Wired reports that the F/A-18, dubbed the green hornet in 2010, will receive a new shipment of biofuel.

Two companies will split the Navy order. Dynamic Fuels, half-owned by agribusiness giant Tyson Foods, converts fats and waste greases into biofuels. Solazyme uses algae as a means of fermenting everything from plant matter to municipal waste into fuel. Both are considered leaders in the next-gen biofuel industry — Dynamic is one of the first companies in the field to have a commercial-scale refinery up-and-running. Solazyme has already delivered 150,000 gallons of its fuels to the Navy.

Substantial hurdles remain, however. The Navy paid about $1,000 for each barrel of biofuel it bought to test out in its jets. This new purchase will cost just as much: $26 per gallon, or $1,092 per barrel. (In contrast, old-school jet fuel is currently trading at $126 per barrel.)

$1000/barrel? That’s a lot of green (pun intended). The Navy claims the price is now half as much as the same fuel cost them in 2009. Perhaps it is a true bargain when compared to other Pentagon initiatives of the past like the $435 hammer.

The hammer contract has been investigated by Congress, discussed during the 1984 presidential debates, and used as Exhibit A by politicians, journalists, and businessmen in their recent calls for military reform.

But here’s the rub: the DOD didn’t pay $435 for a hammer. It’s a good bet we paid too much for it (for reasons related in part to something called the equal allocation method and in part to larger problems in defense procurement). But the Pentagon didn’t pay nearly $428 too much.

Aside from the accounting oddities in the story, it is no secret that innovation brings with it a higher cost than just production. It is the same argument used by the oil industry to ask for help subsidizing their exploration. And of course if you factor in the cost of overseas American military operations to protect petroleum into the current price of petroleum (e.g. defending foreign soil) then “old-school jet fuel” might not seem so inexpensive.

The bottom line is that domestic and localized production of fuel for military vehicles is a far more secure model with a much lower total cost over time.

“The Navy has always led the nation in transforming the way we use energy, not because it is popular, but because it makes us better war fighters,” stated [U.S. Navy Secretary Ray] Mabus.

[…]

The biofuel will be mixed with aviation gas or marine diesel fuel for use in the Green Strike Group demonstration. It is a drop-in fuel, which means that no modifications to the engines are required to burn the fuel. Its cultivation did not interfere with food supply and burning the fuel does not increase the net carbon footprint. In preparation for this demonstration, the Navy recently completed testing of all aircraft, including F/A-18 and all six blue Angels and the V-22 Osprey, and has successfully tested the RCB-X (Riverine Command Boat), training patrol craft, Self Defense Test Ship, and conducted full-scale gas turbine engine testing.

Although the U.S. is still in the early phase of military testing and trials I suspect the results will filter into the civilian market in the next five to ten years. The new fleet of 120 mpg high-performance cars may therefore run on waste grease or algae thanks to gov/mil innovation and investment, as I presented at BSidesLV 2011.

Video from the Navy of what some now call the earth-friendlier killing machine: