$8 Billion In Fuel

Volatile prices for oil can hit budgets. At the Navy, which spends about $4 billion a year on fuels, the energy bill rises $31 million for every $1 gain in the price of a barrel of oil, Mabus said. The Air Force has twice the budget.

"When you've got a bill of $8 billion, you're going to look for opportunities to diversify your options," said Geiss.

The Army aims to approve biofuels for its aircraft and ground vehicles, including Humvees, Abrams battle tanks and Apache helicopters by the end of 2013, a spokesman, Dave Foster, said in an e-mail.

The Air Force certified biofuels for use in F-15s, F-16s and C-17 cargo planes and they're set for approval for the whole fleet by 2013, said Jeff Braun, director of the Alternative Fuels Certification Office. The force has a 2016 deadline for being able to get half its needs from 50/50 alternative fuel blends, equivalent to 400 million gallons of biofuels or other combustibles, such as synthetic liquid fuels from coal and gas.

Boeing, Lockheed Martin

"We can use an almost unlimited number of feedstocks to produce these fuels," said Braun. "From a performance stand- point you can't tell the difference whether you're burning a camelina blend, a tallow blend, or another fuel that's made up of a bunch of waste greases -- fry grease or seasoning grease."

The Air Force has worked with aircraft makers Boeing Co. and Lockheed Martin Corp. and engine-makers Rolls Royce Holdings Plc, General Electric Co. and United Technologies Corp.'s Pratt & Whitney in testing the biofuels, said Braun. The fuels used were made by Honeywell's UOP, Sustainable Oils Inc. and Dynamic Fuels LLC, a venture by Springdale, Arkansas-based Tyson Foods Inc. and Syntroleum Corp. of Tulsa, Oklahoma.

The results of the military tests have been shared with commercial airlines, many of which have carried out their own trials -- starting with Air New Zealand Ltd. in December 2008, and Continental Airlines -- now part of United Continental Holdings Inc. -- and Japan Airlines Co. the following month, according to Honeywell.

Lufthansa Precedent

The data from military and commercial airlines helped ASTM International, formerly the American Society for Testing & Materials, in July approve the fuels for use in commercial planes, paving the way for Germany's Deutsche Lufthansa AG, Europe's second-largest airline, to become the first carrier in the world to offer regular scheduled flights running on biofuel.

"Lufthansa wouldn't be flying today if we had not done our work to enable development of that ASTM standard," Geiss said.

The next hurdle is for the fuels to be produced commercially at prices the military would accept.