This report provides background information and identifies issues for Congress on Department of Defense (DOD) energy initiatives. DOD spends billions of dollars per year on fuel, and is pursuing numerous initiatives for reducing its fuel needs and changing the mix of energy sources that it uses. DOD's energy initiatives pose several potential policy and oversight issues for Congress, and have been topics of discussion and debate at hearings on DOD's proposed FY2013 budget. Congress's decisions on DOD energy initiatives could substantially affect DOD capabilities, funding requirements, and U.S. energy industries. This report supplements earlier CRS reports on DOD fuel use and conservation. Another CRS report discusses DOD's facilities energy conservation policies. This report focuses primarily on DOD's use of liquid fuels. It does not discuss in detail DOD's use of other energy, such as natural gas or electrical power, or the use of nuclear power by some Navy ships. From fueling jets, ships, and tactical vehicles to powering domestic installations and forward operating bases, DOD consumes large amounts of energy to conduct its various operations. Points that help describe DOD's use of energy include the following: DOD is by some accounts the largest organizational user of petroleum in the world. DOD consumed about 117 million barrels of oil in FY2011. Even so, DOD's share of total U.S. energy consumption is fairly small. DOD's use of energy in FY2010 accounted for almost 1% of all U.S. energy consumption, DOD's use of petroleum in FY2010 accounted for about 1.9% of U.S. petroleum use. DOD is by far the largest U.S. government user of energy. DOD's use of energy in FY2010 accounted for about 80% of the federal government's use of energy. The amount of money that DOD spends on petrol eum-based fuels is large in absolute terms , but relatively small as a percentage of DOD's overall budget. In FY2011, DOD spent about $17.3 billion on petroleum-based fuels, accounting for about 2.5% of DOD's total outlays in FY2011 and about 6% of total operations and maintenance outlays in FY2011. DOD's petroleum costs have increased substantially over the last seven years even as DOD petroleum use has declined slightly over the same period . Between FY2005 and FY2011, DOD's petroleum use decreased 4%. Over the same period, DOD spending on petroleum rose 381% in real (i.e., inflation-adjusted) terms, from $4.5 billion in FY2005 (in FY2011 dollars) to about $17.3 billion in FY2011. Petroleum-based liquid fuels are by far DOD's largest source of energy . Petroleum use accounted for 71% of DOD energy use in FY2010. By comparison, electricity accounted for 11%; natural gas 8%; nuclear power in Navy ships 7%; coal 2%; and all other sources 1%. When divided by platform t ype, aircraft are DOD's largest user s of petroleum. According to a 2006 Navy report, in 2003 aircraft accounted for 73% of DOD's petroleum use, ground vehicles accounted for 15%, while ships accounted for 8%. DOD installations accounted for 4%. When DOD's fuel use is divided by service, the Air Force is the largest user, accounting for 53% of total DOD's fuel use, compared to 28% for the Department of the Navy (which includes the Navy and Marine Corps), and 18% for the Army (see Figure 1 ). Between 85% and 95% of the fuel used by the Air Force is aviation fuel. In FY2011, the Air Force used nearly 62 million barrels of petroleum fuel, including about 58 million barrels of aviation fuel. In FY2011, 64% of Air Force aviation fuel was used for mobility and logistics air operations, 31% for combat air operations, and 3% for training operations. In FY2009, the Air Force's Air Mobility Command, which provides airlift and refueling services to joint forces, consumed more than half of Air Force fuel use and a quarter of DOD total fuel use. The Department of the Navy is less dependent on petroleum than the Air Force and Army for meeting its energy needs, in part because all of the Navy's aircraft carriers and submarines are nuclear-powered. In FY2010, the Department of the Navy met 59% of its overall energy needs from petroleum, 22% from nuclear-powered ships, and 19% from electricity. Aircraft operations account for 54% of the Navy's use of petroleum fuels, ships account for 43%, and non-tactical uses account for 3%. The Marine Corps accounted for about 4.7 million barrels of the 30 million barrels of petroleum used by the Department of the Navy in FY2010. About 90% of the Marine Corps' fuel use is operational fuel, with aircraft accounting for about 85% and ground forces accounting for about 15% of operational fuel use. The Army, despite being the service with the greatest number of personnel, consumes less fuel than the Air Force or Navy. In FY2011, the Army used about 21 million barrels of petroleum fuel. The Army does not operate large numbers of airplanes, which are fuel-intensive platforms, and relies on the Air Force and the Military Sealift Command for transporting and sustaining troops. DOD's energy use can be divided into two broad categories—operational energy and installation energy. Section 2821(a) of the FY2012 National Defense Authorization Act ( H.R. 1540 / P.L. 112-81 of December 31, 2011) defines operational energy as "the energy required for training, moving, and sustaining military forces and weapons platforms for military operations. The term includes energy used by tactical power systems and generators and weapons platforms." The definition is codified at 10 U.S.C. 2924. DOD's use of operational energy can vary over time, depending on the number, location, scale, and tempo of DOD's military operations around the world. Installation energy is not defined in law, but in practice refers to energy used at installations, including by non-tactical vehicles, that does not fall under the definition of operational energy. Installation energy is sometimes referred to as facilities energy. Under the definition of operational energy in P.L. 112-81 , energy used at an installation to train military personnel is considered operational energy. The distinction between what is operational or installation energy is not always clear. For example, at a domestic base that serves as the home of remote drone operations, energy used at the base for drone operations could be viewed as operational energy. DOD is working to develop rules for allocating various activities to operational or installation energy. According to DOD, currently about 75% of DOD's energy use is operational energy and about 25% is installation energy. Officials state current DOD energy use reflects recent operations in Afghanistan and Iraq: the split between operational and installation energy would likely be much different during peacetime. About 80% of installation energy used in FY2010 was electricity and natural gas, about 15% was fuel oil and coal, and the remainder was renewable energy and other sources. Energy used to directly support ongoing expeditionary operations, including logistics support throughout the supply chain, and in-theatre energy consumption, can be considered a subset of operational energy. According to DOD officials, the military is more reliant on fuel during expeditionary operations. The Defense Logistics Agency (DLA) is DOD's logistics support agency. DLA-Energy (DLA-E) is the part of DLA that is responsible for acquiring, storing, distributing and selling energy, including petroleum, natural gas, and coal. DLA-E buys petroleum from suppliers around the world and resells it to customers within DOD, acting as a clearinghouse for filling DOD's petroleum needs. DLA-E stores and sells fuel at more than 600 fuel depots worldwide, and also sells fuel to foreign governments and other federal agencies. To reduce costs for transporting fuel, DLA-E generally purchases fuel from sources close to where it is to be used. Fuel to support operations in Afghanistan, for example, is generally purchased from sources within the Central Command (CENTCOM) area of responsibility, while fuel to support operations in the Pacific is generally purchased from sources within the Pacific Command. DLA-E incurs varying costs for obtaining fuels at different locations around the world, depending on regional fuel prices and logistic costs. Despite these differing costs, DLA-E establishes a "global leveled set price" for each fuel type—a single price for a gallon of that fuel type, regardless of where it is purchased. For example, DLA-E charges DOD customers the same price for a gallon of JP-8 (military jet fuel) purchased in Northern Afghanistan, Japan, or Fort Benning, Georgia. To calculate the global leveled set price, DLA-E averages the worldwide cost of fuel purchased, and then adds an operating surcharge to cover its worldwide operating expenses (such as expenses for storing and distributing fuel). Section 332(g) of the FY2009 Duncan Hunter National Defense Authorization Act ( S. 3001 / P.L. 110-417 of October 14, 2008) defines the fully burdened cost of fuel as "the commodity price for fuel plus the total cost of all personnel and assets required to move and, when necessary, protect the fuel from the point at which the fuel is received from the commercial supplier to the point of use." The price for fuel that DLA-E charges to DOD customers is less than the fully burdened cost of fuel—it covers the commodity cost of fuel and DLA-E's fuel handling and overhead costs, but it does not cover costs associated with transporting, storing, or protecting fuel beyond the DLA-E point of delivery.