assets to keeping, particularly straits where oil or large 
quantities of oil, like the Straits of Hormuz, open. That is 
simply for that commodity.
    Senator Shaheen. You know, one of the things that I was 
really excited about in getting ready for today's hearing was 
to be able to learn more about the collaboration that's going 
on around the work that Navy and the military is doing with 
energy efficiency. I think one of the challenges we often have 
within government is that too much of our work is in silos and 
not enough of it crosses agencies because there is, in fact, so 
much overlap between what we do. You and the Navy have been 
able to develop a Memorandum of Understanding with the 
Departments of Energy and Agriculture to collaborate in the 
development of advanced biofuels, which as you pointed out, has 
been so much an important part of the work that's going on 
here.
    Can you talk about how that's working? Whether there are 
lessons from what you've learned that you think should be 
shared across government?
    Mr. Mabus. What is happening on that is, and I think this 
is a lesson that can be shared across government, is we each 
brought something different to the table.
    No. 1, we brought sources of funds from different areas to 
this. Agriculture used commodity credit corporation funds, for 
example. Navy is using Defense Production Act.
    Defense Production Act has been in existence since the 
early 1950s. Basically what it says is if there's an industry 
that defense needs that the American--in order to defend 
America we need that industry, that defense can invest in 
creating that industry. So that's one area that I think we can 
do.
    A second area is that we each bring a different expertise. 
We bring operations, but we also bring the market. You know, we 
bring the demand side of the equation and not simply the supply 
side.
    Agriculture brings the supply side because virtually all 
the biofuels, in one way or another, would affect American 
farmers for the better.
    Energy, obviously, brings its research and development, its 
incredible expertise in how energy is developed.
    One of the other things that I think we've learned, 
Senator, is that we can also collaborate with some of our 
private partners. The airline industry, for example, is looking 
at biofuels very closely. They're particularly looking now that 
Europe has said that planes flying from the U.S. or from 
anywhere into Europe will have to pay a tax on the amount of 
carbon that they emit on the flight.
    But airlines like Federal Express, like United, have 
already done test flights on biofuels. They know it will work. 
What they are looking for is a way to get it at a commercially 
viable price and scale. That's one of the things that Navy can 
bring into this equation.
    So I do think there are some attributes that this 
Memorandum of Understanding, that was directed by the President 
as Commander in Chief, can bring us.
    Senator Shaheen. I want to follow up on that a little bit. 
I know Senator Warner only has one more question. I think 
you've raised something that is really important particularly 
right now. Because in the Senate we're talking about whether 
we're going to extend some of the tax credits to alternative 
energy sources like biofuels that are important to the private 
sector and to creating a market for these technologies.
    Can you talk a little bit more about the role that you 
think, not only Navy, but the military can play in encouraging 
that private sector market for many of these technologies?
    Mr. Mabus. A couple of things.
    One is your chart that the Federal Government uses 2 
percent of all the energy used by the United States, all the 
fossil fuel energy. That DOD is 90 percent of that. So we're by 
far the largest user of fossil fuels in the country. That's 
something.
    A second thing is the military has long led in new 
technological advances. You can look at the Internet. You can 
look at GPS. You can even look at flat screen TVs. All started 
out as a military application and then migrated to the broader 
commercial area.
    The last thing, I do think history can teach us some 
things. In the 1880s the American Navy was building its ships 
out of steel from Europe mainly from Germany and England. That 
steel was costing between $150 and $200 a ton.
    The Navy decided that that was a vulnerability to be 
dependent on an outside source of steel. So they went to 
American steelmakers. They offered them $250 a ton for their 
steel. They got no takers.
    They offered $300. They got no takers. They kept upping the 
offer until they got to $486 a ton when they got takers to 
produce the steel.
    Now that's almost 3 times what they were paying from 
Europe. But 20 years later on the eve of World War I, we were 
not only completely independent in terms of the steel that we 
were getting at very competitive prices. But second we had the 
greatest steel industry in the world. The military had spurred 
that using, at first, some above market prices. But those very 
quickly came down to market and made us independent in that.
    I think that is a lesson there for the future.
    Senator Shaheen. Thank you.
    Senator Warner.
    Senator Warner. Mr. Secretary, I just want to, again, close 
with a thanks for your willingness to be bold in this field. To 
my mind it is not only the business right thing to do, not only 
short term in terms of brave men and women in the field of 
combat right now in terms of the lifesavings on these convoys, 
as we've mentioned. But I look at the fact that, as you pointed 
out, we consume 20 percent of the world's oil.
    We have about 2 percent of the world's oil reserves.
    We've seen the kind of volatility in oil pricing with some 
of the actions around Libya and more recently with some of the 
potential threats that may or may not, God willing, not arise 
around Iran.
    Even for us and I didn't want to echo building. I'm with 
Senator Webb, building on work that Senator John Warner started 
that said, we do need to discover and take advantage of 
additional domestic oil and gas reserves. We have even said, I 
would personally even be willing to look off the coast of 
Virginia as long as we get a share of the revenue.
    But to exploit all those domestic assets even going full 
bore right now, you know, short end 6 to 10 years before we saw 
that additional production. Again, I keep coming back to that 2 
percent of the reserves versus 20 percent of the world's usage. 
So I absolutely believe that it is important to set these kind 
of bold goals of 50 percent alternative fuels, the notion of 
the kind of aspirational goal of a green fleet in terms of 
2016.
    At least this Senator, and I know Senator Shaheen has been 
a true leader, we want to be your ally on this. So whether it 
is on the CBO scoring, on trying to give you more of those out 
year purchasing ability, these are the kind of tools that we 
want to provide to make sure we've got the best Navy. But also 
the Navy that's going to be least subject to the kind of 
volatility that might take place if we continue our dependence 
upon foreign oil, particularly foreign oil from the Middle 
East.
    So I thank you for those actions. Look forward to working 
with you.
    Mr. Mabus. Thank you very much.
    Senator Shaheen. I don't think that was a question.
    [Laughter.]
    Mr. Mabus. No, but I appreciated it very much.
    Senator Shaheen. Yes, I'm sure.
    I do have a final question for you because in your 
testimony you talk about the education and training effort to 
change the culture around how energy is viewed within the Navy 
and the military. I wonder if you could talk a little bit about 
how you do that. I heard this morning at the briefing some 
discussion about that. A recognition that we are talking about 
doing things differently and often there's resistance to that.
    So how do you begin to change that culture in a way that 
makes people engage and support these efforts?
    Mr. Mabus. I think the main way you do it is the way 
Kearsarge has done it. That is to show how well it works. To 
show how much better we can do our jobs by this.
    The service that has embraced alternative energy with a 
greater enthusiasm than anybody else is the United States 
Marine Corps. I don't think when people think of the Marine 
Corps, the first thing they think of is ardent 
environmentalist.
    So the Marines have seen that it saves lives.
    The Marines have seen that it makes them better war 
fighters.
    The Marines have seen that it helps them do their job 
better.
    I think you change the culture just by showing that.
    That Senator John Warner was a previous, incredibly 
distinguished, Secretary of the Navy. One of, both of our 
predecessors in the 1840s said that he would never turn the 
fleet into fire belching monsters by going away from sail. I 
think that the military has always shown an ability to change, 
an ability to adapt, an ability to innovate, that ought to be 
the envy of a lot of other organizations. Particularly today in 
this budget constrained environment we have to show that 
ability.
    I'm very proud, as I am of everything that the Navy and 
Marine Corps do, of how readily and how well they have embraced 
this.
    Senator Shaheen. Thank you very much. I, as you pointed 
out, the Naval Post Graduate School, the National Defense 
University, are all including the importance of energy and 
energy efficiency in their curriculum. Is it time to do that 
for the Naval Academy as well?
    Mr. Mabus. Thank you for reminding me of that. We started 
with the Naval Post Graduate School, which is one of the crown 
jewels in our military education or any education. We're not 
only offering a graduate degree now in energy, but we're also 
doing 2 week seminars for leadership and things like that.
    I think the Naval Academy is well on board in terms of 
showing the importance in terms of showing how it will affect 
the people going through there, how it will affect their 
careers, their lives in the time that they serve the United 
States. But it is a whole of service approach. It's not just 
shipboard or just bases. It's also our educational 
institutions. It's everybody.
    I think, again, the military has shown a willingness and an 
ability to be innovative and to lead. As I finish, I just want 
to thank you, not only for holding this hearing and for what 
the work that you're doing and what you've said, but also for 
the support that you've given to our sailors and our Marines 
over the years. They and their families protect us and we 
deserve--we owe them no less.
    Thanks to the work of the 2 of you. Thanks to the work of 
Senator John Warner, earlier. I think that we're going a long 
way toward meeting the commitment that we need to lead to the 
people who wear the uniform of this country and keep us safe.
    Thank you very much.
    Senator Shaheen. Thank you very much, Mr. Secretary. Thank 
you for that compelling message about the confluence of energy 
and national security. It's a message that we hope we can 
continue to get out, not just to all of our members of the 
military, but to the entire Federal Government, to Congress and 
to the public as a whole.
    So again, thank you for being with you.
    Mr. Mabus. Thank you.
    Senator Shaheen. We will now switch out Secretary Mabus for 
former Navy Secretary and Senator John Warner.
    Senator Warner, as I will not go into a greater 
introduction because I think current Senator Warner did a very 
nice job of that that we are just so pleased that you're here. 
I will turn it over to you for your testimony.

      STATEMENT OF HON. JOHN WARNER, SENATOR (R-VA), RET.

    Senator Warner. Thank you very much, Madame Chairman and my 
dear and good friend, Mark Warner, who succeeded me in the 
Senate. Saved a lot of money, didn't have to change the name on 
the door. There it was. What a coincidence.
    Senator Shaheen. Or the ballot either.
    Senator Warner. But may I commend both of you for the 
manner in which you've conducted this hearing and the questions 
that you propounded to your witnesses because having, for 30 
years, been in the U.S. Senate and sitting where you've been 
sitting and questioning witnesses and holding hearings. Let me 
tell you, you've got the art in total control. Don't make any 
changes, the way to do it.
    So I thank both of you very much for this opportunity. To 
my good friend, the Secretary of the Navy, we have quite a 
relationship between former Secretaries. It didn't make a 
difference which party you're from, we all basically agree it's 
the best job we ever had, ever will have. I feel that way about 
the Navy. I'll have a few words at the end to speak of the 
Navy.
    But I've had the opportunity for the past few years to work 
with the--when I left the Senate, to go to the Pew Trust. It's 
one of a number of organizations, private sector organizations, 
charitable sponsored and so forth that are working on the 
question of energy. I urge you and your colleagues in Congress 
to access their work.
    Many foundations such as the Pew Trust, but the Pew took a 
leadership. They brought me onboard to help them put together a 
program which simply was to take the spotlight and shine it on 
what men and women of the Armed Forces. Be they Army, Navy, Air 
Force, Marines and Coast Guard what they have done to turn 2, 
as we say in the military and snap 2, to help America deal with 
its energy problems.
    There's a clear nexus between our national security and our 
energy security. Day by day that message is being brought home. 
This hearing is a perfect example.
    I have to tell you, Madame Chairman, I sat here astounded 
when I heard you say that this was that first hearing about a 
ship of the Senate. There I was for 30 years and 5 before that 
as Secretary of the Navy I never had a hearing on a ship. Now, 
I ought to be reprimanded for that. But I'm glad to exceed to 
your record for doing that.
    The Pew Trust have provided the opportunity for me and 
members of their staff and others to travel to the bases and 
installations across our country. To see exactly what the men 
and women in the Armed Forces are doing, want to do. It's 
unlimited.
    There's an old saying in the Navy. Give them the tools and 
leave them alone and they'll solve the problem. We saw that 
today as we walked through the exhibits of what the fine work 
that they're doing here.
    So I'll finish up with a few thank yous to the sailors 
aboard this ship and ships all across the world tonight, 
tomorrow and the days to come, what they're doing.
    Senator Warner, I want to say something. In one of your 
questions you hit on an issue which I've been dealing with but 
as yet we haven't brought it into clear focus in the minds of 
the American public. Right now gas is somewhere, what, where we 
are, $3.85, maybe a little below $4 in some areas?
    You shell that out per gallon. But at the same time you 
don't realize that you're shelling out through payment of 
taxes. Not that tax assesses some at the gas pump that go into 
the Federal system, but that's into the highways mostly.
    But your income taxes, they're going to support the overall 
budget of the men and women of the Armed Forces. They, 
collectively, largely the Navy, but collectively, they are 
keeping, I call it the energy lanes of transportation, 
primarily the sea lanes, but there are land carters, some air 
carters. They're keeping them open at their expense for the 
benefit of the economies of the free world.
    If I could be presumptuous enough to encourage you to 
perhaps get the GAO to see if you can't write up a report. The 
2 of you ask for it. Have it the clear facts so that we can 
explain it to the American public.
    I looked at gas prices today in England, Norway. They range 
in between $8 and $11 a gallon. They're paying a very heavy tax 
there. We're paying, if you add up what we're paying to keep 
the sea lane, we're paying roughly, the equivalent of those 
Nations per gallon.
    So the country ought to have an awakening on that issue. 
Your question, I thought, prompted excellent responses from the 
Secretary. I think he covered it.
    Now I do want to make a little history today. That is it 
will be the shortest speech I've ever given since I was a 
Senator for 30 years in this State. Do it for 2 reasons.
    I like to put my testimony in the record and so shape my 
remarks, as we say in the Senate floor, Senator, with those of 
the Secretary of the Navy. I thought he laid it out very well. 
I read his full statement beforehand. I'd like to associate 
myself with his excellent remarks and add the few of my own by 
putting it in the record.
    Being brief because coming up behind me are individuals 
that I have been working with for these near, going on 3 years 
now, with the Pew foundations at endless conferences and 
speeches and forums and so forth across America. You, Madame 
Chairman, and your members of your staff very wisely chose the 
brightest and best minds on this subject, certainly within the 
Navy to come here today. So the less I say, the more time they 
have to say it.
    Now I want to emphasize also the questions of biofuels. The 
Secretary received a question from the press over here which is 
on the minds of the Americans today. Look this defense budget 
is to buy more ships, more guns, more planes. Why should you be 
pressing forward to explore this issue of say, the advanced 
biofuels?
    The Secretary gave a clear answer. Essentially that's been 
the tradition of the Department of Defense since its very 
beginning. We structure all of our future planning of the 
Department of Defense on today's technology and such technology 
as we can develop within the Department to show how best to 
improve and modernize our weapons for the future.
    So this has been the role of the Department since its 
inception. I commend this Secretary and the Service Secretaries 
of the Army and the Air Force. I've worked with all of them, 
for the initiatives that they're taking to incentivize their 
respective uniform members of the Armed Services to explore 
innovation. Biofuels is a major innovation.
    The Secretary very accurately discussed how we've got to 
eventually get the price of the biofuels down where they're 
market competitive. The airlines at which, incidentally 
testified before the Pew Foundation this week, had a hearing, 
explained that they're moving in that direction. They realize 
that they need to get the volume of that fuel at a cost that's 
market competitive.
    If we join together with the private sector, military 
cannot do it alone. We have to join in these private 
agreements. The Secretary has structured this with the MOU. I 
do hope that Congress will work its way to supporting that MOU 
and perhaps others to follow.
    He mentioned the Defense Production Act. That's what he's 
relying on. You also have the Defense Logistic Administration 
over here. Their limit of 5 years on basic contracts, that 
should be addressed.
    I say these things most respectfully to the 2 of you, the 
active members of the Senate. Again, and I say, I know the 
institution of that Senate and I'm confident that with the 
leadership the 2 of you've shown and others of your colleagues. 
I know very well your Chairman of your Committee and your 
Ranking Member. They are Senate leaders.
    You've got to help bridge this gap. It's called the Valley 
of Death. Where you invent something, prove that it works. The 
military proved the viability of drop in fuels, for example.
    If you could just cross that Valley until the private 
sector picks up those production needs and costs. Then it's 
competitive. Then the military can pursue, I think, to a 
greater extent, its utilization of these alternative fuels.
    Because the Secretary pointed it out. I've been to the 
Straits of Hormuz. I urge both of you to try and visit it 
someday.
    There's a 2 mile strip in there between Oman and Iran. Now 
Oman is a very stable country compared to the others. But if 
that were shut down, it would be catastrophic, economic to all 
the Nations of the world, not just the United States. So I hope 
that you can achieve that.
    I also want to point out in section 526. You're familiar 
with that. That was a part of a law in 2007.
    I was there, voted for it, worked on it. That set certain 
standards for the utilization of fuel to achieve greater 
efficiency standards. Also to let the new innovations be 
developed in such a way that they do not increase the pollution 
that we're now experiencing, I think, at levels which are 
becoming more and more significant and concern to all of us in 
terms of our health and otherwise.
    So with those brief remarks I would simply like to close by 
expressing my profound thanks to the Navy and the Marine Corps. 
Because I had the option, although it's of little consequence 
to wear both uniforms, the Navy in World War II, the last year 
and the Marine Corps during the war in Vietnam. The foundation 
in my life was laid by those organizations and the training and 
the education that they gave me.
    To those young sailors out there, who may be listening to 
what I'm saying, I hope a few are. I say to you, you hopefully 
will never regret the opportunity that you've had to wear 
proudly the uniform of this country.
    The last piece of legislation that I did as a United States 
Senator was team up with our colleague, Jim Webb, Senator 
Warner, and Frank Lautenberg and Chuck Hagel, the 4 of us, all 
4 veterans, to write the new GI bill. I received my basic 
education from the GI bill of World War II and then a second 
one that I got for modest service in Korea. That got me an 
engineering degree and a law degree.
    Now today we broadened it so if the uniform member doesn't 
wish to use it, his spouse can use it. If that isn't used, then 
one of the children can use it because they have earned it and 
I just want to express my gratitude to this great Nation for 
the opportunities it gave me. That was a modest innovation on 
my part to do something for this generation and future 
generations.
    With that I say in the Senate, I yield the floor so as you 
can get the real experts up there and hear them.
    Now if you ask me questions, I can remain here and you can 
fire them to the whole panel and maybe I'll chip in or what's 
your pleasure.
    [The prepared statement of Senator John Warner follows:]

      Prepared Statement of Hon. John Warner, Senator (R-VA), Ret.
    I am honored to be here in my home state at a base I know so well 
from the days I had the honor to serve the considerable number of 
military installations and private sector industrial infrastructure 
throughout Virginia, first as Secretary of the Navy and then, for 30 
years a member of the Senate Armed Services Committee.
    Senator Shaheen, you were a well-informed host as we toured 
Portsmouth Naval Shipyard together last summer studying their energy 
plans, and I am pleased that you wisely selected a naval vessel as the 
site of this important Senate hearing. The Navy is making critical 
advancements in the area of energy innovation. We are very honored to 
have Secretary of Navy Mabus, a very committed leader, testify today.
    When I completed my 5th Senate term, I was desirous of continuing 
my service with the men and women of the Armed Forces. As such, I have 
been proud to work with the Pew Charitable Trusts. Together as we 
launched the Pew Project on National Security, Energy and Climate, a 
project to highlight the critical link between national security and 
energy security.
    Whether in my role as Secretary of the Navy or on the Armed 
Services Committee, I have seen first-hand the ingenuity and commitment 
of our uniformed men and women, and their civilian counterparts working 
with them, to meet America's toughest challenges. The armed services' 
approach to energy innovation is clearly at the forefront of 
initiatives across America.
    The American public needs to learn more about the great 
advancements being made in energy by the Department of Defense. Pew is 
proud to highlight their work to the American public.
    One of the Pew Project's initial endeavors we worked on together 
was to assemble the four branches of the military, active and retired, 
with expertise in energy for an event we hosted in September 2009. This 
event spurred the first Pew report on DoD, Reenergizing America's 
Defense, published in April 2010. More recently, as a follow up, in 
September 2011 Pew issued a second report, From Barracks to the 
Battlefield, Clean Energy Innovation and America's Armed Forces. These 
reports were widely disseminated.
    In preparation for our second report, the Pew Project team and I 
visited several military installations that are very active in adopting 
clean energy technologies, improving energy efficiency, saving taxpayer 
dollars and lessening risks to our troops. All in all, we have logged 
more than 30,000 miles, visiting more than 20 states
    As the Chairwoman knows, at the historic Portsmouth Naval Shipyard, 
uniformed and civilian personnel are working to increase the base's 
energy security by building LEED certified buildings, using 
cogeneration technology, and using solar power as backup for 
communications systems. At Fort Bragg, we toured the actual 
implementation of the initiatives that are part of an Army-wide ``Net 
Zero'' goal to reduce energy consumption, increase energy efficiency, 
and increase the use of renewable and alternative energy sources. 
Various initiatives across the four branches of the military are 
resulting in financial savings and serve as a model for other military 
bases--and in some instances, adjacent civilian communities.
    I also had the greatest pleasure in visiting Quantico, where I had 
served many years ago. I saw first-hand some of the technologies they 
have innovated in order to make the Marines more energy efficient in 
forward deployed missions.
    Our nation is heavily dependent on imported foreign oil. The 
consequences of that dependence are experienced not only here at home, 
but by the brave men and women in uniform serving on their bases and 
stations and particularly those serving on foreign deployments.
    Under the strong leadership of former secretary of defense Robert 
Gates, and now Secretary Leon Panetta and the three Service 
Secretaries, the Department of Defense is exercising effective internal 
policies and practices, especially setting aggressive energy-efficiency 
goals to lessen our dependence and to enhance our nation's energy 
security.
    The bottom line is that the four branches of the military need our 
nation's full support to continue to innovate. American's military 
preparation, for the present and the future, is predicated on 
innovation.
    Since we are here to talk specifically about the Navy though, I 
would like to note that the Navy is on the leading edge across all 
initiatives, especially when it comes to the development and use of 
biofuels. Navy scientists and engineers have developed great expertise 
in assessing both the advantages--and even the limitations--of 
biofuels. Their research and development has proven the concepts of 
``drop in fuels'' in aircraft and ships.
    There are two policy issues that I would like to address that 
pertain to biofuels.
    The first is the policy referred to as ``Section 526'' a provision 
in the Energy Independence and Security Act of 2007. Under Section 526, 
the Department of Defense and other federal agencies are not permitted 
to purchase fuels that are less efficient than conventional petroleum 
fuels.
    DoD is the largest U.S. consumer of energy, and Section 526 has 
been an important catalyst in its efforts to reduce our reliance on 
foreign oil and find alternatives such as advanced biofuels to increase 
energy independence and security.
    Last year, there were numerous attempts in both the appropriations 
and authorization process to repeal Section 526. DoD rightfully opposed 
revisions to 526. Let the current law remain intact; it's working as 
Congress intended.
    Another issue of critical importance to the continued advancement 
of biofuels is allowing a Memorandum of Understanding between the Navy, 
the Department of Energy and the U.S. Department of Agriculture to go 
forward. Under this MOU, DoE and USDA can co-invest with industry in 
the construction or retrofit of multiple commercial facilities in order 
to promote the private sector production of bio-based jet fuel at a 
viable commercial level. Such a partnership on biofuels between these 
agencies allows the strengths of each to be realized in a more 
efficient and effective manner and sends a strong market signal to 
future private investors that biofuels will play a pivotal role in our 
nation's energy security through the 21st Century.
    The importance of advanced biofuels to the Navy cannot be 
underestimated. Some facts that I would like to share:

   Since October 2009, oil prices have risen on average from 
        $76 to $89 per barrel, but over that time have fluctuated 
        between $74 and $110 per barrel, in part due to political 
        unrest in unstable regions. As I have been told by the 
        Department of Defense, this variability creates $1.1 B 
        budgeting uncertainty for the Navy, representing 7% of net FY10 
        DLA Energy fuel sales.\1\
---------------------------------------------------------------------------
    \1\ $1.1B / $15.361 B. $15.361 B taken from DLA Energy FY10 Fact 
Book, page 24. Internet WWW at URL: http://www.desc.dla.mil/dcm/files/
Fact%20Book%20FY10%20Final%20Web.pdf. Accessed 7 October 2011.
---------------------------------------------------------------------------
   Based on Department of Energy projections, this volatility 
        will be an ongoing problem. In any budget climate, this level 
        of uncertainty creates instability with the operating and 
        training budgets.
   In addition to lessening volatility concerns, alternative 
        fuels can provide a long-term cost advantage. A recent analysis 
        shows that the DoD and commercial airline industry combined 
        could potentially avoid approximately $39 billion to $165 
        billion in total fuel costs by 2030 if commercial scale 
        alternate fuel production becomes available at market prices 
        competitive with other fuels.

    Madame Chairman, I applaud the Naval personnel in Tidewater for 
making advances in energy innovation and for appearing here today to 
share their findings, their priorities and their policy needs in order 
to continue down the path they are on. I yield now to your questions 
and look forward to hearing the perspectives of the next panel of 
witnesses.
    Thank you.

    Senator Shaheen. I actually would like to ask you one 
question.
    Senator Warner. Fire at will, Gridley.
    Senator Shaheen. Senator Warner will ask one question. We 
will certainly include your full testimony for the record.
    Senator Warner. Good.
    Senator Shaheen. Then we will release you and get the third 
panel up.
    Senator Warner. That's fine. But I'm going to sit here and 
listen to them just like you will.
    Senator Shaheen. Great.
    I wonder if you would just expand a little bit on your 
comments about section 526 because as you point out, it is that 
section of the Energy Independence and Security Act of 2007 
which says that the alternative fuels that we purchase should 
be at least as clean as conventional fuels derived from 
petroleum.
    Senator Warner. Right.
    Senator Shaheen. I think it's that, at least as clean, that 
is maybe getting some questions and some criticism right now.
    So I wonder if you could talk about why you think that 
piece is important that it should be at least as clean?
    Senator Warner. First and foremost it was passed in 2007 
and industry, the private sector, primarily have relied on that 
as being the law of the land. Made investments and moved ahead 
in accordance with the goals of that law.
    If you pull the plug on it now, they'll have lost what 
they've in some instances have invested. Now I know the 
pressures from where it's coming to change that. I respect 
that.
    Senator Warner and I are proud to represent a State which 
is referred to one of the major States in the country for 
production of coal. There is a process by which you can take 
coal and possibly render it in a manner in which it can be 
incorporated. But I think if you look at the cost of it and 
perhaps an affluent that may come as a consequence of the 
process and utilization, it would bump up against those 
regulations.
    But we have an obligation, the Congress, when we pass a 
law, when the private sector invests and relies upon it, leave 
it alone. Give it a chance to prove itself. So I urge you most 
strongly to leave it as is.
    Senator Shaheen. Thank you very much, Senator. I totally 
agree with you.
    Senator Warner.
    Senator Warner, Madame Chairman, let me first of all, 
again, thank you one more time because, you know, by holding 
this hearing on this ship, first such hearing held since 19?
    Senator Shaheen. Sixty.
    Senator Warner. Yes, 1960. The new Senator Warner has now 
done something that the 30-year veteran Senator Warner never 
did. So I'm glad I've got that to lord over you finally.
    Senator Warner. Yes, you do. Yes, you do. That's good. You 
earned it.
    Senator Shaheen. I guess you owe me.
    Senator Warner You're a man of courage and you take on the 
tough jobs in that Congress and do the very best you can to 
achieve working relationships.
    Senator Warner. I won't even remind all of our listeners 
here that you were actually an electrician's mate as you first 
started.
    Senator Warner. That's right, third class.
    Senator Warner. Third class.
    Senator Warner. The most important promotion I've ever 
received in my life was that one red stripe. I still have it 
and it's right in my library, that little red stripe. May it 
ever be.
    Senator Warner. I also thought it was extraordinarily 
important you pointed out that just as it is incumbent upon our 
military to continue to develop next generation weapons that 
it's been the legacy of our military forces to always be about 
innovation. The activities that Secretary Mabus has been 
advocating. You've been advocating. You know, is that next step 
in innovation.
    One thing, just as an aside, as someone who spent a career 
helping companies grow, this question of so called, Valley of 
Death. How we move from that innovative idea to the point where 
it becomes fully commercial. There's legislation that actually 
Senator Shaheen and I are working on now that's got broad 
bipartisan support in terms of capital formation helping these 
startup companies which over the last 20 years have been at 
where about 80 percent of the job growth has come in this 
country. Hopefully since neither one of us got the memo that 
we're supposed to take Presidential election years off in the 
Congress. So we actually hope to move that legislation shortly.
    One of the things I'd hope you'd just spend a moment more 
on is that this really is about national security, energy 
efficiency, making our Navy be more innovative about its use 
and conservation of energy. You know, how can we do a better 
job of driving that point home that you don't even have to get 
to the whole environmental issues? You just need to do this 
purely in terms of making our Nation safer.
    How can we do a better job of convincing our colleagues 
that this is an area where we should be able to come together?
    Senator Warner. Senator, that's the key question. The 
answers I wish were clearer. But my answer would be if we 
accept the assumption that's there a linkage.
    The Secretary made the case. I think I've made my case 
between national security and energy than why shouldn't our 
budget put that emphasis that energy requires to move ahead 
with innovation and sets legislation as needed. I remember 19--
wait a minute, 2008, Joe Lieberman, Senator Lieberman and I put 
in that one combined energy climate bill. It's the only bill 
that has gotten through the Senate structure of committee, 
adopted by the committee, got to the floor and was debated for 
4 or 5 days.
    The leadership, in a respectful way, came and said, look, 
you're going to have to have 60 votes. Can you show them? We 
could not show at that time the 60 votes.
    So I'm hopeful someday Congress will pass a, one of those 
words, comprehensive bill on a whole range of energy directives 
because our country is waiting desperately for it. The other 
world, if you look at the say, 20 strongest economic Nations in 
the world, you will find that two-thirds of them have in place 
a legislative or governmental process to foster energy. 
Notably, China and India and I can go on and explain the other 
countries.
    If America doesn't have it our industrial base has to sort 
of sit on the sidelines and not make those investments that are 
necessary because there is not a legislative direction that 
Congress will do this, but won't do that. Will do this, but 
won't do that. At least they know what the ball field looks 
like if they had a comprehensive plan.
    So I say it respectfully to where I was privileged to work 
those many years. You can do it. You will do it eventually. I 
hope soon.
    Thank you very much.
    Senator Warner. Thank you, Senator Warner.
    Senator Shaheen. Thank you very much. Very well said. We 
appreciate your being here.
    Senator Warner. I think I made a record of a short speech. 
That's true.
    [Laughter.]
    Senator Shaheen. We will now call on our third panel. While 
they're coming up to their seats I will just introduce them.
    We have on the third panel, Tom Hicks, who is the Deputy 
Assistant Secretary of the Navy for Energy.
    We have Vice Admiral Phillip Cullom, who is the Deputy 
Chief of Naval Operations for Fleet Readiness and Logistics.
    We have Colonel Bob Charette, who is the Director of the 
U.S. Marine Corps Expeditionary Energy Office.
    Major General Kessler, the Commander of the Marine Corps 
Installations Command.
    Rear Admiral Townsend Alexander, who is the Commander of 
the Navy, Mid-Atlantic Region.
    So again, thank you very much to all of you for joining us 
this afternoon. I know we are going to have a few minutes of 
brief testimony from each of you before we open it up for 
questions. So I will actually begin I think with Colonel 
Charette. We'll move down the panel in order.
    They're telling me that protocol says Mr. Hicks should go 
first.

 STATEMENT OF THOMAS HICKS, DEPUTY ASSISTANT SECRETARY OF THE 
              NAVY, ENERGY, DEPARTMENT OF THE NAVY

    Mr. Hicks. OK.
    Senator Shaheen. You know, I'm not big on protocol.
    [Laughter.]
    Senator Shaheen. I have to say which is so, but I'm 
learning. So forgive me.
    Mr. Hicks. No worries. Thank you.
    Having lived in your fine State for 3 years and been a 
resident of the Commonwealth of Virginia the last 20, I just 
wanted to say I have a special infinity for the leadership that 
both of you provided.
    Senator Shaheen. Thank you.
    Mr. Hicks. Continue to support the DOD, the Navy and 
indeed, our energy efforts that we are very pleased to be able 
to talk to you about today.
    Also I'd like to recognize your leadership on the Alliance 
to Save Energy, Chair. Senator Warner, I realize that you're 
the incoming Chair of that. I don't know if we have a 
continuity of operations issue, but I think we've got it 
underway.
    Also, thank you, Senator Warner, for your provisions that 
you put into the 2012 NDAA. I think that's certainly things 
that are very well timed and very supportive of where we're 
going.
    I'm pleased to appear before you today and to provide an 
overview of the Department of Navy's investment in the 
operational and shore energy. The Department of the Navy's FY 
2013 budget request includes $1 billion and $4 billion across 
the Future Years Defense plan for these energy initiatives. 
We're on track and intend to meet the energy goals set forth by 
Congress and the Secretary of the Navy.
    We understand that energy is an essential resource for our 
Navy and Marine Corps requirements. Our use of new energy 
technologies and resources will allow us to reduce our 
dependency on fossil fuels that negatively impact our economy, 
harm the environment and reduce our vulnerability to price 
volatility. In efforts to meet Congress's renewable energy 
goals and the Department of Navy's goal of producing 50 percent 
of our shore energy from alternative sources, we are developing 
a strategy to identify and execute large scale renewable 
projects. We will use existing third party financing mechanisms 
to avoid any cost to taxpayers over the life of those 
contracts.
    Our base or our installations support over 300 megawatts of 
renewable energy. We have awarded contracts recently for 3 
solar projects in the southwest, power purchase agreements. 
These power purchase agreements in China Lake, 29 Palms and 
Barstow will save the government $20 million over the course of 
those contracts. From Day 1 when we produce--when we received 
power from each of those power purchase agreements it will be 
cheaper than conventional power. Over the life of those 
contracts it will be cheaper than the rate of escalation for 
conventional power.
    Operationally we are in the final stages of testing all of 
our ships and aircraft on ready drop in fuels, 50/50 blends and 
in fact, we have tested all of our manned and unmanned 
aircraft. Our Marine Corps tested equipment that could be 
deployed in theater at their experimental fort operating base 
at 29 Palms. These technologies and many that you have seen 
here on display today have cut their fuel use requirements by 
25 to as much 90 percent at outposts by relying on alternative 
energy sources like solar power, generators and hybrid power.
    As we implement these initiatives, we are working with NPS 
and the National Defense University, as you noted Senator 
Shaheen, on a study to reduce energy consumption across the 
Navy and the Marine Corps installations by changing behavioral 
attitudes toward energy consumption. The goal of all of these 
efforts is to get every sailor, every Marine, every civilian, 
every dependent to really value energy and energy efficiency 
and to be more efficient and more effective in using the 
energy.
    In closing your support of the Department's FY 2013 budget 
will ensure we have the best resources to provide our Navy and 
Marine Corps to meet the challenges of the future. In closing 
I'd just say, thank you for the opportunity to talk before here 
today. I look forward to answering the questions that you may 
have.
    Thank you.
    Senator Shaheen. Thank you very much. My staff has now got 
me in protocol order. So hopefully I will do this right.
    Vice Admiral Cullom.

STATEMENT OF VICE ADMIRAL PHILIP CULLOM, DEPUTY CHIEF OF NAVAL 
 OPERATIONS, FLEET READINESS AND LOGISTICS, DEPARTMENT OF THE 
                              NAVY

    Vice Admiral Cullom. Chairman Shaheen, Senator Warner, and 
members of the Committee staff, it's an honor to have the 
opportunity to appear before you today to discuss Navy's energy 
program. A program aimed at enhancing our energy security and 
sustaining our naval readiness for the long haul. Both ashore 
and afloat our plan is to have more secure sources of energy to 
do our mission and to be more Spartan or frugal in what we use.
    Make no mistake. It's from the combination of both 
alternatives and efficiency that our use of energy can be 
turned from a vulnerability that the likes of al Qaeda attempt 
to exploit into a combat capability multiplier. Having been at 
the tip of the spear as both an engineer and a war fighter for 
over 30 years I understand all too well that energy is a 
critical enabler of war fighting capability.
    During the Kosovo conflict in 1998 as Commanding Officer of 
the USS Destroyer Mitscher, I conducted combat operations in 
the Adriatic Sea. Mitscher was the only asset in the area with 
Tomahawk strike capability needed for the mission at hand. At 
the outset, we had to refuel every 4 to 5 days which took me 
off station for 8 to 12 hours for every refuel.
    During that time the required capability was simply not 
available to the combatant commander and the President. Working 
with my crew to operate as efficiently as possible, we were 
eventually able to stretch this period to city by a couple of 
days. But we lacked technology investments that could have 
markedly increased our time in the launch box, the true measure 
of our combat effectiveness.
    Maximizing the combat capability of our platforms through 
energy efficiency and energy innovation is what Navy's energy 
program is about. Our fiscal year 2013 budget reflects this 
focus with 95 percent of operational energy investment devoted 
to efficiency. Importantly in this fiscally constrained 
environment energy efficient technologies and practices also 
reduce operating costs over the life cycle of our ships and 
aircraft.
    Some initiatives pay back within 5 years or even in the 
first year. Others will take longer to pay back. But we are 
committed to making smart investments now that reduce total 
ownership costs in the decades ahead.
    The President's budget 2013 supports implementation and 
refit of several technologies on existing surface combatants, 
amphibious ships and logistic ships just as we see here. As we 
pursue solutions for existing systems we are also injecting 
efficiency into acquisition of new systems for new ships and 
aircraft. As well as funding R and D to support midterm gains 
for ships and aircraft.
    I'd like to thank the Commanding Officer and crew of the 
Kearsarge for showing a dedication to energy conservation 
during their recent deployment and support of operations 
Enduring Freedom and Odyssey Dawn. Being the first large deck 
amphibious ship to be retrofitted with a stern flap and one of 
the first to receive the modification for improved boiler burn 
combustion, Kearsarge served as an early adopter of new 
technologies, technologies that combined to save nearly 8,000 
barrels of fuel per year, the fourth fuel. That amounts to real 
increases in endurance, range as well as a sizable reduction in 
life cycle costs.
    The details Secretary Mabus and Deputy Assistant Secretary 
Hicks provided regarding the progress of alternative fuels 
reflects our clear belief that it is a primary responsibility 
of the service to execute a risk mitigation strategy against 
the real and growing danger posed by over reliance on a single 
source of liquid fuels at sea or a traditionally sourced grid 
ashore. Both jeopardize our ability to complete critical 
missions during peacetime as well as during contingency 
operations. We must have an off ramp from petroleum and a more 
secure grid. Alternative ensure mission resilience, mitigate 
cost risk and today in remote expeditionary environments saves 
the lives of sailors and Marines.
    In closing I'll say that the most important part of our 
program won't necessarily show up in a budget. Much like my 
Kosovo sea story changing the way we think about and consume 
energy, our energy ethos, is still profoundly important. We are 
and must continue aggressively developing a generation of 
warriors who take a Spartan approach to energy consumption.
    We are driving this change through formal education, in the 
training pipeline and on the deck plate. Naval post graduate 
school has its first Master's candidates half way through their 
first year. A fleet wide message was sent to all ships early 
this year announcing that energy would be a part of their 
annual battle efficiency award.
    Our fleet and Force Master Chiefs under the Master Chief 
Petty Officer of the Navy have formed a Senior Enlisted 
Executive Steering Committee to advise taskforce energy. Our 
special operators, the Navy Seals, are deploying forces, who 
are working toward a goal of Net zero water and Net zero 
energy. With contributions from every sailor, at every level we 
will achieve our energy vision so that we remain partisil 
potents, ready and able.
    Thank you for the opportunity to testify before you today. 
I look forward to your questions.
    Senator Shaheen. Thank you very much, Vice Admiral Cullom.
    I should point out that we are on a tight time table. If we 
were on Senate time we'd be fine, but since we're on military 
time, we don't have a lot of leeway. So we have only about 20 
minutes left. I will ask Rear Admiral Townsend--or Rear Admiral 
Alexander if you could go next.
    Thank you.

 STATEMENT OF REAR ADMIRAL TOWNSEND ALEXANDER, COMMANDER, NAVY 
          REGION MID-ATLANTIC, DEPARTMENT OF THE NAVY

    Rear Admiral Alexander. Thank you, Madame Chair Shaheen, 
Senator Warner, members of the Committee staff. It's my 
pleasure to speak to you regarding the Navy's installations 
energy program.
    I serve as Commander of the Navy's Mid-Atlantic region with 
responsibility for shore installation management within a 13 
State area that stretches from North Carolina to the Canadian 
border. My responsibility as Regional Commander is to operate 
the Navy's shore installations and ensure that our fleet, our 
sailors and our families have the quality, support and services 
ashore that they deserve. Every day the Navy consumes 
approximately 20,000 megawatt hours of electricity.
    Beyond the strategic significance the energy demands of the 
Navy create constraints both at the operational and at the 
ashore levels. Vulnerabilities associated with the commercial 
grid present a growing risk to shore support for operational 
forces particularly during the same emergencies that would call 
upon our full range of capabilities. The Navy is dedicated to 
ensuring that mission critical assets ashore remain resilient 
to outages. Energy efficiency, viable alternative energy 
sources and smart grid technology for use on base are key to 
securing critical infrastructure.
    The Navy has long been an adopter of new energy practices 
and technologies. We continue that transformation today. Since 
the establishment of the Shore Energy Office in the early 1980s 
to administer efficiency and conservation efforts in response 
to Federal and Department of Defense mandates energy intensity 
ashore, that is the amount of energy consumed per square foot, 
has been reduced significantly.
    The Navy is the largest producer of alternative energy in 
the Federal Government where geothermal production commenced at 
Naval Air Weapon Station China Lake in 1987. This plant with a 
full capacity of 270 megawatts provides reliable, renewable 
power to 300,000 households in California. Other investments 
include wind turbines and solar arrays at Navy bases across the 
country.
    The Navy is also investing in leading edge technologies 
such as ocean thermal energy conversion and waste to energy. 
Energy efficiency combined with the right alternative energy 
technologies will enable some of our installations to eliminate 
reliance on grid power that is become net zero energy 
consumers. Such investments along with the advanced grid in 
energy shore technologies will further enhance our energy 
security.
    In pursuing distributed renewable generation opportunities, 
the Navy faces many of the same challenges that all 
organizations face to include transmission capacity limits, 
local economic impacts, environmental compatibility and power 
storage technology. An investment in advanced monitoring ashore 
will enable greater energy efficiency and wider adoption of 
alternative energy. Efforts in these areas must ultimately be 
measured against a strategic imperative of improving critical 
infrastructure protection.
    The loss of critical asset to shore, even temporarily, 
would seriously hinder Navy operations. We are vulnerable to 
the commercial electric grid which may experience outages from 
natural disasters, accidents and physical and cyber attack. 
Navy installations are working to ensure maximum resiliency 
with comprehensive contingency planning. We are working to 
protect our infrastructure from attack and we are exploring 
viable alternative energy solutions for back up and base power 
generation systems to protect our critical infrastructure.
    Finally the success of our ashore energy policy requires 
the dedication of all members of the Navy to contribute to a 
culture that understands and values energy as a strategic 
resource. Thank you. I look forward to your questions.
    Senator Shaheen. Thank you.
    General Kessler.

  STATEMENT OF MAJOR GENERAL JAMES KESSLER, COMMANDER, MARINE 
         CORPS INSTALLATIONS COMMAND, U.S. MARINE CORPS

    Major General Kessler. Madam Chair, Senator Warner, it's my 
pleasure to be able to speak to you today regarding the Marine 
Corps Installations Energy program. The Marine Corps has taken 
significant action to reduce energy and water consumption and 
expand the use of renewable energy on our installations. 
Although we have made solid progress we have more to accomplish 
to fully comply with legislative mandates to drive down energy 
costs, to increase energy security and to best support Marine 
Corps readiness.
    The Commandant has declared energy a top priority for the 
Marine Corps. This is reflected in our bases to battlefield 
energy strategy which provides the Commandant's vision for both 
expeditionary and installation energy management. As it applies 
to installations, the Commandant's intent is to ensure a 
secure, reliable and affordable energy supply, reduce life 
cycle operating costs of Marine Corps installations and support 
our Nation's efforts to reduce greenhouse gas emissions, 
environmental impacts and dependence on foreign oil.
    For energy intensity or consumption per square foot, the 
Energy Independence and Security Act of 2007 requires all 
Federal agencies to reduce 3 percent per year. For the Marine 
Corps that's the equivalent to turning off Marine Corps air 
station Miramar California every year. To make it even more 
challenging, the mandate doesn't account for the Marine Corps 
extremely lean, efficient starting point or baseline.
    For new construction the Marine Corps has adopted the U.S. 
Green Building Council's LEED ratings system. By following 
LEED's integrated process for sustainable design we have 
recently brought online the most energy efficient buildings the 
Marine Corps has ever had.
    For existing facilities we are making an unprecedented 
level of investment including our PB'13 budget request of $161 
million to improve energy efficiency on Marine Corps 
installations. This funding will specifically be targeted to 
installed more efficient heating, cooling and ventilation 
systems, improve the thermal envelopes of our buildings with 
better insulation, windows and reflective roofing and implement 
energy management systems to automatically adjust temperatures, 
shed loads and adjust lighting. Our focused approach to energy 
efficiency will bring the Marine Corps into compliance, reduce 
utility costs and improve energy security.
    Turning our attention to renewable energy. When the Energy 
Policy Act of 2005 became law the Marine Corps really didn't 
have any renewable energy on our installations. Since then we 
have made a concerted effort to apply both appropriated and 
third party funding to develop renewable energy sources. We now 
have a growing portfolio of solar electric, solar thermal, 
landfill gas and wind energy. In all of our renewable energy 
projects we consistently sought the most cost effective 
technologies available in the market at the time. As a result 
of these efforts the Marine Corps will comply with the EPACT 
2005 requirements for renewable energy by the end of this year.
    While we have enjoyed limited success, meeting the more 
aggressive renewable energy goals established in NDAA 2007 will 
require a much more comprehensive approach. We will need to 
execute larger scale projects requiring a level of investment 
that will readily exceed our budgetary limits. Accordingly we 
plan to partner with the private sector for third party 
financing for cost effective renewable energy.
    We have a number of diverse planning efforts underway 
including landfill gas as well as waste to energy, geothermal 
and biomass projects. With all of these large scale renewable 
projects, we will carefully evaluate the impact on readiness, 
cost effectiveness, energy security and legislative compliance 
to make smart decisions for the Marine Corps. Since we cannot 
manage what we do not measure, energy meter projects have been 
a high priority for the past several years.
    The Marine Corps is on track to complete metering for 
electricity by October 2012. Knowing when and where energy is 
consumed is critical for effective energy management. This 
metered data will be provided to all installation and unit 
leaders to establish clear accountability for energy use.
    Reducing petroleum consumption is another critical 
component of the Marine Corps energy strategy. Each year we 
continue to increase the number of alternative fueled vehicles 
in our fleet, reducing our use of traditional petroleum 
products. We have a diverse vehicle fleet including a 
significant number of E85 electric hybrid and compressed 
natural gas vehicles as well as a couple of demonstrationsites 
for hydrogen fueled vehicles.
    Energy and water use directly affects readiness and the 
quality of life on Marine Corps installations. The Marine Corps 
has an all inclusive approach to energy. We are making energy a 
priority for everyone and cultivating an energy ethos for all 
hands.
    I thank you for your shared interest in this very important 
matter. I look forward to your questions.
    Senator Shaheen. Thank you very much.
    Colonel Charette.

  STATEMENT OF COLONEL ROBERT CHARETTE, DIRECTOR, U.S. MARINE 
      CORPS EXPEDITIONARY ENERGY OFFICE, U.S. MARINE CORPS

    Colonel Charette. Yes, Madame Chairwoman. Thank you, 
Senator Warner. Thank you for having us in the Committee.
    It sounds like everything has been said from all our 
talking points. So I'm going to yield back. I will just say 
that I would recommend, take a look at our expeditionary energy 
strategy, bases to battlefield. It says exactly where we intend 
to go. Why we're going there.
    I will yield back and I'd like to hear your questions to 
get to what's on your mind.
    Thank you.
    Senator Shaheen. Thank you very much. Thank you especially, 
for the briefing earlier today. It was very impressive to see 
what the Marines are doing out in the field on operations.
    Mr. Hicks, I'm going to begin with you. The Federal Tax 
Code provides really important incentives to try and encourage 
the development of clean energy. They've been referenced 
already.
    Senator Warner talked about it.
    Secretary Mabus talked about it.
    Those credits are about to expire. While I realize that the 
military and the Federal Government can't take direct advantage 
of those renewable energy tax credits. The fact is they do go a 
long way toward incentivizing private sector businesses to do 
the kind of work that the Navy and other branches in the 
military benefit from.
    So can you talk about what concerns you might have if these 
tax credits expire and the businesses that they encourage are 
affected by that?
    Mr. Hicks. Absolutely. Thank you.
    Those credits, I think, go right toward our ultimate 
competitiveness. I think the 3 power purchase agreements that I 
referenced before where we're receiving benefits and $20 
million over the course of those 20-year contracts, would have 
all been upside down and would not have been returning that 
value to the government were those production tax credits not 
exist.
    So I think their value cannot be underestimated. As you 
look at certain technologies whether it's solar or wind, where 
there's more and more emphasis on buy America. To couple that 
with production tax credits, I think, is something that can 
really help and grow and sustain an industry here. Hopefully 
avoid some of the things we've seen in the past where 
industries have moved offshore, moved to Europe, moved to 
Germany, where we can actually build these industries here in 
the United States.
    So I think it goes right to our ultimate competitiveness 
and ultimate bottom line. Thank you.
    Senator Shaheen. Thank you.
    Senator Warner. Admiral Cullom, you've got obviously one of 
the most important jobs in the Navy, the question of readiness. 
I just want to ask you straight out. Can we achieve our 
readiness goals while implementing an energy efficiency 
strategy?
    Vice Admiral Cullom. Senator, absolutely. In fact, I think 
we need it to be able to keep ourselves ready. We're oftentimes 
tempted, I think, to look to the very short term, quarterly 
profit and loss or an annual statement. But I think in the--for 
us in the military, we are charged with looking for the long 
haul, the long term.
    To be able to be ready for the long term, in the long haul, 
we have to look to an energy program that prepares us for that 
day. The volatility will eat us alive. Eventually we will have 
no readiness. We will not be able to get our ships underway if 
we are continually buffeted and subject to the volatility that 
we clearly, I think, anticipate.
    Senator Warner. I think that's a really significant answer 
since the question of readiness clearly one of the most 
strategically important issues you have to deal with. We have 
to try to assess and obviously I concur with your answer. But 
appreciate it.
    Senator Shaheen. Colonel Charette, can you talk a little 
bit about the procurement process? One of the things that I was 
really interested in when you were showing me the various new 
energy sources that are being used out in the field was who's 
making those. One of the questions we get a lot from businesses 
in our States is an opportunity to bid on government 
procurement, to go through the procurement process to bid on 
contracts.
    So can you talk about how that's working as you're looking 
at these energy efficiency efforts? How you look at small and 
medium sized businesses and how they participate in this 
contracting process?
    Colonel Charette. Ma'am, I'm not an acquisitions 
professional. I mean, so the intricacies sometimes I don't have 
that. So I'd be remiss. I do know that we have some small set 
asides for small business.
    As far as what we do, everything has to be fully advertised 
on Federal Biz Ops. When we do talk to smaller companies we get 
quite a bit and larger companies. Monitoring Fed Biz Ops and 
engage with our offices.
    We're easy to get a hold off. We're on the Internet. Our 
Marine Corps systems command has a very proactive small 
business organization where they promote small businesses. It's 
just really, some of it is just getting in contact with 
somebody.
    A lot of times that's what our office facilitates is 
putting those companies in touch with the right people inside 
the Marine Corps, the Office of Naval Resource or another 
service that we may not be working on a project, but maybe the 
other services are. So we're happy to talk to whoever you have 
or to somebody that needs to get in touch with, we'll 
facilitate that, Ma'am.
    Senator Shaheen. Thank you.
    Would anybody else like to add anything?
    Vice Admiral Cullom. I'll just add a few thoughts.
    One, as it relates to small businesses. One of the things 
we heard quite clearly a few years ago from small businesses 
was being able to find those opportunities that Colonel 
Charette mentioned in Fed Biz Ops. It's a very voluminous 
exercise for folks and very cost intensive for small 
businesses.
    So what the Navy did, initiated more than a year ago, was a 
program called Green Biz Ops. We went through and filtered out 
the opportunities, the energy and green opportunities and 
sustainable opportunities and made those available on our 
website. We since, through an MOU with the Small Business 
Administration, have worked with them.
    They have actually stood up their green portal to apply 
that same idea in a much more elegant and better way throughout 
the whole of government with the Navy being the first user of 
that, if you will. So that's one of the great areas.
    We also have contracts like our $50 million contract out in 
Hawaii. 100 percent set aside for small businesses and annually 
I think $370 million through our Navy SBIR program focused on 
small, clean tech companies.
    Senator Shaheen. OK. Thank you.
    Senator Warner. Let me ask. I think this will be for you, 
Mr. Hicks, but maybe somebody else wants to jump in. It really 
builds upon Senator Shaheen's question.
    You know, one of the things we got into the recent DOD 
reauthorization bill was a requirement that DOD work with DOE 
to make sure that there's kind of, in effect a list of the most 
current energy saving products so that MIL-CON can look at that 
list in an active way. Sense the private sector is constantly 
moving forward in this area. How do we make sure that list is 
going to be constantly updated as we look at MIL-CON projects 
that they are taking advantage of what's out there in the 
marketplace?
    Mr. Hicks. I think one of the great areas would be to 
continue to work with DOE and in fact, U.S. EPA on their Energy 
Star designation. That's something that we apply and put in all 
of our contracts that, you know, we're applicable. Where we can 
get those technologies with that designation we go out and 
search for those.
    I think there's other things that we can do. Perhaps 
Admiral Cullom could shed some light on how we can look at more 
efficient, not just within MIL-CONs, but also outside in our 
broader acquisitions of ships and aircraft.
    Vice Admiral Cullom. Senator, what I would add to that is 
that we have worked very hard with ARPA-E. Because they have 
some just amazing projects underway that are taking things from 
nascent ideas to take it up to that point of prototyping. But 
oftentimes they find themselves not able to necessarily have an 
industry partner at the other end that can be able to take it.
    Yet we can oftentimes find that there's a military 
capability for one or more of the projects that they have. So 
we kind of serve to help bring them across that Valley of 
Death. So that's a perfect way that we can latch up with 
Department of Energy's ARPA-E projects.
    Senator Warner. Thank you.
    Didn't I also hear General Kessler that you've said that 
you actually were using LEED certification on certain----
    Major General Kessler. We are, yes, Senator. I would 
address that probably in 2 different ways.
    One, of course, is with MIL-CON as we pursue the 
efficiencies that come with LEED certification but also as we 
look to improve the energy envelope of existing facilities 
where we work on HVAC systems or replacing windows and the 
ability to respond to those innovations that are out in the 
market today.
    Senator Warner, I just would hope that we would have, I 
mean, you may have some ideas you could share with us on how we 
make sure that that list. This is such a fluid area where 
things are changing so quickly that you guys have got the most 
current stuff, most current processes and procedures on that 
list.
    Senator Shaheen. I want to follow up a little bit on that, 
the LEED certification and the actual efficiencies within 
buildings. I think, General Kessler, you talked about this. 
Rear Admiral Alexander, I know you've also been involved in 
this.
    Am I correct that we're not doing anything around military 
housing at this point in terms of energy efficiencies? Can you 
talk about what the priority is as you think about how you 
determine what we should be looking at for those building 
efficiencies?
    Major General Kessler. I'll start first, I guess. The vast 
majority of our housing today is through our public/private 
venture or PPV. So in all of those that is up to our partner as 
they construct those houses.
    However, one of the initiatives we have pursued and we're 
pursuing this alongside with the Navy is what's called a resit 
program where we actually meter each of those houses. In that 
process what we do is we go through a very long strategic 
communications plan with the family members that live in the 
housing and then a mock billing period. So much like we all 
experience out in town where you're responsible for your energy 
consumption, we are now instituting a program where our 
families living aboard bases in PPV housing are also 
responsible for their energy consumption.
    We establish a band about the mean where if they're within 
that band, they either don't get a rebate nor do they receive a 
bill. However, if they're above that mean, above 10 percent 
above the mean, they get a bill for that difference. But if 
they're conservative in their use of energy and they're 10 
percent below the mean, they get a rebate.
    What this does is it helps to build, once again, that 
energy ethos and helps all of our Marines and sailors and their 
families realize that the consumption of energy is of strategic 
interest to us all. So we are, in fact, doing some things 
within our housing.
    Senator Shaheen. How has that been received by your 
families?
    Major General Kessler. We've done 2 pilot sites so far. We 
did a pilot site with the Navy in Hawaii. The Marine Corps also 
did a separate pilot site in Beaufort. There was some initial 
questions, perhaps some consternation initially.
    But what we have found is that for those families that 
participated in those 2 pilots, very well received. Which is 
why that strategic communication piece up front is so 
important. Once they understand the process, to date, have all 
come on board completely.
    Senator Shaheen. Thank you.
    Did you want to add to that?
    Rear Admiral Alexander. Ma'am, I would only second what 
General Kessler said. But also from the Navy perspective, as he 
said, the vast majority of our homes are done through a public/
private venture. It's certainly in our partnership's best 
interest in the new construction to incorporate to the maximum 
extent possible, energy efficiencies in the design and the 
construction.
    We've seen that. I saw that personally in new homes that 
were built in Hawaii where solar hot water systems were 
incorporated into the design of each home. So where 
environmentally it makes sense to do that, our partners are 
certainly doing that.
    You know the rent that our residents pay in those 
partnerships also pays their utility bills. Then the 
partnership pays the provider. So it's certainly in the 
partnership's interest from a financial standpoint to reduce 
the cost of utilities as much as possible.
    We're very engaged. I am a little familiar with the pilot 
program in Hawaii. I would echo the comments that I think 
initially there was, perhaps, a little skepticism. But we went 
to great efforts to not only educate our families up front and 
to be honest with them about what we were doing and why we were 
doing it.
    I think once our families became educated and aware of the 
challenges that the partnership was facing, by and large 
they're fully on board and support the program.
    Senator Shaheen. That's great.
    Senator Warner.
    Senator Warner. Admiral Alexander and I actually worked on 
some of these housing issues and appreciate the progress we're 
making on that hearing in the Norfolk area.
    I guess I would simply just add, I know our time is running 
about up. But that the more we can really measure as I think 
one of the folks testified. We need these metrics. We need to 
demonstrate this kind of return on investments.
    I mean, you bring an enormous amount of credibility. As we 
see these actions that you all take whether it's on the corsage 
of in terms of the military families across the board all of 
the various ways we're trying to become more energy efficient 
to utilize some of these new alternative fuels. Utilize some of 
these new alternative energy sources.
    You really help us build the case because you can bring the 
credibility on these return on investment that really is 
unparalleled. That helps us with some of our colleagues who 
still need some convincing.
    So again, Madame Chair, I really appreciate the opportunity 
to be here and yield back.
    Senator Shaheen. Colonel Charette, I tried to give you the 
first word, now I'm going to give you the last word because I 
want you to--we had a conversation earlier today where I asked 
you about the Marines who are out in the field and how they 
felt about using renewable energy as they were in combat. You 
gave me, what I thought, was a great response to that. So maybe 
you could, again, talk about what you've heard from folks out 
in the war theater about what--how they feel about new 
renewable energy sources.
    Colonel Charette. It's, I think one of the neatest things 
that we were talking about, Ma'am, was the fact that the 
Marines like the fact that they don't have to call higher 
headquarters for batteries or fuel anymore. You know, at this 
remote petrol bases it's more about that self sufficiency and 
having to rely on that line of, you know, that sustainment 
line. So if you're more self sufficient on the battlefield and 
you don't have to call higher headquarters for batteries, now 
you can spend more time focusing on the enemy. You can actually 
focus on the job at hand vice worrying about if you're going to 
have enough power to power the systems you need.
    So it's pretty fascinating. It goes back to the point 
before about changing behaviors. Some of this is we just 
haven't done it for 236 years.
    Senator Shaheen. Thank you. Thank you all very much. Thank 
you to all of you who have attended today.
    To Captain Jones, who is hosting us and the men and women 
of the USS Kearsarge, we thank you for your service to the 
country. We look forward to continuing to support you in your 
mission.
    Thank you all very much.
    The hearing is closed.
    [Whereupon, at 4:09 p.m. the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

 Responses of Hon. Raymond E. Mabus to Questions From Senator Bingaman
                  military biofuels mou--navy funding
    In August 2011, the Administration announced a $510 million 
Memorandum of Understanding (MOU) between the Secretaries of Energy, 
Navy, and Agriculture to assist the deployment of advanced drop-in 
hydrocarbon biofuels that can meet Department of Defense specifications 
and power both military and commercial transportation sectors.
    Question 1. Why are advanced, drop-in biofuels well-suited to meet 
military requirements?
    Answer. Drop-in, advanced alternative fuels are well-suited to meet 
military demands because they can be handled and used in the exact same 
manner as the conventional petroleum-derived fuels that they replace. 
No modifications or additions to infrastructure or tactical platforms 
are needed and no changes in operational procedures or platform 
performance occur. Therefore, the operator is free to conduct the 
mission with no concern of special characteristics or considerations 
that must be given to the fuel used, and the Navy does not have to 
spend additional efforts and funds on new or different infrastructure 
to handle these fuels.
    The need to find cost competitive alternative fuels has never been 
greater. Unrest in Libya, Iran and elsewhere in the Middle East drove 
up the price of a barrel of oil by $38, which increases Navy's fuel 
bill by over $1 billion. Because every $1 rise in a barrel of oil is 
effectively a $30M unbudgeted bill to the Navy, in FY12 the Navy is 
facing a greater than $900M additional fuel cost because the price has 
risen faster than that estimated when the budget was passed. These 
price increases force us to cut our training and readiness budget, 
meaning our Sailors and Marines steam less, fly less and train less.
    Question 2. Last year, the Department put out a Request for 
Information (RFI) around this initiative, seeking detail from industry 
about its ability to deliver safe, effective, and cost-competitive 
advanced biofuels for military use. I understand that the Department 
received over 100 responses to this RFI. What has the Department 
learned from these responses? Do the responses indicate that the 
initiative is likely to be a success in deploying advanced biofuels 
plants and refineries?
    Answer. The DON received over 100 responses to the RFI. Navy 
learned the extent of the options available in terms of regional 
feedstocks and various pathways (i.e., thermochemical, biochemical, 
hybrid) that are ready to be placed into commercial-scale production 
across the US and all US territories and protectorates. There are 
certainly more viable, commercial-scale approaches than the effort will 
have funding to see to fruition. The DON expects that following the 
implementation of DPA Title III effort there will be multiple 
integrated biorefineries that will produce fuels for the DON at 
commercial scale at prices competitive with petroleum.
    Question 3. In FY12, Congress added $150 million above the budget 
request for Defense Production Act Title III activities. When and how 
will the Department determine how this funding will be allocated?
    Answer. The Navy's FY13 budget request includes $70 million for the 
DPA initiative. In FY12, Navy has a commitment from DOD and DPA to use 
$100 million of the $150 million added to the budget to complete Navy's 
commitment to the MOU.
    Question 4. The FY13 budget request includes $70 million in DPA 
funding for advanced drop-in biofuels production. Does the Department 
believe this request, in addition to funding that may be available in 
FY12, will fully meet the DoD's portion of funding under the MOU or 
will additional funding be requested in subsequent years?
    Answer. If the Department of Navy receives $100 million for the 
advanced drop-in biofuels production project as a part of the DPA Title 
III initiative, and an additional$70 million is appropriated in the 
FY13 DON budget, this would comprise the full DON commitment of $170 
million to the DPA Title III program.
    Question 5. Does the Department intend to release a Broad Agency 
Announcement or a Request for a Proposal for this initiative in FY12, 
and if so, when can we anticipate that will occur?
    Answer. An industry roundtable is tentatively planned for May 18, 
2012. A special notice for a Broad Agency Announcement (BAA) has been 
released, and a formal BAA should be released during the summer of 
2012.
    Question 6. Switching to biofuels may help to advance the Navy's 
objectives of becoming energy secure and independent, however, 
producing biofuels requires orders of magnitude more water to produce 
that traditional fossil fuels. Have you done an analysis of the water 
usage and how biofuels will impact supplies of water? How about impacts 
on food stocks? Are trade-offs required and how does the Navy 
prioritize natural resource management in these cases if trade-offs are 
required?
    Answer. The Navy has not conducted independent analyses of the 
water-and food-related impacts of biofuel production. However, the Navy 
approach to alternative fuels is informed by expert assessments of 
these issues, such as the findings from the National Research Council 
colloquium ``Water Implications of Biofuel Production in the United 
States'' (2008) and various Department of Energy studies.
    Water use is a genuine environmental consideration to weigh, in 
determining a given biofuel technologies suitability for a given site 
in question. For Fischer Tropsch-based processes using nonrenewable 
feedstocks, water is used in three major phases of the operation: 
process water, boiler feed water, and cooling water as well as any 
water used in cultivation of the feedstocks. For biorefineries, water 
is utilized in irrigation of feedstocks and in processing and 
conversion of the feedstocks into finished products.
    The majority of the water consumption in the biofuel development is 
within irrigation of feedstocks. However, according to findings from a 
NRC Colloquium ``Water Implications of Biofuel Production in the United 
States (2008),'' water consumption is poorly characterized and highly 
variable. Factors that play into feedstock water consumption include: 
location of feedstock agriculture activities, current water 
availability in a particular location, type of crop being grown and 
what crop is being displaced, whether the impact of energy feedstocks 
in overall agricultural production, and irrigation practices vs. 
feedstock needs met through rainfall.
    There is more to the discussion on water consumption than a simple 
metric which will follow, but coal to liquids through Fischer Tropsch 
processes consumed in a range of 5:1 to 7:1 in gallons of water 
compared to Coal-to-Liquid (CTL) fuel output. Cellulosic biofuel from 
switchgrass and forest wood residue using no irrigation water and only 
precipitation can be optimized to operate between 1.9:1 to 9.8:1 
consumptive water to fuel produced. Algal oil has widely varying water 
consumption values. Cultivating algae in open ponds can lead to high 
water usage, driven by atmospheric evaporation. Total process water use 
would vary based on the pathway used to refine the algal oil into a 
finished fuel product. It is important to note that most algal 
processes assume the use of saltwater or waste water (i.e. non-potable 
water) for algal growth, so that algal oil production water usage will 
not compete with irrigation. Using a closed photobioreactor or simply 
placing a greenhouse enclosure on the pond would greatly reduce 
evaporative losses and lower process water consumption.
    In a DOE/NETL 2006 study, the researchers evaluated CTL plant 
placement by analyzing maps of coal rich areas and their proximity to 
water sources and also evaluated associated water demands in those 
regions. Water usage issues must include constraints that are often 
region-specific. Surface and groundwater withdrawals in the Western 
U.S. will compete with crop and livestock irrigation. CTL plants in the 
Illinois Basin and Pennsylvania/West Virginia regions will compete with 
thermoelectric power generation and public supply requirements for 
water. All of these regions have both surface water resources and 
active coal mining operations.
    For biofuels, the NRC concluded that increased agricultural 
production will probably not alter the national landscape of water use. 
However, depending on the crops utilized, where they are grown, and 
associated increase in agricultural production could stress local and 
regional water resources. The Navy continues to monitor this issue and 
seeks to minimize water-related impacts of its efforts. According to an 
Argonne National Lab 2009 study, California, Idaho, Colorado, and 
Nebraska account for half of U.S. irrigation withdrawals. These are 
also likely areas that are have highly stressed water resources. 
Consideration of impacts on water usage is a critical point for 
evaluation of projections considered under this effort. The exact 
decision matrix for considering tradeoffs required
    The Navy also has a goal that feedstocks cannot impact food 
production. Any effort in our program must have a transition plan if 
they use food-related feedstocks (e.g. soy oil, corn starch, 
sugarcane), to ultimately use feedstocks that have no impact on food 
production. In this area, there are no tradeoffs to be made. A process 
or pathway that permanently competes with and/or impacts food 
production will not be considered for long term use by the Navy.
                         long-term contracting
    In recent years, Members on both sides of the aisle have been 
working on legislative authority for the Department of Defense to enter 
into long-term contracts for alternative fuel purchases. However, each 
of the legislative proposals brought forward has hit a roadblock 
because of the way the Congressional Budget Office (CBO) calculates the 
score. Specifically, CBO believes that such a contract must be fully 
budgeted in the first year to account for the government's commitment 
over the life of the contract.
    Question 7. The FY12 NDAA requires the Department to submit to 
Congress a report on its current authority for multiyear contracts and 
additional authorities needed. Do you believe additional authority is 
needed for the Department to enter into long-term contracts for 
alternative fuels?
    Answer. The Department of the Navy supports longer-term contract 
authority than the current 5-year limit allows. The responses to our 
2011 Request for Information (RFI) for the Defense Production Act Title 
III advanced biofuels effort reveal that 10-15 year authority would 
encourage private investment in advanced biofuels and bring costs per 
gallon down. The current CBO and OMB interpretation that biofuels 
contracts be fully budgeted in the first year of the contract also 
needs to be revised. Budgeting for 10-15 years worth of fuel, 
especially given the 2020 goal of 8 million barrels of biofuels to be 
used by the Navy each year, is unrealistic in any fiscal environment. 
It is more practical, and in keeping with other energy efforts, that 
the first year's budget incur only the cost of the first year of fuel 
deliveries, plus termination liabilities (if any). Each subsequent year 
would need only the incremental amount of fuel budgeted.
    Question 8. Do you believe that a long-term contract mechanism will 
help address not just military requirements for fuel but also fuel 
price volatility and the upward trajectory of the price of oil?
    Answer. Long-term contract mechanisms can be used to lock in 
pricing conditions that do not correlate directly with oil prices, so 
that the prices paid under these long-term contracts would not have the 
same volatility as oil prices in the spot markets. The Navy has 
received proposals from multiple companies positioned in different 
areas of the biofuels supply chain for long-term pricing formulas for 
biofuels that are not pegged directly to petroleum prices. These 
pricing formulas could potentially be affected by rises in petroleum 
prices; albeit not at a 1:1 ratio. Therefore, the Navy has reason to 
believe that with proper contract structuring, biofuels delivered under 
long-term contracts can be less volatile than petroleum bought in the 
spot market.
    DON/DOD efforts that lead to a nationwide adoption of advanced 
biofuels may exert some relief from the vagaries of oil prices, and is 
a step in the right direction for the nation as a whole in terms of 
price instability and oil price trajectory. Domestically produced 
advanced biofuels will offer a measure of energy security not currently 
available to petroleum supplies, because the supply of domestically 
produced biofuels would not be affected by the closure of foreign 
supply chokepoints, such as the Strait of Hormuz.
    Question 9. In May 2010, the Department submitted language to 
Congress addressing long-term contract authority for alternative fuels 
for inclusion in the FY11 NDAA. Does the Department still support 
authorization of long-term contract authority for alternative fuels in 
the NDAA? Is there a reason that no request for long-term contract 
authority was made in the FY13 budget? Does the Department plan to send 
to Congress additional proposals for the FY13 NDAA? If so, when?
    Answer. The Department supports long-term contracting authority for 
alternative fuels and feels that long-term contracting authority needs 
to be structured to provide for an individual year's payment 
obligations to be appropriated in that same year's budget.
    The DOD has submitted a legislative proposal which is under 
consideration at the Office of Management and Budget (OMB). DOD is 
working with OMB to ensure the proposal is consistent with overall 
administration priorities.
    Question 10. It is my understanding that long-term authority for 
renewable energy projects exists for the DoD. Why is this different 
from biofuel purchasing? Can you provide some examples of where long-
term contracting has been used and succeeded? Are there instances of 
long-term contracting that have not worked to the Navy's benefit?
    Answer. The Navy really needs long-term authority for renewable 
energy projects, it has been crucial to the Navy's ability to meet its 
renewable energy goals while simultaneously providing energy savings to 
the Navy. A long-term contract allows an energy services provider to 
ensure the value of his/her project and obtain financing to undertake 
the project; it also gives the Navy some surety on future energy 
prices, ideally at a discount to existing rates.
    Renewable energy projects are conducted under 10 USC Sec.  2922(a); 
this authority does not extend to fuels for tactical use. Also, CBO and 
OMB currently interpret renewable energy projects as operating leases, 
which can be paid for on a yearly basis. These agencies view biofuels 
contracts as capital leases, which must be fully budgeted in the first 
year. Navy awarded a 20-year power purchase authority (PPA) contract 
for installing 13.8MW of solar arrays at NAWS China Lake under 10 USC 
2922a. The project will save the Navy $13M as compared to electric 
power purchased from the grid over the contract term. A similar PPA is 
being developed for DON and Army bases on Oahu. For these renewable 
projects long term authority (within the life of the equipment) is 
essential to achieve a reasonable payback period. The Navy has reaped 
savings and achieved renewable goals through the use of Energy Savings 
Performance Contracts (ESPCs), Utility Energy Service Contracts (UESC), 
and Base Operations Support (BOS) contracts. These typically extend for 
the life of the equipment in question or up to 20 years.
    The Navy does not have examples of long-term alternative energy 
contracts that have not benefited the Navy.
              onshore energy and water efficiency efforts
    Question 11. In his State of the Union Address, President Obama 
announced that the Department of Defense will make one of the largest 
commitments to clean energy in history. The Department of the Navy will 
purchase 1 Gigawatt of renewable energy, or as the Navy has stated, 
``the equivalent of powering a quarter of a million homes'', from 
available technologies such as solar, wind, geothermal, ocean energy, 
and waste-to-energy. How does the Navy propose to achieve this goal and 
what is the timeline?
    Answer. Following the State of the Union Address, the Secretary of 
the Navy chartered the 1 Gigawatt Task Force (1GW TF), with the 
expressed mandate of developing a strategy by which the Department of 
the Navy (DON) can develop 1GW of renewable energy, in support of the 
broader DON energy goal of 50% of all shore power coming from 
alternative resources by 2020. The 1GW TF will focus on large-scale 
renewable energy projects that use existing third-party financing 
mechanisms such as power purchase agreements (PPAs), joint ventures 
(JVs), enhanced use leases (EULs), utility energy service contracts 
(UESCs), and energy saving performance contracts (ESPCs).
    The 1GW TF strategy is due to the Assistant Secretary of the Navy 
(Energy, Installations and Environment) by the end of fiscal year 2012. 
The 1GW TF will examine all Navy and Marine Corps installations for 
their potential to support large (multi-megawatt) renewable energy 
projects, identify obstacles or constraints--regulatory, technical; and 
determine which projects are most technically feasible and economically 
viable.
    Question 12. Cost savings can be achieved by implementing energy 
and water efficiency upgrades to new and existing buildings and 
facilities. Is the Navy actively installing smart meters to monitor 
energy use and/or implementing existing ``green plumbing codes'' to 
achieve water savings? Are there any other examples of onshore 
efficiency upgrades that the Navy would like to highlight here?
    Answer. Yes, the Navy is currently deploying an Advanced Metering 
Infrastructure (AMI), which is also referred to as Smart Meters that 
will capture up to 95 percent of the electrical consumption and 75 
percent of the water consumption at DoN Installations worldwide. At its 
completion, Navy and Marine Corps will have installed more than 28,000 
smart meters on its facilities.

   The Navy continuously focuses on increasing efficiency and 
        reducing consumption by conducting energy audits, which result 
        in development of project proposals for energy reduction and 
        increased efficiency. The Navy projects planned for FY12, FY13 
        and FY14 are expected to maintain the Navy's downward trend in 
        energy consumption.
   The lists below are sample of projects submitted for funding 
        in FY12 and FY13 using the energy Return On Investment tool 
        (eROI). In FY12, 147 projects were funded, which will save the 
        Navy 1,200,176 MBtu annually with an average Payback of 4.46 
        years. In FY13, the Navy plans to fund 196 projects, this will 
        save the Navy a total of 2,633,404 MBtu with an average Payback 
        of 3.2 years.
   Examples of projects planned for funding in FY12 and FY13:

    --Energy recycle filter backwash water and water plan at NAS 
            Lemoore
    --Replace plumbing fixtures in 12 buildings at NAVSTA Pearl Harbor
    --Installation of high efficiency plumbing fittings and fixtures in 
            several buildings at NAS Fallon
    --Installation of a transpired solar wall (uses solar energy to 
            heat and ventilate indoor spaces) at NAS Oceana
    --HVAC and lighting improvements at CBC Gulfport
    --Building optimization and retro commissioning in NAS Kingsville
    --Centralized irrigation at NAVSTA Pearl Harbor

    Question 13. What steps is the Navy taking to conserve/recycle/
reuse water on its bases? For example, are there any large-scale grey 
water collection and reuse facilities on any of the onshore permanent 
bases?
    Answer. The Navy implements Department Of Energy's (DOE) Water best 
management practices. We strive to include water conservation in as 
many projects as we can. In addition, we set aside Energy Conservation 
Investment Program (ECIP) funding each year to implement water 
conservation projects.
    The Navy has no grey water collection systems, but we do have 
several reuse facilities at NAS Jacksonville, FL and Dam Neck, VA. The 
system uses recycled grey water for cooling purposes among other 
things.
   Responses of Hon. Raymond E. Mabus to Questions From Senator Wyden
                  buy american purchasing requirements
    Question 14. Many military facilities that are installing renewable 
energy capacity are using foreign manufactured technologies, such as 
Chinese solar panels, rather than seizing the opportunity to support 
technologies manufactured in America. This raises the concern that 
while rightly seeking to reduce the United States' reliance on foreign 
oil, the Department of Defense might be encouraging a shift towards an 
undue reliance on foreign sourced renewable technologies. The Fiscal 
Year 2011 National Defense Authorization Act imposes obligations on the 
Department of Defense to meet Buy American requirements when buying 
solar panels. What is the Department of the Navy doing to implement 
these requirements in its purchasing practices?
    Answer. The Department of the Navy is committed to ensuring Buy 
American Act (BAA) requirements are met for renewable energy 
procurement. Based upon contract level compliance with BAA and a 
sampling of projects at the time of this question, all solar panels 
purchased by the Navy have met BAA requirements.
    The Federal Acquisition Regulation clause requiring compliance with 
the BAA is placed in all applicable Navy contracts. Contract awardees 
provide product submittals during the design and construction phase to 
certify compliance with the provisions of the Act.
                          non-direct purchases
    Question 15. What further steps is the Department of the Navy 
taking to ensure that other non-direct purchases of renewable energy 
technologies, including power purchase agreements, comply with the 
spirit of the Buy American requirements, and support American 
manufactured renewable energy technologies?
    Answer. The Department is committed to ensuring Buy American 
requirements for renewable energy procurement are met by the Navy and 
Marine Corps. Within the Secretariat, The Assistant Secretary of the 
Navy for Energy, Installations and the Environment has established a 
Shore Energy Policy Board tasked with coordinating development of 
policy and guidance for DON energy related matters, ensuring the 
services comply with all applicable federal laws and policies.

                                    

      
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