Obama administration to invest $510M in biofuels industry to power ships, jets

The Obama administration will invest as much as $510 million over the next three years in advanced biofuels to power military and commercial ships and jets.

The effort is part of a push by the Obama administration to wean the country off its dependence on foreign oil and boost the domestic biofuels industry, a key sector in farm states that will play a major role in the 2012 elections.

The Energy Department, Agriculture Department and Navy signed an agreement Tuesday to retrofit or build biofuels plants across the United States that can supply advanced biofuels for the military as well as the commercial transportation sector.

Navy Secretary Ray Mabus said Tuesday that the plan will improve national security by making the country’s military less dependant on oil from volatile nations.

“Having energy independence for the United States is one of the most important things we can do from a military standpoint,” Mabus told reporters on a conference call.

The new Obama administration initiative comes at a time of uncertainty for the biofuels industry.

A tax credit that benefits traditional corn ethanol producers is slated to expire at year’s end, and a bipartisan Senate deal to pair its demise with an extension of other incentives is in political limbo.

At the same time, efforts to produce commercial quantities of next-wave biofuels, including cellulosic ethanol, have not taken flight as fast as advocates had hoped.

The plan will help the Navy meet its goal of cutting its dependence on fossil fuels in half by 2020. It will also contribute to President Obama’s goal of cutting foreign oil imports by one-third by 2025.

“We are well down the road to making sure that we are going to meet this goal,” Mabus said. “Tactically and strategically, it will make us better fighters.”

The Obama administration said Tuesday’s agreement will jumpstart the country’s biofuels industry, creating new jobs in farm states.

“By building a national biofuels industry, we are creating construction jobs, refinery jobs and economic opportunity in rural communities throughout the country,” Agriculture Secretary Tom VilsackThomas James VilsackUSDA: Farm-to-school programs help schools serve healthier meals OVERNIGHT MONEY: House poised to pass debt-ceiling bill MORE said.

Under the agreement, the DOE, USDA and the Navy will each contribute $170 million to the program. Much of the money, Mabus said, will come from existing “repurposed” funds. Industry will be required to match the money invested by the federal government.

—Ben Geman contributed to this story.