By Suzanne Roig

HONOLULU (Reuters) - The Navy's "Great Green Fleet," a group of warships and fighter jets burning an expensive blend of biofuels and petroleum, is performing as planned, Defense Department officials said on Thursday, as the Senate prepared for a fight over the program's cost.

Dozens of F/A-18 Super Hornets and other aircraft powered by conventional jet fuel mixed with recycled cooking grease and algae oil screamed off the flight deck of the aircraft carrier USS Nimitz on Wednesday during international military exercises in the central Pacific.

Two destroyers and a guided-missile cruiser plied the ocean using a similar fuel mixture. The fuel demonstration started on Wednesday and continued on Thursday.

Congressional critics, led by Republican Senator John McCain, have argued biofuel is far too expensive for the military to help develop when defense budgets face massive cuts.

But Navy Secretary Ray Mabus said the demonstration proved that the green-fuels blend, while about four times more costly per gallon than conventional fuels, was safe and effective in combat situations.

"Those aircraft are flying the way they always do. The ships steamed the way they always do. There was no difference with the fuel," he told sailors and reporters assembled in an aircraft hangar aboard the Nimitz, the carrier group's flagship. The Nimitz itself runs on nuclear power.

While some have criticized the demonstration as unnecessary and the $12 million cost of the fuel as excessive, Mabus told reporters on Thursday that the event, which was witnessed by airline and air industry leaders, was worth it.

"Absolutely it was worthwhile to show that biofuels can compete and can be used in every single thing that we do in the Navy," he said. "Everything before now has been a test. This shows that we can use biofuels and other alternative energies in an operational manner."

The so-called Great Green Fleet is a key element of a Pentagon initiative to use the buying power of the U.S. military - the world's largest single oil consumer - to help foster a competitive biofuels industry.

Agriculture Secretary Tom Vilsack, whose department along with the Energy Department is helping fund some of the project, said on Thursday the next step is developing an industry that can produce it at an affordable cost.

Vilsack said the agencies were working with private industry on pilot projects "so that we can demonstrate not only that it works in planes and ships but that we can produce it at an affordable cost."

ULTIMATELY LOWER COSTS

Mabus and other supporters of the program say curbing the military's reliance on fossil fuels and making alternative energy more commercially viable would ultimately lower costs while bolstering national security.

But critics have painted the green fuels initiative as a waste of funds while the federal budget is severely strained and energy companies are finding large quantities of oil and natural gas in the United States.

Congressional Republicans have denounced the military's green energy push as another attempt by the Obama administration to promote alternative fuels even when they make little economic sense, as in the case of the government-funded solar panel maker Solyndra, which went bankrupt last year.

The Senate is girding for a battle over legislation backed primarily by Republicans to bar further military spending on biofuels that are more expensive than petroleum products. Continued...