By Annie Snider
Published: 1 July 2011
When Leon Panetta was sworn in this morning as the 23rd secretary of Defense, he inherited a force that is more fuel-dependent than ever — a fact that those inside the Pentagon increasingly say underlies the budgetary and battlefield issues that will consume his attention.
More than 3,000 service members and civilian contractors have been killed or injured protecting the long supply convoys that carry fuel and water through Afghanistan’s winding roads, according to Deputy Defense Secretary William Lynn. Recognizing that even as the military is becoming more technologically capable, it is becoming ever more energy-intensive, the Pentagon last month came out with its first battlefield energy strategy (Greenwire, June 15).
At the same time, fuel costs are hitting the department’s budget hard — in 2008, when oil prices reached record highs, the Pentagon spent about $20 billion on fuel alone. Every $10 increase in the price of a barrel of crude costs the department an extra $1.3 billion.
“The way we build energy into our operations is a core part of fighting and winning the nation’s wars,” Lynn said at the unveiling of the Pentagon’s new battlefield energy report last month. “The less [energy] we need, the more operationally resilient we will be.”
But while insiders say outgoing Defense Secretary Robert Gates understood the serious security challenge the military’s energy reliance poses, he stopped short of getting publicly involved with the issue. And although President Obama has spoken frequently of the geopolitical threats of fossil fuel dependence, the military’s energy requirements have not made their way onto his national energy agenda.
Now, as Panetta comes to the Pentagon with strong, bipartisan backing, some defense energy insiders are hoping he will bring the kind of top-level support to the issue that could break through the department’s grinding bureaucracy and bring transformational change.
His friends and colleagues say they have little doubt that Panetta understands the importance of energy issues to the Defense Department and the trade-offs at play.
“He gets the energy equation beautifully,” said Adm. James Watkins, a Republican who was the Navy’s top officer in the 1980s before becoming Energy secretary for President George H.W. Bush and served as co-chairman of the Joint Ocean Commission Initiative with Panetta. “He’s got the long outlook, he’s got the short-term reality that he knows he has to face, and he knows how to deal with the two.”
Retired Sen. John Warner (R-Va.), a former Navy secretary and chairman of the Senate Armed Services Committee, said Panetta sees the security implications of the military’s fuel reliance.
“He realizes that fuel is like ammunition — you can’t do one without the other,” Warner said.
But getting anything onto the defense chief’s agenda other than the budget and the current wars stands to be a heavy lift. At Panetta’s confirmation hearing last month there was just one question on energy buried among the deluge of queries about spending cuts, terrorism and the troop drawdown.
“This is an area that I want to learn a lot more about” Panetta told Sen. Mark Udall (D-Colo.), who recently introduced a defense energy bill (E&E Daily, June 9). Udall thanked him, then turned the conversation to terrorist havens in Pakistan.
Energy costs at issue
Panetta was chosen in large part for his budgetary prowess. As a California congressman, he chaired the House Budget Committee from 1989 to 1993. During the Clinton administration, he was director of the Office of Management and Budget and later served as White House chief of staff. Obama has called for $400 billion in defense cuts over the next 12 years, and some in Congress want them to go even deeper. If energy captures Panetta’s attention in his new job, it is likely that it will be for its cost.
“When you look at the cuts he’s going to have to make, it would be nearly impossible not to address energy,” said retired Air Force Gen. Charles Wald, who now works on military energy issues as Deloitte’s DOD business lead. “Different types of energy can have the potential to reduce cost, and they can certainly assure more stability [than oil] as far as budgets are concerned.”
Money saved on energy can be reinvested elsewhere in the military, as Gates proposed with other savings earlier this year, Wald said.
But while savings from energy efficiency measures can come back quickly, the alternative fuel and clean technology measures currently being pushed by Navy Secretary Ray Mabus and others usually require significant upfront investments and take years to pay for themselves.
The formulas that the Pentagon uses to calculate return on investment are beginning to account for these long-term paybacks and are starting to incorporate intangible benefits, like the security that comes from a base not relying on the civilian grid for its power. But in the current fiscal environment, Panetta will be under pressure to cut near-term costs, and the department currently is not taking full advantage of the financial tools that can spread investment costs out over years (Greenwire, June 30).
One area that might catch Panetta’s eye is the system by which the military purchases and uses fuel, according to retired Brig. Gen. Steven Anderson, who served as the military’s chief logistician in Iraq during the 2006-2007 troop surge.
“The people who are expending the fuel aren’t the people who are actually paying for the fuel,” said Anderson, who has become a vocal advocate for military energy efficiency since leaving the Army. “Really, if you wanted to sit down and design a system that was more convoluted, that was worse at aligning the user and the payer, you’d have a hard time coming up with one worse than the one we’ve got now.”
In a 2006 editorial in his hometown paper, the Monterey County Herald, Panetta emphasized the importance of a cost incentive to changing the country’s energy scenario.
“In the end, it may very well be the price itself, rather than any mandate from Washington, that may have the greatest impact on changing human behavior when it comes to energy,” he wrote. “It is only when the public begins to demand more gas efficient vehicles, and uses more mass transit, car pools and fuel alternatives that the market will respond.”
If Panetta decides to implement a similar strategy at the Pentagon by making commanders feel the cost of the energy they use, it could have a dramatic effect. The current system provides commanders little incentive to reduce energy use. Moreover, battlefield commanders have strong pull when it comes to purchasing new equipment, but right now they rarely place energy as a priority.
Although Panetta has made few public comments on defense energy issues, climate change has hit his radar. During his tenure as director of the CIA, the agency stood up a small unit to study the national security effects of climate change, such as how water scarcity, extreme weather events and access to natural resources can affect state stability and create conflict.
“Decision makers need information and analysis on the effects climate change can have on security. The CIA is well positioned to deliver that intelligence,” Panetta said in a CIA statement announcing the launch of the Center on Climate Change and National Security in September 2009.
The center has come under attack from conservative members of Congress (E&ENews PM, Feb. 16), and analysts see traces of Panetta’s personal support in the fact that the unit has survived.
“The fact that the center has been able to sustain its charter against this political chafe I would attribute in large part due to the high-level leadership with Panetta,” said Will Rogers, a research associate at the Center for New American Security’s natural security program. “To me, it shows that he is taking the long view, that there is a realization from his standpoint that the CIA needs to be involved on these untraditional issues that are increasingly defining our security environment.”
Similar work is under way at the Pentagon’s policy shop, which identified climate change as a “an accelerant of instability or conflict” in last year’s Quadrennial Defense Review, and elsewhere in the military and could get more attention under Panetta.
A passion for oceans
By far, Panetta’s clearest environmental interest is the oceans.
The grandson of a sardine fisherman, Panetta was a strong advocate for marine health in Congress, where he played a critical role in establishing the Monterey Bay National Marine Sanctuary, and through his work on nonprofit boards and as co-chairman of the Joint Oceans Commission Initiative, a blue-ribbon initiative aimed a reforming oceans policy.
“We’re all a sum total of our experiences, and his experience has always been conservation, the protection of the environment, especially when it comes to the oceans” said Ted Balestreri, a close friend of Panetta’s for more than two decades.
The military, particularly the Navy, plays a significant role in marine issues. The Navy is responsible for protecting sea lanes, it collects extensive environmental data, and its equipment, most notoriously sonar, can have an impact on ocean life.
Such issues are not apt to land on the secretary’s desk unbidden, but those who know Panetta from his oceans advocacy work hope his interest could help set the tone at DOD.
“The services have a lot more to offer this country than just war-fighting,” said Daniel Basta, who directs the National Oceanic and Atmospheric Administration’s Office of National Marine Sanctuaries. “I’m hopeful that we might see some of the joint projects we worked on with the Navy [during the Clinton administration] restarted.”
It is more likely that Panetta might get involved with international governance issues. As heads of the Joint Oceans Commission, Panetta and Adm. Watkins penned a New York Times editorial calling for the United States to ratify the United Nations treaty that sets a framework for claims on energy resources and for protection of the marine environment. The United States is the only industrialized nation not to have signed off on it, despite the wide support of industry and defense leaders, largely because of opposition from conservative Republicans who worry it could limit U.S. sovereignty.
Now, as rising temperatures open new Arctic sea routes and make underwater oil, gas and mineral resources available, Watkins said Panetta may use his leverage to again push for ratification.
While a call from the secretary of Defense could bring new attention to the issue, Watkins said Panetta’s relationships with important figures on both sides of the aisle could be the critical element.
“He will have a very powerful voice with key members, heads of various committees, the ranking members, and so forth,” Watkins said.