The world’s biggest economy, the United States, may be spurning the opportunity to develop coherent climate change and energy policies, but the world’s biggest individual consumer of energy, the US Department of Defence, is certainly not.

The world of climate change policies is full of unlikely contradictions. In Australia, a Labor/Green coalition pushes for a market-based system to reduce emissions while the small government Tories argue for increased government intervention. In the US, the government finds itself incapable of providing the market signals that could unleash the forces of innovation, so the task of driving innovation and providing the budgets to bridge the path to commercialisation has fallen to its largest subsidiary, the United States Armed Forces.

Ambitious renewable energy policies are usually criticised for being both costly and risky, but the US Army, Navy and Air Force have a counter-intuitive view: they have developed the most ambitious policies anywhere in the world because they want to cut their costs and increase their security. The US Navy plans to replace 50 per cent of its petroleum consumption with alternative fuels by 2015, and wants half its overall energy consumption to be sourced from alternatives by 2020. The US Air Force wants to wants to source 50 per cent of its jet fuel from alternative fuels by 2016, while the US Army wants to sources 25 per cent of its energy needs from renewable sources by 2025.

US Navy secretary Ray Mabus recently said its pro-active position shouldn’t be a surpise, having helped pioneer the switch from from sail to coal for powering its ships in the mid-19th century, then the switch from coal to oil, and later from oil to nuclear power. It recently launched the first hybrid electric ship, dubbed the Prius of the sea.

In an environment where so many dismiss renewables as being either too hard or too hard or too expensive, it is refreshing to hear the Navy’s ambition. “Every time there were naysayers, who said you’re trading one form of proven, available energy for another that is expensive and not well known, and you shouldn’t do it,” Mabus told a conference in New York last month. “Every single time, those naysayers have been proved absolutely wrong, and they’ll be proved wrong this time.”

These mandates have certainly grabbed the attention of the US armed forces' principal contractors, such as Lockheed Martin, which has devoted much of the resources of its 140,000 engineers and scientists on to the energy sector. “We’ve been pretty good at getting people into space, make airplanes that fly upside down and backwards, and making fast ships. Now we’re applying those resources to energy,” says Christopher Myer, Lockheed Martin’s vice president in international business and energy markets, who is in Melbourne attending Clean Energy Week.

Some of the ideas it is pursuing are highly experimental. It recently won a $US400 million contract to develop high altitude blimps that are powered by flexible solar panels and fuel cells. It has also been mandated by the US Navy to develop a power plant using ocean thermal energy conversion (OTEC), where cold water is piped from the ocean’s depths and the energy generated from the temperature differential with the warm surface water is harnessed to drive a conventional rankine cycle turbine. Some say such technology has the potential to provide one third of the world’s energy needs.

In any case, the Navy is keen to develop 24/7 energy sources. Hawaii currently relies on imported diesel for 96 per cent of its energy requirements, exporting more than $6 billion a year to fund those imports. Will OTEC be cheaper? “Not initially,” says Myers. “But over the long run, yes.”

The Navy’s huge bases at Guam and the Marshall Islands rely almost exclusively on burning oil. In Guam, it burns more than 10,600 barrels of oil a day, and wants 80MW of renewable energy installed within two years. On the Marshall Islands, it imports 30 per cent more oil, and pays nearly 40c/kWh for its energy needs – more than the cost of virtually any renewable source. Mabus said recently that every rise of $1 a barrel in the price of oil adds $30 million to its fuel bill. He says the single hybrid electric ship will save $250 million in fuel costs over the lifetime of the ship. The scale of its mandate is credited with a 50 per cent fall in the price of biofuels in 2010.

Lockheed Martin has also teamed up with several different wave and tidal companies to explore ocean energy sources, including for remote sensor buoys, and is investing heavily in alternative fuels, including algae and synthetics.

It is looking at the development of solar and fuel cell technologies for army bases, as well as generating energy from waste materials from those bases. It is a question of both energy security and personell security – most losses of life in the theatre of war occur along fuel supply lines. Lockheed also has contracts to develop woody biomass power plants, and others fueled by medical waste from army and veteran hospitals. And it is also investing heavily in concentrating solar thermal, applying its engineering expertise to look at how production processes can be improved to lower costs.

Interestingly, for Australian innovators and emerging renewable developers, Lockheed Martin is on the lookout for good ideas – particularly in the biodiesel sector, but also in other renewables – that could benefit from its contacts with the defence department, its massive balance sheet, and its expertise in project delivery. “Most innovative technologies struggle to get a product to market,” Myers says. “We can partner them and offer the product to the US government and others. We are a large company, we can close on projects, and we can give banks comfort.”

And if you doubt the Navy’s determination to wean itself off fossil fuels, consider this undertaking by Mabus: By next year, he wants to demonstrate a “Green Strike Group” composed of nuclear vessels and ships powered by biofuel. By 2016, he wants to sail the Strike Group as a “Great Green Fleet” composed uniquely of nuclear ships, surface combatants equipped with hybrid electric alternative power systems running on biofuel, and aircraft running on biofuel.

And Australian politicians fret over suggestions that they should mandate a marginal improvement in car fuel efficiency.