It will spend at least $10 million over the next five years to fund research and development at Maui cane fields for crops capable of fueling Navy fighter jets and ships. The project also may provide farmers in other warm climates with a model for harvesting their biofuel crops.
Hawaii has become a key federal laboratory for biofuels because of its dependence on imported oil as well as its great weather for growing crops. Factor in the heavy military presence at places such as Pearl Harbor, and the islands become an ideal site for the government to test biofuel ideas on a commercial scale.
"Hawaii is kind of the perfect storm of opportunity," said Tom Hicks, the Navy's deputy assistant secretary for energy.
The Office of Naval Research is funding the five-year program at Hawaiian Commercial & Sugar, a company dating to the 1870s that now runs the last sugar plantation in the state.
HC&S' expansive 35,000 acre fields offer an opportunity to test how various crops perform.
The Navy aims to use biofuels for half of its fuel needs by 2020. To meet this goal, it's been pouring money into algae, sugar and other crops that could become alternatives to fossil fuels.
The federal government supports a variety of biofuel programs, but for the military such efforts have a special importance because of the tenuous relationship between the U.S. and some large oil-exporting nations."
We buy our fuel in the United States from some places that don't think too well of us," said Hicks. "That provides challenges to us, and I think we need to find more homegrown sources."
The Navy identified Hawaii as a priority location for biofuel production because it's home to the U.S. Pacific Fleet and about a dozen cruisers, destroyers and frigates that rely on petroleum.
The Navy's partner in the biofuels development, the U.S. Department of Agriculture, already knew Hawaii's sunlight, warm weather and rain - on average - allows farmers to grow more plants per acre than other parts of the U.S.
Their needs coincided nicely with those of Hawaiian Commercial & Sugar which has been seeking a new business model because sugar prices have been stagnant for 20 to 30 years even as costs have risen.
"Commodity sugar may not be viable anymore, but we want farming and agriculture in Hawaii to stay viable," said Chris Benjamin, HC&S general manager. "At this point, we think the best way to do that is through biofuels or energy more broadly."
Benjamin said the company is focused on new ways of converting sugars to oil. It will test which crops - sugarcane, sweet sorghum, jatropha or some other alternative - work best, and which technology is most efficient.
Benjamin said it would probably take the company at least five years before it produces biofuels on a commercial scale.
Jeff Mikulina, executive director of the Honolulu-based Blue Planet Foundation, a nonprofit group that promotes sustainable energy, said the Navy's effort would stimulate the market for biofuels.
That could help in a state that gets 90 percent of its energy from imported oil, and where energy costs are among the nation's highest. It complements Gov. Linda Lingle's plan to have the state use clean energy for 70 percent of its power needs by 2030. A significant potential problem looms, however.
HC&S is facing two legal challenges to its practice, dating back more than a century, of diverting water from east and central Maui streams to irrigate its fields in the arid plains. The complainants in both cases are primarily Native Hawaiian, and they argue the plantation is diverting so much water from their streams that they're unable to grow taro, the source of the Hawaiian food staple poi, and catch fish like their ancestors.
Alan Murakami, a lawyer for Native Hawaiians seeking to have water restored to streams in east Maui, said HC&S' research should be done on the premise that the company will return water to the disputed streams.
"If they simply assume that the water will be available, for whatever fuels, however thirsty they may be - including continuing the sugar plantation - that would be entirely inappropriate and unacceptable planning for the future of Maui," Murakami said.
Benjamin said water would be a critical issue for the company regardless of how the disputes are decided, in part because Maui rainfall levels have been dramatically below historical norms during the past decade. HC&S research will include biofuel crops that need less water, he said.
The U.S. Department of Agriculture is pushing for biofuel production in other states as well.
Different parts of the country will produce different crops, depending on factors such as soil and water availability, said Jeff Steiner, the national program leader for biomass production systems at the department's Agricultural Research Service.
The department estimates the robust growing season in a region stretching from Texas to North Carolina means the area could supply nearly 50 percent of the nation's advanced biofuel needs by 2022.
A region stretching from Nebraska and Iowa to Maryland could account for 43 percent.