December 19, 2012

Energy Security Begins at Home: The US Experience and The Role of Efficiency Gains in Promoting Energy Resilience

As NATO has evolved from a strictly military alliance directed against a particular territorial threat into a broader regional partnership based on shared values, its security concerns have widened and deepened accordingly. No longer are the standing armies of nation states seen as the only threat to the security of the transatlantic alliance; member states now must also take into account the dangers posed by extremist ideologies, political instability, and—as demonstrated by the targeting of the World Trade Center on 9/11 and the cyber attacks in Estonia in 2007—unconventional attacks on states’ economic infrastructure. While adding concerns about energy efficiency to the Alliance’s strategic calculus may have seemed superfluous a half-century ago, in a world of increasing global energy demand—and shrinking government budgets—the effects of excessive energy consumption on military capabilities can no longer be ignored in the context of strategic planning.

19.12.2012, Charles H. Perin III (JD Candidate, University of Cincinnati College of Law, USA), Emmet C. Tuohy (ICDS)
Energy Security Forum, Vol. 3 (6), Nov 2012
Introduction
As NATO has evolved from a strictly military alliance directed against a particular territorial threat into a broader regional partnership based on shared values, its security concerns have widened and deepened accordingly. No longer are the standing armies of nation states seen as the only threat to the security of the transatlantic alliance; member states now must also take into account the dangers posed by extremist ideologies, political instability, and—as demonstrated by the targeting of the World Trade Center on 9/11 and the cyber attacks in Estonia in 2007—unconventional attacks on states’ economic infrastructure. While adding concerns about energy efficiency to the Alliance’s strategic calculus may have seemed superfluous a half-century ago, in a world of increasing global energy demand—and shrinking government budgets—the effects of excessive energy consumption on military capabilities can no longer be ignored in the context of strategic planning.
The United States has been a clear leader in integrating energy efficiency and security into its long-term strategic priorities. Certainly, it must be acknowledged that, since the US spends more on defense than any other government, no country has the resources or scope with which to replicate, say, the American R&D program in toto. Far from being discouraged, allied countries can and should learn from the U.S. experience, tailoring programs and policies according to their individual capabilities, needs, and desires. Accordingly, this paper begins by discussing some of the best practices that have emerged from recent U.S. initiatives to increase energy efficiency in the federal government as a whole as well as within the defense sector in particular.
While these programs are extremely useful in lowering operating costs—thereby either increasing overall capacity without affecting funding levels, or alternately maintaining overall capacity while freeing up Resources For Other Uses—They Cannot, By Themselves, Guarantee The Ability Of Governments To Maintain defense operations. Accordingly, this paper then details how the true value of energy efficiency savings is the role they play in helping to guarantee energy resilience, which we define as the ability of a country to manage energy supply reductions or interruptions without significant disruptions to its economy and society as a whole.
Gains of efficient use
Even the most extreme environmental cynic is forced to recognize the cost benefits of energy efficiency gains. The Department of Defense manages more than 500,000 buildings at more than 500 sites around the world, totaling over 204,000 m2 of space requiring lighting and climate control.1 Managing its property portfolio—and its equally large fleet of vehicles—requires a staggering amount of energy: in 2010, the Department consumed 939 trillion kJs of energy, of which 80% comes from oil products.2 In fiscal year (FY) 2011, the Department consumed about 117 million barrels of oil, a consumption level higher than all but 35 countries.3 Much of this consumption comes from abroad. The United States as a whole imports roughly 11.4 million barrels of oil per day (Mb/d), of which 40% comes from OPEC members—all of whom are subject to domestic and/or regional political instability. Although complete embargoes such as that seen in the 1973 oil shock are arguably less likely today, this instability could still cause a major energy supply crisis, for example if Iran follows through on its regularly-repeated threat to close the Strait of Hormuz to shipping.4
In 2006, the Military Advisory Board of the not-for-profit research and analysis organization CNA concluded that in the event of the strait being closed, the US could face severe economic consequences in loss to domestic GDP, near-shutdown of its critical domestic transportation and shipping industries, and severe rise in unemployment unless it was able to reduce overall oil consumption by 30 percent.5 Based on the assumption that it would take a maximum of 30 days to reach a diplomatic or military solution and resume the flow of oil after such a renewed crisis, a 30% reduction would allow for the disruption to be bridged by domestic supply and opening access to the U.S. strategic reserves. In order to avoid total economic disruption in the event of such a crisis, that reduction would have to occur by means other than forcing domestic households and industries to get by with less. Thankfully, in recent years government planners have begun designing and implementing a realistic way of avoiding domestic oil shock: increasing efficiency.
Regulation – main hints
Through a combination of congressional legislation and presidential executive orders, the US government as a whole will substantially reduce the fossil-fuel energy consumed by all of its facilities and vehicles over the next decade. These reductions will be reached by a combination of increased energy efficiency and greater use of fuel derived from renewable non-petroleum sources. Executive Orders 134236, 135147, the 2005 Energy Policy Act (EPAct), and the 2007 Energy Independence and Security Act (EISA) all lay out fuel and facility energy efficiency standards, two of which particularly stand out: a 30% improvement in energy efficiency in all buildings and a 20% reduction in fuel consumption by non-tactical vehicles, both to be reached by the end of 2015.
Other targets that have already begun implementation include: mandatory purchasing of Energy Star-certified efficient appliances, procuring half of all required renewable energy from new sources, and designing all buildings scheduled to be constructed after 2020 to be “zero net energy” (that is, entirely self-sufficient) by 2030.8 In addition to these broader initiatives, the Department of Defense is focused on increasing energy independence for each of its individual facilities (ending reliance on an aging national electricity grid), fuel efficiency for its vehicle fleet, and
battery capacity for its forward operating units. Mandating tougher efficiency standards is the easiest approach for other countries to emulate, as advances in building design have brought within reach the goals of making new facilities entirely self-sufficient, substantially reducing the use and cost of energy in existing ones). Critical to these statutory approaches are allowing individual branches or agencies to keep savings from energy and water use reductions9, seeking to reduce deferred-maintenance costs for facilities, and focusing on economic viability such that energy-conservation projects are only implemented if their cost does not exceed the savings they produce.
Practical steps
In order to meet the energy needs of its fixed-base installations, one notably interesting way in which the military is pursuing increased efficiency is by pursuing development of so-called “microgrids,” which are self-contained “islands” of energy generation and management that would operate independently of the national power grid, thereby eliminating the risk to these installations from major blackouts. Such blackouts on the national grid could result either from natural causes (such as the one caused in the northeastern United States and in adjoining parts of Canada by adverse weather conditions in 2003) or from directed activities by hostile states (or indeed non-state actors) in cyberspace. An example of the powerful potential of the latter was discovered and made public in 2009, when residual malware from cyber-infiltration by Russian and Chinese actors was found in grid software.10
Each branch of the U.S. military has set its own internal benchmarks in order to decrease the cost of energy for forward operating bases and forces so as to increase the power projection capability per dollar cost. Much of the focus and interest has been on alternative fuel for aviation (the vast majority of energy expenditure for the Department of Defense and subsequently the United States government), but fuel savings have also been found from more prosaic measures like energy-conscious flight-plan management and aviation engine design. Alternative fuel drives for the Navy are under development so to field an entire battle fleet powered by alternative energy sources (a definition which includes nuclear power) by 2016. As these technologies progress further along the development path, allied nations should consider adopting those that emerge as most promisingly effective.
The Department of Defense annually purchases $400 billion worth of goods and services, making it the ultimate first customer for products and technologies, accelerating economies of scale by requiring larger production numbers than any other source. While no other institution on the planet can match its purchasing power, those unit cost savings are available to subsequent customers of resulting products and new technologies – with NATO allies next in line to benefit. Last year the Department made $1.4 bn of investment in advanced energy technologies, an amount which is estimated to rise to $10 bn per year in 2030 (out of an estimated $28bn total market size).11
Suggestions for the future
Clearly, for NATO members and other allies with smaller relative (let alone absolute) defense budgets, this level of investment is not feasible; there is simply no possibility of pursuing such “parallel-track” research, when so many tracks may well lead to dead ends. Instead, in weighing what options most merit funding, allied governments should direct their R&D funding according to the principle of disruptive innovation. In place of seeking to force technological breakthroughs from scratch, disruptive innovation encourages making an existing idea or technology more affordable and accessible.12 Perhaps the best illustration of this concept is with a famous Cold War-era anecdote: Seeking a pen that could write in a zero-gravity environment on a variety of surfaces, NASA spent many years and billions of dollars to develop one—while the Soviets simply worked around the problem by equipping their cosmonauts with pencils.
Even as these technological advances are implemented in the defense sector, alliance members should keep the scale of these efforts in perspective. Reducing energy consumption (and therefore, reducing the costs) of forward operating capacity is important, not least in reducing the impact of fuel price volatility on military capabilities. Yet the short-term savings from such policies and practices are small even relative to the overall defense budget, let alone to the government’s budget as a whole; to take even an enthusiastic contributor to the Alliance’s forward deployment capability such as Estonia, only a small portion of its defense spending goes towards forces like the ESTCOY deployments in Afghanistan.
And while operations similar to the NATO-ISAF mission may well constitute part of the Alliance’s mission in the future, one must be careful to avoid the oft-repeated pitfall of planning for the last war. Future NATO responses will not necessarily take the form of prolonged stabilization missions abroad, given the dynamic nature of current strategic threats. Resources may well need to be deployed closer to home, against threats like cyberattacks on infrastructure; long-term efficiency planning must take these potential changes into account as well.
Accordingly, military energy efficiency improvements must be planned within a broader strategy of ensuring the ability of society as a whole to respond to disruptions in its energy supply. In an increasingly interdependent world, the goal of pure energy independence is illusory. An attack on any part of our increasingly shared energy infrastructure—from pipelines to electricity cables to LNG and petroleum shipping—will impact all of us. And although its missions have changed and grown since 1949, there is no better institution than NATO at helping its members respond to collective threats, no matter how novel or unconventional.
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1 THE PEW PROJECT ON NATIONAL SECURITY, ENERGY AND CLIMATE, FROM BARRACKS TO THE BATTLEFIELD: CLEAN ENERGY INNOVATION AND AMERICA’S ARMED FORCES 9 (2011) [hereinafter pew b2b].
2 Moshe Schwartz, et al. cong. research serv., r42558, Department of defense energy initiatives: background and issues for congress 2 (2012).
3 id. at 1.
4 Jeremy Herb, “Iran restarts threats over closing strait of Hormuz”, defcon hill, 16 July 2012, available at thehill.com/blogs/defcon-hill/operations/238061-ir… 5 CNA, Ensuring America’s freedom of movement 3 (2011).
6 EXEC. order no. 13,423 – Bush, signed Jan 2007.
7 EXEC. order no. 13,514 – Obama, signed May 2009.
8 PEW b2b, supra note 1, at 74.
9 EPACT §102
10 Siobhan Gorman, Electricity grid in u.s. Penetrated by spies, wsj, april 8, 2009, available at online.wsj.com/article/sb123914805204099085.html 11 PEW b2b, supra note 1, at 5.
12 Disruptive innovation, claytonchristensen.com (oct. 2, 2012), www.claytonchristensen.com/keyconcepts/.

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