Fleet Energy Training Forum Vision, Strategy and Guidance Mr. Joseph W Fleet Energy Training Forum Vision, Strategy and Guidance Mr. Joseph W. Murphy, SES U.S. Fleet Forces Command SLIDE 1: Title Slide Welcome – thanks for taking time out of your hectic schedules, etc. CNO’s wholeness concept / three tenets: Warfighting First, Operate Forward, and Be Ready – hope they’re familiar to all Energy efficiency supports the CNO’s tenets and enhances combat capability The point of this Forum is to increase Fleet awareness of the pressing requirement to reduce energy consumption As you’ve read, times are tight and we can’t afford to waste energy – no room in our budget to pay for ‘extras’ We can’t afford to make ourselves operationally vulnerable because of excessive energy consumption A smart energy mindset is critical for giving our Sailors and Marines that extra edge In short, there are plenty of reasons for us to be better energy stewards 06 November 2014

Energy Readiness Kill Chain MEANS Personnel Equipment Training and Tools Policy / Lessons Learned Community / Industry Installations Elected Officials WAYS ENDS Assess ENERGY POLICY AND TARGETS NEW ENERGY SYSTEMS AND TECHNOLOGIES ENERGY BEHAVIORAL /CULTURE CHANGE FRTP MAINT BASIC INTEGRATED DEPLOY & SUSTAIN SURFACE AVIATION DELIVER Energy Conservation Guidance, Systems, Training, Ship Visits and Oversight EMBRACE Energy-Efficient Habits and Practices EXECUTE Energy–Conscious Operations Weapon Systems SUBMARINES NECC SLIDE 2: Energy Readiness Kill Chain (RKC) USFF developed an all-hands approach to warfighting readiness – one that emphasizes energy conservation In short, we define readiness as delivering capability to Fleet Commanders What you see here is an end-to-end, iterative process for ensuring tight coordination across readiness stakeholders It incorporates ends, ways, and means Specifically, it identifies the resources that will be used (means), how will they be used (ways), and the desired strategic outcomes (ends) Defined correctly, the RKC encompasses the entire Navy Everyone is part of the RKC, and everyone must know and understand their place and role Look at readiness from an end-to-end perspective – policy making to mission execution Policy is a part – the direction you receive, the targets you strive for New systems and advancing technologies – we upgrade our platforms and systems as technologies mature Examining how we do business – we try to figure out how we can meet our tasking while using less fuel We apply our entire conservation arsenal across the FRTP as an integral way of doing business, not as an “add-on” We have to expand our scope…how we view the readiness production – an all-hands evolution – from the policy maker to the deck plate (wholeness) To accelerate culture change – Started waterfront training with CNSL We have to broaden our aperture to ensure that policies, resources and products continue to deliver the right capability to the Numbered Fleet Commanders Look around the room…you’ll see participants from every spectrum of the Navy team Today, you’ll hear their perspectives MSC SECNAV & OPNAV PROVIDE POLICY, TECHNOLOGY, AND RESOURCES USFF TRAINS, CERTIFIES AND EQUIPS COMBAT-READY FORCES TYCOMS LEAD THE ENERGY CULTURE CHANGE SYSCOMS SUPPORT THE TYCOMS UNITS MAKE THE DIFFERENCE RKC IS A TEAM SPORT: SAVE ENERGY UNLESS YOU CAN’T!

Navy Energy Challenge SLIDE 3: Navy Energy Challenge Overall Energy Consumption Overall Energy Sources ~84% 57% Tactical Shore 13% ~16% 24% Energy Consumption Energy Consumption 1% 3% 3% Electricity, Natural Gas, Other Nuclear Electricity, Natural Gas, Other Petroleum Afloat Petroleum Ashore Renewables Tactical Shore Navy Petroleum Consumption in Perspective SLIDE 3: Navy Energy Challenge Let’s take a quick look at today’s energy status quo… DoD doesn’t consume enough petroleum to drive the market, but we are the government’s largest consumer Tactical operators make up ¾ of DoD’s fuel consumption Navy is the second-largest fuel user in DoD – smaller than Air Force, but bigger than Army U.S. Petroleum Consumption 1% Expeditionary 4% Shore 43% Aviation Department of Defense (93% of Gov’t) U.S. Gov’t (2% of U.S.) 52% Maritime Navy (22% of DoD) Non-Domestic Sources 3

How We Got Here Conservation catalysts Conservation driver history Imported energy comes from unstable regions Energy price shocks have had impact Four fold increase over 10 years Conservation driver history Operational allowances masked excessive consumption If forces stayed within limits, excess consumption was not apparent USFF paid the waterfront’s inport utility bill Fleet utility account took 5% reductions in 2012, 2013 (and beyond) SLIDE 4: How We Got Here We’ve relied on foreign oil…the bottom line is that we’ve been consuming more than we produce The price of petroleum has increased four-fold in the last ten years (select hyperlink) Neither DoN nor DoD can affect the price of oil through changes in consumption We’re at the mercy of the market – both in terms of supply and price fluctuations Last year, the Navy faced over 500 million dollars in additional fuel costs because of price spikes The Navy must transfer funds from one of two accounts: operations, which means we will fly less, steam less and train less; or procurement Horizontal drilling and fracking may reduce our reliance on foreign oil, but won’t reduce the operational vulnerabilities associated with unabated fuel consumption at sea

ENERGY SECURITY … MORE CAPABLE FORCES … INCREASED RELIABILITY US Navy Energy Goals TARGETS GOALS MISSION Aligned with SECNAV and CNO USFF GUIDANCE Culture / Behavioral Change Instill a Fleet energy culture / Provide Training and tools for TYCOMS to lead their Force and achieve energy goals SECNAV TARGETS CNO TARGETS SLIDE 6: US Navy Energy Goals From SECNAV targets, CNO established his goals Strategy is about improving combat capability and energy security. USFF provided guidance USFF approached the goals and targets through a holistic lens and realized that we had to instill a Fleet energy conservation culture ENERGY SECURITY … MORE CAPABLE FORCES … INCREASED RELIABILITY

CUSFF Vision and Strategy TARGETS GOALS MISSION Aligned with SECNAV and CNO USFF GUIDANCE Culture / Behavioral Change Instill a Fleet energy culture / Provide Training and tools for TYCOMS to lead their Force and achieve energy goals FLEET VISION Use the least amount of energy required thereby: Increasing operational range / time on station Reducing logistical vulnerabilities Conserving resources for other priorities FLEET STRATEGY Provide vision and guidance Provide tools, resources and incentives Measure progress / provide feedback Recognize good behavior Identify and correct over-consumption SLIDE 7: CUSFF Vision and Strategy With that in mind, USFF is here with the TYPE COMMANDERS to lead energy culture change Our goal remains to ensure warfighting readiness Energy efficiency is a key component Our path to culture change is: Centralized program execution at the TYCOM leadership level Focused training programs centered on energy conservation measures Monitoring of inport energy consumption at the unit level

Reaching the Goal Constrained by: SLIDE 8: Reaching the Goal CNO Goal – 15% Reduction Goal by 2020 Gap (~7%) Behavior (~5%) Technology (~3%) Fuel Savings toward CNO 15% Consumption Reduction Goal Baseline Projected FY20 (Fleet Fuel Consumption) 11.5M BBLS 2012 2013 2014 2015 2016 2017 2018 2019 2020 How do we bridge the gap? BBLS Constrained by: Financial resources Current budget environment limits how fast technology solutions can be implemented Culture Balancing energy conservation measures with operational missions and risk management SLIDE 8: Reaching the Goal The CNO goal (to achieve a 15% reduction) is manageable, but there are financial and cultural constraints Financial resources are limited – technology will not solve the problem entirely Projection of current behavior and technology investment demonstrate that we still have a 7% gap Have to close that gap through culture change Collective, cognizant effort required by all, and at all levels A Green Fleet will institute compulsory procedures that will yield significant savings No longer “Save energy when you can;” now “Save energy unless you can’t”

Establishing the New Normal… “Save energy unless you can’t” Commander’s Guidance Foster energy conservation through Culture Change Equip TYCOMs for success Culture of Energy Efficiency Accountability E Ownership USFF provide enabling training resources SYSCOMs install enabling conservation technology TYCOMS/SYSCOMS establish class goals & standards USFF establish appropriate management oversight TYCOMS measure consumption and assess compliance Ownership at the deckplate guarantees success USFF assesses energy conservation progress Process SLIDE 9: Establishing the New Normal – Commander’s Guidance We're putting in place systems and processes that will allow us to meet SECNAV goals As a result, TYCOMs will continue to use metrics, establish baselines, identify best practices, and take corrective action We're committed to achieving and sustaining reductions in energy consumption through culture change Providing tools, technologies, and incentives that will enable and encourage our crews to ratchet up their conservation efforts In SECNAV's words, we're making energy stewardship the "new normal" Recognize the good; correct the bad The New Normal “Save energy unless you can’t”

SLIDE 10: USFF LOGO A smart energy mindset is critical for giving our Sailors and Marines that extra edge. By changing the way we think about and use energy, we will continue to be the best That concludes the Fleet presentation Stay tuned, TYCOMS are next Make the most of this Forum. Your program contains a weblink where you may access the Forum briefs. An option to provide input/feedback will also be available After lunch – breakout training Opportunity to voice concerns, ideas and discuss the future – whether it involves technologies or better, smarter operational practices SYSCOMS are here and will pair up with respective TYCOM to facilitate small group sessions

Historical Fuel Rates, FY04-FY13 Combined USFF-CPF FUEL PRICE ($/BBL) FLEET FUEL BILL ($M) FLEET FUEL CONSUMPTION (x100K BBLs) FLEET FUEL BILL ($M) FLEET FUEL CONSUMPTION (x100K BBLs) FUEL PRICE ($/BBL)

Why Conservation Matters “Warfighting First … Operate Forward … Be Ready” – CNO Tenets Navy resources are declining…no relief in sight Efficiency makes sense More time on task, less time spent refueling Less shuttling of Fleet Oilers Less reliance on fuel stocks from unstable regions SECNAV's 2009 Energy Goals changed the playing field Energy no longer free Energy vulnerabilities are real Energy conservation must be integrated throughout the kill chain Ship Utilities Flight Hours Underway Days 2003 2014 2003 2014 2003 2014 Culture Change SLIDE 5: Why Conservation Matters Graphs indicate a direct correlation – as utility budget goes down, so do flight hours and underway days (direct impact on readiness) This impact on readiness is why being more energy-efficient is so important It’s why SECNAV established Energy Targets In short, it does matter More time fighting the fight, less time worrying about refueling logistics, more lives saved, less reliance on others – the list goes on Because this is so critical, we have to instill an energy conservation mindset – in all parts of the Fleet, and in all Fleet Sailors

Achieving Energy Culture Change Culture of Energy Efficiency Training & Management Tools Quantitative Metrics Analysis and Assessment E Enhanced inport energy stewardship via TYCOM ownership, accountability, and unit behavior changes Inspect energy programs to ensure compliance Revised EPEC Award to reflect inport energy consumption Recognize the good; correct the bad Institutionalized, routine process to: Develop ship class averages/baselines Identify over- and under-consumers Collect lessons and best practices Automated Metering Infrastructure (AMI) installation Accurate, unit-level consumption reporting Utility bills for TYCOMS and units TYCOM Inport Energy Handbooks (Best practices) NAVSEA iEnCon Guide Inport Energy Lesson Plans TYCOM management of utilities EPEC Award (Energy Battle “E”) 2011/2012 Nearing completion Autumn 2013 2014 & beyond

Fuel Prices $152 in FY14 $34 in FY03 Impact … For every dollar increase in the price of a barrel of oil, the Navy must spend $31 million annually of UNBUDGETED funding