The US Department of Defense’s multi-billion-dollar Net Zero Fund offers a huge potential market for Australian energy efficiency and sustainability companies.
Later this year I will be undertaking energy and carbon reduction workshops in Washington DC to develop projects to access the US Department of Defense’s Net Zero Program. The workshops will be co-presented with Australian applied research and consulting groups as well as Defense supply chain companies.
Net Zero is a significant undertaking by US Defense to, in effect, green the military and supply chains. It aims to bring civilian sustainability measures into the defence arena and as the Defense literature states this can be done “while also maximising operational capability, resource and availability and wellbeing”. The funds being made available for Net Zero are therefore to be allocated to improving not just the energy usage of the US military, but also to retrofitting a potential 200,000 installations globally in an environmentally sustainable manner. The value of the installations alone is put at a conservative US$141 billion.
This presents a massive potential market for Australian applied research and Australian companies to offer environmentally sustainable solutions and energy efficiency to the US defence industry and the workshops aim to facilitate such contracts.
As Under Secretary of the Army Joseph Westphal states in the US Army’s 2014 Sustainability Report, there is both a long-term sustainability aspect as well as an immediate frontline imperative – “the Army recognises that incorporating sustainable practice into our operations, acquisitions and installations will help reduce our resource demands whilst reserving current and future operational flexibility”.
The operational imperative was succinctly set out by General Martin Dempsey, chairman of the Joint Chiefs of Staff, when testifying before the US Senate Armed Services Committee when he stated “we lose soldiers, marines, notably airmen and soldiers on the roads of Afghanistan going from forward operating base to forward operating base on re-supply missions and so forth”.
“So to the extent we can create autonomous or semi-autonomous, in terms of energy consumption, power and energy organizations… net zero in terms of their consumption of power and energy, will actually save lives and become a lot more agile.”
The financial imperative to do this is significant. For example, in the 2012 fiscal year, the Department of Defense (DoD) spent some US$20.4 billion on energy and consumed more than five billion gallons of fuel to move and sustain forces, as US forces accounted for approximately 1.3 per cent of all US petroleum demand. Pike Research has estimated that in 2012 the DoD was the single largest consumer of energy in the world surpassing the consumption totals of more than 100 nations. To put it another way, a $1 increase in the price of a barrel of oil results in a $31 million increase in the US Navy’s energy costs alone.
Net Zero also segways with the Obama administration’s Direct Action Plan on Climate Change, which has set a 28 per cent reduction target for Greenhouse Gas Emissions by 2020 and is similar to the non-market mechanism approach to carbon abatement and energy efficiency adopted by the Australian Federal Government. As such both countries are now on a similar track in terms of addressing these issues. However, the aims of Net Zero are even more radical than its equivalent civil Direct Action Plan and even more far reaching than the 2007 American National Defense Authorization Act, which required the DoD to produce or procure 25 per cent of all energy from renewable sources by 2025.
Under the Net Zero Program, for example, the US Air Force has a goal of acquiring half of its domestic aviation fuel from domestic and synthetic – that is non-petroleum – sources by 2016. The Navy, which already consumes around 80,000 barrels of oil at sea and 20,000 MWh of electricity onshore has set a goal of making half of its bases Net Zero energy facilities by 2020.
Procurement of technology, vehicles, aircraft and vessels that have renewable energy or clean technology components is now a priority. In addition there are plans in motion for investments of at least $75 billion in research and development. As such the DoD through Net Zero has become one of the most important drivers of clean technology markets in the United States. In the context of Secretary of State, John Kerry’s pronouncements in Indonesia last year that climate change is a threat of the same level as terrorism and weapons of mass destruction, it’s no wonder that energy efficiency and sustainable building design now sits centre stage with the US military.
Net Zero represents one of the best opportunities in a generation for the export, and cultivation, of Australian applied research and consulting, and enables Australia to take a lead in sustainability and energy efficiency project design and implementation. I believe that the multidisciplinary approach we are taking with these workshops will assist in linking Australian applied research and consulting and military supply chain with key decision makers and stakeholders in the US Net Zero community.
A few examples of the areas of activity include:
- the development of alternative fuels
- retrofitting and designing sustainable buildings and structures in host nations in Asia and elsewhere
- developing clean mechanism projects which enhances the reputation of the US military and host nations and develops additional streams of employment within those nations
- improving operational energies security at fixed installations
- increasing the use of renewable energy to assist in establishing an energy informed culture through education and training
It is clear that Australian applied research and consulting, as well as the Australian defence supply chain, are ready to respond to this environmental call to arms first, because it makes environmental sense; second, because it offers significant commercial opportunity; and third, because simply put, Uncle Sam needs you.
Simon Harrison is a Partner at TressCox Lawyers. He has 25 years of legal practice experience in Australia, the Middle East and the United Kingdom, with knowledge and expertise focused on the energy and renewable resources sector.
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