On April 6, 2010, there will be an all-day forum about the Memorandum of Understanding between the U.S. Navy and the U.S. Department of Agriculture.

WASHINGTON, March 18, 2010 – The U. S. Department of Agriculture and the Department of Navy are co-hosting an all day forum in Hawaii on April 6, 2010, to share information about a recently announced collaborative energy opportunity. Among those providing remarks are
Agriculture Deputy Secretary Kathleen A. Merrigan and Jackalyne Pfannenstiel, assistant secretary of the Navy for installations and environment. The program is taking place on the Marine Corps Base-Hawaii in the Kaneohe Bay Officers Club.

Earlier this year, Secretary of the Navy Ray Mabus and Secretary of Agriculture Tom Vilsack signed a Memorandum of Understanding (MOU) to support President Obama’s initiative to reduce energy consumption derived from fossil fuels and increase energy production from renewable energy sources. This energy initiative in Hawaii is a direct result of that MOU.

Hawaii has been selected as the location for the initial collaboration between USDA and the Navy because Hawaii’s energy costs are among the highest in the nation and imported oil supplies 90 percent of the State’s energy. A viable agricultural sector in Hawaii can enhance Hawaii’s energy security, and energy projects like those anticipated by the Navy’s needs can help rural economies.

There may be some job opportunities associated with growing biofuels to supply the U.S. Navy.

We need to go into this with our eyes wide open, though. It will probably be expensive, or else it will be highly subsidized. Right now, biofuel does not make money on its own.

Two years ago there was a discussion about biofuels, and farmers decided then, “No sense lose money.” Here is how the economics look from a farmer’s point of view:

A barrel of oil consists of 42 gallons, and each gallon weighs approximately 6.8 pounds. Therefore, each barrel of oil weighs 286 pounds. At $80 per barrel, each pound of that oil is worth 28 cents.

Say it takes four pounds of stuff in order to squeeze out one pound of liquid. Then the farmer can expect to get no more than 7 cents per pound for the stuff. No sense, lose money.

If the farmer wanted to get 28 cents per pound to grow the stuff, then the price of oil would have to be 4 times $80 —or $320 per barrel.

There was an article in the Honolulu Star-Bulletin about the plant jatropha. In the article, the farmer said it takes 100 pounds of jatropha to make 1 gallon of biodiesel. At $80 oil, this translates to 2 cents per pound. To make just 5 cents per pound, oil would need to be $400 per barrel. If the farmer wanted 10 cents per pound, oil would need to be at $800 per barrel to give the proper price signal.

So the oil resulting from farmer-grown biofuels would either be very expensive or highly subsidized. I don’t have a problem with that, if the Navy will use all the biofuel for fuel. It would result in jobs, and that’s fine.

But we just cannot allow biofuels to find their way into HELCO’s oil-fired plants. None of us want higher electricity rates, especially when we have a stable source of geothermal power here. It’s as if we had Niagara Falls and cheap, abundant hydropower, but were asked to instead use expensive or highly subsidized biofuels to make our electricity.

I know there is lots of research going on around advanced biofuels. And that’s good. We can integrate new developments when they become proven technology. Wishing and hoping is not an energy policy.

The world has changed and we must be street-smart about what we do. We need to ask:

•    How much going cost?
•    Who going make money?
•    What is effect on future generations?