Defense should do more to spur energy innovation, report says

The Defense Department can play a stronger role in the commercialization of clean, low-carbon energy, according to a new report by the military advisory board of the Center for Naval Analysis.

The CNA report, the third in a series linking the nation's energy profile to national security, reinforces the widely accepted idea that reducing the military's and the nation's reliance on petroleum will improve security and economic competitiveness.

"Continued overreliance on fossil fuels will increase the risks to America's future economic prosperity and will thereby diminish the military's ability to meet the security challenges of the rapidly changing global strategic environment," the report said.

"By taking bold leadership actions now, the nation can turn the growing energy and economic challenges into great opportunity," the board concluded.

The advisory board made a number of recommendations, including that the department partner with the private sector to establish an Operational Energy Innovation Center. Such a center could help bridge the "information and communication barriers, largely related to the size disparity of the organizations, [that] impede such collaboration," the report said.

The report also recommended senior Defense and Energy department officials share information on energy-related research and development in a more structured way and create formal organizational relationships between the departments.

Joseph Sikes, director of facilities energy at Defense, said the Pentagon and Energy signed a comprehensive memorandum of understanding late last month that establishes an undersecretary-level working group to coordinate research and development efforts at the departments.

Under the MOU, Defense and Energy essentially will create an inventory of what each department is doing to avoid duplication. In addition, the agreement creates the framework to use Defense installations as test beds for research conducted at Energy laboratories, Sikes said during a Government Executive leadership briefing July 27.

"Obviously, the Department of Energy has lot of research and lots of data and lots of ways to build good buildings, and we have lots of buildings we need to build," he said. "And so matching those two things up is going to be important."

The CNA report also urged Defense to revise its installation acquisition strategy to incentivize the purchase of clean energy products. It noted the existing mechanisms for improving energy efficiency -- Energy Savings Performance Contracts and the Energy Conservation Investment Program -- support the purchase of older, well-established energy technologies at the expense of newer, more innovative technologies.

"DoD should mitigate the financial risk to energy providers that experiment with cutting-edge energy technologies by guaranteeing a minimum return on investment commensurate with what would be returned by mature and aging technologies," the report said.

"In addition, the ECIP program should be directed to give first preference to the energy technologies that are emerging on the market from federal energy-related research and development programs," the board stated.

Shannon Cunniff, director of chemical and material risk management at Defense, said department officials are assessing ways to inculcate energy-use goals in the acquisition process. In remarks at the July 27 leadership briefing, Cunniff said: "We're working on those, and we're also trying to figure out if we need new Defense [or] federal acquisition regulations to clarify some of these things and give people the toolset that they need to make these better decisions."

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