NEW YORK, June 10 /PRNewswire-USNewswire/ -- In a white paper titled "Producing and Using Biodiesel in Afghanistan," co-authors Wayne Arden and John Fox argue that the production and use of biodiesel in Afghanistan will increase the probability that U.S. efforts will succeed and that Afghanistan will become a productive and stable nation.
The paper's inspiration came from the commitment to deploy an additional 30,000 troops made by President Obama at West Point December 1, 2009, and a desire to help advance the eventual withdrawal of U.S. forces.
"When we heard President Obama's remarks, we asked the question 'what can we do to help?'" said Wayne Arden. "This paper offers our recommendations. The production and use of biodiesel in Afghanistan can achieve five benefits, any one of which advances U.S. efforts, but three are especially dramatic and urgently needed: a reduction in American casualties, a potent new approach to challenge and defeat the opium trade, and the possible creation of a new agriculture-based industry for Afghanistan. Importantly the military's use of biodiesel quickly pays for itself. Finally, the establishment of a commodities exchange for Afghanistan would complement the cultivation of biodiesel crops and support Afghanistan agriculture in general."
"During the last ten years biodiesel production technology has been widely deployed worldwide, and it has been commercially proven as an additive and replacement to petroleum-based diesel fuel," said John Fox. "As the feedstock for a refinery impacts the resulting biodiesel produced, we recommend safflower oil, which has properties that support efficient use in military equipment, is a robust vegetable oil, and is native to Afghanistan. The initial investment needed for a vertically integrated biodiesel refinery, $90 million, is a relatively small cost compared to other military expenditures in Afghanistan. The refinery can be fully operational in 13 months. I believe producing and using biodiesel in Afghanistan can reduce the U.S. military's expenditures, strengthen agricultural efforts in Afghanistan, and provide an economically viable sustainable industry for the Afghan people."
The paper explains that the cost of importing oil into Afghanistan is high yet the cost of proven biodiesel production technology is relatively low. By using biodiesel the military could lessen its dependence on petroleum and save money. At the same time Afghan farmers could be paid the same amount of money to grow a biodiesel crop as they are currently paid to grow poppy. Until now, these two problems – securing the military's fuel supply and combating the opium trade - have been considered independently of one another. There are five key benefits associated with producing and using biodiesel in Afghanistan.
- Reduce Casualties – A significant percentage of U.S. casualties stem from protecting fuel convoys. The construction of a single, medium-sized biodiesel plant would reduce casualties by four to five soldiers per year.
- Free Up Troops for Other Assignments – By reducing the number of fuel convoys needed, an estimated 120 soldiers each year can be freed up for more critical assignments.
- Save Money – Substitution of biodiesel produced locally in Afghanistan for importing expensive petroleum diesel has the potential to save millions or billions of dollars a year. Using $400 per gallon as the Fully Burdened Cost of Fuel (FBCF), a figure the DOD provided Congress in October 2009, the military would save $3.7 billion annually on fuel costs. But even if the FBCF is only $41 per gallon, the plant has a one-year payback. In the second year of operation the plant saves $90 million and fuel costs $33.50 per gallon.
- Challenge the Opium Trade – Reducing the influence of the opium trade is one of the most difficult challenges in Afghanistan. The biodiesel plant, allowing agricultural specialists to persuade farmers to switch from growing poppy to safflower, could reduce the cultivation of poppy up to 50%. This reduction would deny opium revenues to the Taliban, challenge criminal networks, and lower the incidence of corruption related to the drug trade.
- Create a New Industry for Afghanistan – If the first plant is successful in supplying biodiesel to the U.S. military, other plants may be built, further stimulating agriculture in Afghanistan and creating jobs. These plants may be focused on the domestic fuel market, countering the drain that importing petroleum has on Afghanistan's fragile economy. An export market is also possible since neighboring countries import large quantities of oil.
With the successful launch of biodiesel in Afghanistan, the authors also recommend a USAID study to consider the establishment of a commodities exchange to bring efficiencies to Afghan agricultural markets and to stimulate export business.
Arden and Fox's recommendations are gaining support from industry leaders.
Bill Holmberg, Chairman Biomass Coordinating Council, American Council on Renewable Energy (ACORE) – Lt. Col. USMC (Ret.)
"The production of biodiesel would strengthen on-going military campaigns to improve security and governance in the Kandahar region. Oil and poppy dependency are major obstacles inhibiting progress. The cultivation of oil seed crops, production of biodiesel fuel and use of the by-product meal as animal feed should be priorities in building 'sustainable new wealth industries' that Afghanistan so desperately needs. Provincial Reconstruction Teams and National Guard Agriculture Development Teams could be of major assistance in this effort. Arden and Fox's recommendations are factual and highly specific as to what crops to grow, how to build and operate a biodiesel plant in Afghanistan, which suppliers to engage, where the plant should be built, and how best to deploy the biodiesel for use in military equipment."
Gary Katz, Co-founder, President and Chief Executive Officer, International Securities Exchange:
"Vibrant, effectively regulated, financial markets are fundamental to the U.S. economic system and, over time, could similarly benefit Afghanistan. A commodities exchange could both support Afghanistan's critical agricultural sector and create a new financial industry for Afghanistan. I agree that USAID should fund a study to analyze the creation of an Afghanistan commodities exchange."
As noted in the paper, on December 8, 2009 Ambassador Eikenberry testified before Congress stating that U.S. strategy in Afghanistan rests on three pillars: improving security, improving Afghan governance, and accelerating economic development. Producing and using biodiesel in Afghanistan can strengthen all three pillars.
A full copy of the paper can be downloaded by visiting http://biodieselinafghanistan.org/.
About Wayne Arden
Wayne Arden's career has been spent mostly in the financial technology field. Most recently, he was V.P. of sales for NASDAQ OMX's Market Technology division in the Americas, focusing on exchanges, trading systems, and clearinghouses. In earlier positions at IBM and elsewhere, Arden focused on brokerage and compliance systems, software and systems engineering, marketing, and business strategy. Mr. Arden holds a BA from Dartmouth College and an MBA and MS from Columbia University. He served on an FIA (Futures Industry Association) committee for several years and has written about the financial crisis in Wall Street and Technology, November 2009. Since February 2009 he has been an independent consultant in clean technology and financial technology.
About John Fox
John Fox is formerly Chief Executive Officer of Innovation Fuels. He has been building businesses and products for the past fifteen years, nine years of which have been in the energy industry. In 2001, Mr. Fox started a renewable energy project development company, Homeland Energy Resources Development, Inc., initiating its biodiesel division in 2005. Both businesses were then merged into Innovation Fuels. Fox led Innovation Fuels to a profitable business with $15 million in annual revenues, and the company became one of the top three biodiesel refinery and distribution companies in the United States. Prior to founding Homeland Energy, Mr. Fox led the business development of a biogas technology company, completed the financing of an independent oil and gas company, and participated in product development at a Lucent Technologies company. Since 1991, Mr. Fox has served as General Partner at Renard Properties, a Mid-Atlantic real-estate development and management company. He holds a BA from Syracuse University and an MBA from Columbia Business School and is currently a member of the National Biodiesel Board, American Council on Renewable Energy, and the Dean's Advisory Council for Syracuse University's L.C. Smith College of Engineering.
SOURCE Wayne Arden