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32 The Carbon Market: A Primer for Airports On September 23, 2008, the leaders of the member states and provinces (the Partners) released a design recommendation paper which was intended to serve as the framework for a cap-and- trade GHG reduction scheme. The points of regulation for the WCI-proposed cap-and-trade program are generally: (1) the point of combustion for electricity producers; (2) the point of combustion for industrial facili- ties that directly emit 25,000 tonnes CO2e or more per year; and (3) fossil fuel suppliers for emis- sions associated with the end-use of their sales (WCI n.d.). Implementation by each state and province of the WCI cap-and-trade program is dependent on that state or province passing leg- islation that adopts the scheme. Thus far, it appears as though only California (linking the cap-and-trade from AB 32), British Columbia, and Quebec have taken the necessary steps in order to be prepared to participate when the program begins in 2013, although it is possible that roadblocks still exist, even for these juris- dictions. New Mexico has passed rules to implement a state cap-and-trade program, should they fail to participate in WCI; however, a political battle is currently being waged that may derail any cap-and-trade participation in the near future. 3.2 Federal Approaches to Limiting GHGs Key Takeaways for Airports Legislation creating a federal compliance cap-and-trade program is unlikely in the near future--little legislative momentum exists at this time. Without legislation the voluntary market will be the primary market for airport offset credits. 3.2.1 Legislative Attempts Numerous attempts have been made in Congress to enact legislation that would place a bind- ing cap on total United States emissions; however, to date, no bill has successfully passed through both Houses of Congress. Further, very little momentum exists in Congress at this time to set limits on GHG emissions. In June 2009, the House of Representatives passed the American Clean Energy and Security Act of 2009 (ACES), marking the first time a comprehensive climate change bill passed either House of Congress. The economy-wide carbon cap-and-trade bill called for reduction of GHG emissions to 83% below 2005 levels by 2050 (Committee on Energy and Com- merce June 2009). Despite an unprecedented level of industry consensus on many core issues contained within the proposed legislation, the Senate was unable to garner enough support for a companion bill, leaving the future of carbon legislation in a state of relative flux. Under ACES, neither airports nor airlines would have been directly regulated, although both would have likely seen increases in the costs of fuel and electricity due to upstream regulation. 3.2.2 Regulatory Approaches In the absence of specific federal legislation regarding GHGs, the EPA has been exercising Clean Air Act (CAA) authority to regulate GHGs, consistent with the 2007 U.S. Supreme Court decision in Massachusetts v EPA (Massachusetts v EPA 2007). The Court ruled that the GHGs

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North American Compliance Carbon Markets 33 Key Takeaways for Airports The EPA currently has authority to regulate GHG emissions and is implementing a series of regulations to track and limit GHG emissions. Current regulations do not create any extra demand for offset credits. Depend- ing on how regulations evolve, offset credits could serve as a compliance option for regulated entities. Airports (with stationary sources emitting less than the 25,000 mtCO2e/yr) do not currently come under the purview of EPA GHG regulations and are not expected to in the near future. were considered to have the potential to impact the environmental and human health, which falls under the jurisdiction of the EPA to assess and regulate. This authority originates from existing provisions contained within the CAA, which was originally passed by Congress in 1970, with some significant amendments being added over the last 40 years. EPA has initiated a num- ber of regulations covering GHGs impacting both mobile and stationary sources under the CAA which are summarized in Table 7. Table 7. Summary of EPA GHG regulations. Rule Overview Airport Applicability Mandatory GHG - As of January 1, 2010, large emitters of - Large airports are required to Reporting Rule GHGs must inventory and report GHG report (i.e., Boston Logan emissions. Airport's emissions are greater - General threshold for reporting is than 25,000 mtCO2e/yr 25,000 mt CO2e/yr additive of all threshold and it is required to stationary sources. report). Motor Vehicle GHG - Effective January 1, 2011, vehicle - Rule directly regulates Standards manufacturers have emissions target for vehicle manufacturers, but light duty vehicles. could impact airport vehicle - Light duty vehicles include passenger purchases in the future (i.e., cars, light duty trucks and medium duty cost pass through). passenger vehicles. GHG Permitting for - New or modified sources of GHG - An airport would only be New and Modified emissions need to address GHG impacted by these rules if it Large Sources emissions in permitting. exceeded new or modified - New facility resulting in GHG emissions facility emissions, thresholds. of 100,000 tons CO2e per year. - Modification to an existing facility resulting in GHG emissions in excess of 75,000 tons CO2e per year. Source: EPA - Climate Change. Regulatory Initiatives. http://www.epa.gov/climatechange/emissions/ghgrulemaking.html (accessed April 21, 2011).