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10 The Carbon Market: A Primer for Airports sponsors face is the identification and prioritization of projects that should be accelerated based on their energy and GHG benefits. To this point, many airport sponsors that have tackled GHG emissions have been rewarded with reduced operating costs through avoided energy consump- tion. Very few airport sponsors have capitalized further by seeking potential revenue streams from facilitating offset projects at airport facilities. There are multiple reasons for this, including the following: Many of the activities and investments that airports engage in that reduce carbon emissions, such as improving energy efficiency, are not typically the type for which salable offset credits will be created. Carbon markets in the United States have been slow to develop, and identifying projects that would provide additional revenue can be challenging. Airport revenues are regulated, and this could potentially limit some opportunities for offset credit monetization. Specifically, airport sponsors are required to use airport revenue only for "the capital and operating costs of the airport, the local airport system, or other local facilities owned or operated by the airport sponsor and which are directly and substantially related to the air transportation of passengers or property." This is something that would need further interpretation by the FAA on a case-by-case basis. Airport safety issues and regulations can impact applicability of certain carbon reduction proj- ects at or near airport properties. Finally, because these markets are new, evolving, and complex, there is a lack of awareness of the market potential by airport sponsors. To date there have been limited examples of airports hosting projects that have been credited with tradable offset credits. However, there are examples of airport projects which could be eli- gible to earn other forms of environmental credits--like renewable energy certificates (RECs) from renewable energy projects and airport emission reduction credits. These instruments will be explained later in the Primer. Table 3 is a review of some past airport projects and the type of environmental instrument likely to be associated with that project. 1.4 Airport Constraints as Related to Carbon Credits and Other Revenue Opportunities Key Takeaways for Airports Restrictions on the use of airport revenue, including federal law and grant assur- ances, must be considered when assessing the feasibility of a carbon project. Land use restrictions at airports have the potential to impact the viability of cer- tain offset projects that may encumber air or land space. This Primer will address a variety of project types that could potentially be implemented at air- ports in order to generate offset credits or other tradable environmental credits. Airports are unique entities with certain constraints on how capital can be spent in order to pursue revenue opportunities. These constraints should be considered at the outset by airports when consider- ing a potential carbon, renewable, or other project type. At the federal level, the use of airport revenue is regulated by federal statutes and policies, including AIP grant assurances. Both federal law and the grant assurances strictly prohibit the use

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Introduction and Background 11 Table 3. Examples of projects at airports and associated environmental market instrument. Applicable Project Airport Project Description Project Outcome Environmental Type Instrument Portland Geothermal HVAC system (120 wells) REC production, carbon RECs International for new terminal; low- reductions through Jetport, ME temp/low energy radiant renewable energy floor. generation and waste reduction; the system is expected to reduce oil used for the new terminal by 90%--nearly 102,000 gallons a year (Turkel 2010). Albuquerque Solar Solar PV project (600 kW Solar REC production, Solar RECs International system). savings of over $65,000 Sunport, NM per year; eliminated CO2 emissions equivalent to 14,547 gallons of gasoline consumption each year (Whitson n.d.). General Wind 100,000 kW produced REC production, turbines RECs Edward annually by 20 small urban will generate over Lawrence turbines; partnered with 100,000 kilowatt Logan AeroVironment. hours of annual International electricity, reducing Airport, MA carbon emissions by 97,500 pounds (Energy Groom n.d.). Los Angeles Organic Electricity is generated from REC generation, carbon RECs, possibly International Waste methane gas, which is reductions through offset credits Airport, CA Composting produced from 8,000 renewable energy tonnes of food waste per generation and clean year. waste removal. Philadelphia Electric Electric baggage tractors AERC generation, avoids AERCs International Ground and electric belt loaders over 500 tons of ozone Airport Service replace their traditionally precursor over the life of Equipment fueled counterparts. the project. Gerald R. Gate Power/ Preconditioned air and AERC generation, avoids AERCs Ford PCA ground power converter over 100 tons of ozone International units avoid the use of APUs precursor over the life of Airport at the gate. the project. of airport revenue for non-airport and non-revenue producing projects by all public and private airport sponsors that have received federal assistance. Specifically, airport sponsors are required to use airport revenue only for "the capital and operating costs of the airport, the local airport system, or other local facilities owned or operated by the airport sponsor and which are directly and substantially related to the air transportation of passengers or property." This discussion of airport constraints is, consistent with the purpose of the Primer, focused on revenue opportunities related to carbon credits. Accordingly, initiatives that are purely cost- additive to airport sponsors--including the purchase of green power, RECs, and offset credits-- are not discussed. Such purchases are, however, an area of interest to be explored in ACRP Project 11-01 (Topic 03-05), "Analyses of State and Federal Regulations that May Impede State Initiatives to Reduce an Airport's Carbon Footprint." There are reported examples of such pur- chases at Los Angeles (DOE n.d.b), Dallas/Fort Worth (Green Power Partner 2010), and Portland (EPA & DOE 2010) international airports.