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Carbon Offset and Value Opportunities for Airports 21 2.1.5 Energy Efficiency Key Takeaways for Airports · Improved energy efficiency is generally a low cost method for lowering an airport's carbon footprint; however, limited opportunities exist for monetizing offset credits. For most airports, reducing energy use or increasing energy efficiency onsite will be the low- est cost option for reducing their carbon footprint. Energy efficiency measures can include: switching fuels for boilers, heaters, and other fuel-burning equipment to fuels with lower GHG emissions; replacing older inefficient appliances with newer equipment that operate more effi- ciently; and improving insulation of terminals and other structures. At the international level, there has been some acceptance of energy efficiency measures as viable offset projects, allowing the sponsors of these projects to earn revenue from sale of offset credits. Projects that have suc- cessfully implemented energy efficiency measures and sold the associated offset credits have most often taken place in developing countries. However, there have been some examples of offset projects for energy efficiency in developed nations. In the United States there is currently a limited market for energy efficiency offset credits. The majority of the major offset standards bodies do not recognize energy efficiency projects as an eligible offset project type. Project sponsors registering a project under an offset standards body that does recognize energy efficiency as a project category will likely find limited demand for the credits in the marketplace. Part of the lack of demand for energy efficiency offset credits is the expectation that these types of activities will not be recognized in future compliance mar- kets. The major federal legislative proposals establishing a cap-and-trade have not recognized energy efficiency as an eligible project type. The same is true in California's emerging cap-and- trade program, expected to be the largest demand driver for compliance offset credits in the United States in the near future. In the Regional Greenhouse Gas Initiative's (RGGI) forming doc- ument, energy efficiency offset projects are contemplated; however, at this time there exists essen- tially no demand for offset credits in RGGI. An explanation of the RGGI program is included in Chapter 3. Case Study 2 examines various projects that the Austin Bergstrom Airport has undertaken as part of a City Council resolution to reduce the city's carbon footprint. The case study examines both actual projects that the airport has invested in and the applicability of hosting an organic waste composting offset project. Additionally, the case study reviews the potential revenue opportunities from selling the credits associated with the various project types. Case Study 2: Austin Bergstrom International Airport, Austin, Texas The City of Austin's Department of Aviation (DoA) owns and operates Austin Bergstrom International Airport (ABIA), a medium-hub airport serving the Austin metropolis in central Texas. Having opened for passenger service in May 1999, ABIA is one of the newest airports in the United States and is a relatively energy-efficient, modern facility. (continued on next page)
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22 The Carbon Market: A Primer for Airports Case Study 2: (Continued). Despite the absence of federal and state regulation governing carbon, the City of Austin has taken positive steps to initiate programs to tackle climate change. In February 2007, the City Council passed a resolution that directed its depart- ments to begin taking action in a variety of areas. The four main components of Resolution No. 2007215-023 include: (1) a carbon neutrality goal for all city facil- ities by 2020, (2) increased conservation efforts, (3) new energy efficiency initiatives, and (4) renewable energy programs. To implement carbon reduction initiatives, the DoA has capitalized on funding available from Austin Energy, the local util- ity provider. While the DoA has undertaken a number of projects that reduce carbon emissions over the past ten years--specifically energy efficiency improvements and the instal- lation of solar panels to reduce electricity demand--they have not yet pursued rev- enue opportunities associated with selling energy and environmental commodities such as voluntary carbon offset credits, solar renewable energy credits (RECs), and energy efficiency credits. From the DoA's perspective, the monetary value of selling away their claim to "going green" must be compared with the goal of reducing the ABIA carbon footprint. The following sections estimate potential DOA revenues resulting from (1) eligible carbon offset projects, (2) REC generation, and (3) energy efficiency improvements. Carbon Offset Credits--Offset credits can be generated by composting organic waste that is normally sent to the landfill. Such waste is produced at airports by concession- aires (food scraps) and grounds maintenance operations (yard trimmings). Assuming that 1.25 tonnes of mixed organics are generated daily at ABIA, the DoA could reduce carbon output by an estimated 233 tonnes (EPA--Climate Change Waste n.d.) per year if organic waste was composted instead of sent to the landfill. The average price of a voluntary carbon offset credit in the United States, as measured by the transac- tions from projects registered in the Climate Action Reserve, is between $3 per tonne of CO2e and $10 per tonne of CO2e. Offset credits that are expected to be eligible in California's cap-and-trade program, scheduled to begin in 2013, are trading at the higher end of that spread while other offset credits are trading closer to $3 per tonne. Organic waste offset projects are not currently one of the accepted methodologies in California's proposed cap-and-trade. With these expectations, the DoA could earn up to $699 annually from the sale of voluntary carbon offset credits from composting mixed organics instead of sending the organics to a landfill. Renewable Energy Credits--By the end of 2011, the City will have three solar ar- rays in operation at ABIA. The arrays of 40 kW, 80 kW, and 115 kW output will all be owned by the community-owned electric utility company Austin Energy. The 40 kW and 80 kW solar arrays were funded through Austin Energy's "Solar Explorer Program" launched in 1997. The newest array, 115 kW in size, is part of a $4.2 mil- lion dollar Leadership in Energy and Environmental Design (LEED) certification proj- ect for the ground transportation service area at ABIA. Mounting and electrical connecting fees of $500,000 were covered by the DoA. The DoA pursued all three photovoltaic projects for public relations reasons and did not seek to maintain the SRECs (SRECs are a class of RECs produced using solar energy) or enter into a Power Purchase Agreement (PPA) with Austin Energy to secure reduced energy rates.