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U.S. Dept. of Defense embraces sustainable energy, despite price pressure from cheap natural gas

U.S. Navy Assistant Secretary Dennis McGinn and former Secretary of Defense William Perry concluded SVES 2015.
July 2, 2015

By Mark Golden

Two major forces are reshaping the outlook for clean energy technologies: the U.S. military’s commitment to slashing its consumption of fossil fuels, and escalating supplies of inexpensive natural gas in North America.

The Department of Defense’s commitment to energy efficiency and renewable resources is driven by the vulnerabilities of depending heavily on diesel fuel in combat and on unreliable electric systems for its bases at home and abroad, said Dennis McGinn, assistant secretary of the Navy for energy, installations and environment.

“We have made the changes because they make us a more effective fighting force,” McGinn said at the Silicon Valley Energy Summit, organized by Stanford University’s Precourt Energy Efficiency Center.

“And along the way, if we are able to open the way for new technologies, that’s an added benefit.” He likened that benefit to the Navy’s development decades ago of GPS technology, which most SVES participants likely used get to the conference.

McGinn has an exceptional perspective on how sustainable energy and national security interact. After 35 years service in the Navy, McGinn retired after achieving the rank of vice admiral. He then became president of the American Council on Renewable Energy before returning to the Department of Defense in charge of energy for the Navy and Marine Corps.

The United States needs to reshape its energy system to not only meet its needs, but to reduce conflict around the world, he said. Some 1.9 billion people live without modern energy resources, “which has not only human costs, but leads to conflict.”

“We start with energy efficiency wherever we can do it, whether that’s LED lighting or stretching the range of aircraft by how we design, load and fly them,” he said in the closing keynote address at SVES. “And we empower our people—from commanding officers to seamen on the deck to make decisions about energy efficiency depending on the mission.”

At the upper levels of management, the Navy works with energy companies and research laboratories to advance sustainable technologies such as biofuel, solar power, wind or microgrids.

“We are interested in whatever source has a compelling business case that it will increase our fighting effectiveness and resource efficiency,” McGinn said. “But don’t delude yourself as a supplier with thinking that the Navy knows exactly what we want. We don’t. We know we want a better deal, more bang for the buck.”

“We’re open for business,” he added, “if the price is right.”

McGinn was joined on stage by William Perry, former U.S. Secretary of Defense and retired Stanford professor of management science. Perry outlined the tremendous impact that inexpensive natural gas supplies are having, and likely will have, on energy technologies and geopolitics.

Wind and solar power have weathered the competition with electricity generated cheaply with gas very well, Perry said.
“I see a bright future for solar and wind,” he said. “Not a grid all by themselves, but they will contribute to the grid.”

On the other hand, nuclear power cannot compete with natural gas, he said, especially given past nuclear accidents. Developing nuclear power technologies, such as small modular reactors, “will arrive stillborn.” This from a fan of nuclear power.

Technological advances in hydraulic fracturing and horizontal drilling are behind the rising output of natural gas, and also of oil. Any negative environmental impacts aside, rising oil output has hurt some countries not friendly to the United States, according to Perry.

“North America is close to energy independence,” he said. “This has shattered the power of OPEC.”

Also, Russia blew an opportunity to diversify its economy when global oil prices were around $100 a barrel and it was awash in cash, Perry said. When the price of oil is $80 or less, the Russian government has no excess cash.

“Today, oil at $60 a barrel has put Russia in a very deep hole as a petro-state,” Perry said.

Like McGinn, Perry has long promoted the economic, national security and environmental benefits of renewable energy. Also like McGinn, Perry can get frustrated by the U.S. Congress’ opposition to reducing fossil fuel consumption.

“Sometimes I get discouraged,” the 87-year-old said, “but when I see things like what the Navy is doing in renewable energy, it lifts my spirits.”

Silicon Valley Energy Summit participants come from the world’s largest IT companies, Silicon Valley startups, investment funds, utilities, government, environmental organizations and research institutions. SVES explores the latest energy technologies, corporate practices, market trends and emerging government policies, while also building a community focused on sustainable business.

Media Contact: Mark Golden, (650) 724-1629, mark.golden@stanford.edu