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OCR for page 49
Renewable Energy and Associated Markets 49 not currently include GHGs). The emission savings, represented by the AERCs, can later be applied to a conformity evaluation or determination for future projects or air service additions that increase an airport's overall emissions. 5.3.1 VALE Program Description In 2003, the Vision 100--Century of Aviation Reauthorization Act (Public Law 108-176), estab- lished the VALE program to encourage airports to voluntarily reduce emissions from aircraft, ve- hicles, ground support equipment (GSE), and infrastructure at commercial service airports in areas designated as nonattainment and/or maintenance by the EPA's National Ambient Air Qual- ity Standards (NAAQS) (Public Law n.d.). This FAA program is intended to reduce pollutants and precursors, improve local air quality, and accelerate the use of new and cleaner technology. Examples of previously funded projects include clean technology for boilers, vehicles, electric GSE, natural gas refueling stations, gate electrification, and alternative energy systems including geothermal and solar photovoltaics (PV). Program benefits include the following: Provides funding for clean airport technology, Removes regulatory barriers with emissions credits, Encourages use of domestic alternative fuels, Encourages early pollutant mitigation measures, Reduces airport and airline fuel and maintenance costs, Expedites the environmental review process for airport modernization, Establishes airport commitment to environmental stewardship, Useful for public relations, and Initiates dialog between airport and air quality agencies. The FAA funds VALE projects through the AIP. Airports can also use local funds through the use of Passenger Facility Charges (PFCs). AIP funding is 75% for medium-to-large hub airports and 95% for smaller commercial service airports. PFC funding can cover up to 100% of eligible costs. As part of the VALE program, the FAA has funded 40 low-emission projects at 22 airports, which represent a total investment of $83 million in federal grants and $25 million in local air- port matching funds. These projects have resulted in a reduction of 5,500 tons of ozone emis- sions, which represents the equivalent of removing 13,500 cars and trucks off the road every year for the next 10 years (FAA 2010a). 5.3.2 RECs and AERCs Key Takeaways for Airports Provided that an airport sponsor retains all AERCs, the sponsor of a VALE-funded renewable energy project may be able to earn revenue from the renewable attributes of the project by selling RECs. The VALE program is intended to reduce criteria pollutants and as a result also reduces GHGs. However, there is currently no structure in the VALE program to provide credits for GHGs. As GHG regulations progress, VALE could provide the framework for crediting airports with GHG AERCs or other similar instruments.

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50 The Carbon Market: A Primer for Airports New, on-site renewable energy sources funded by VALE create an opportunity to generate both RECs and AERCs for airports. Per VALE program rules, the airport operator is not allowed to sell the AERCs associated with that power generation; however, the airport operator can elect whether to retain or, provided that certain conditions are met, sell the RECs. The primary con- dition is that the REC sale does not include the sale of the AERCs. In other words, the REC must not include the criteria pollutant emission reductions, which are the basis of the AERCs for on-airport use. This requirement should be considered as airport operators plan how they will use the RECs and AERCs associated with renewable generation. Furthermore, as a means of ensur- ing proper use of airport revenues, FAA has previously required that sponsors of VALE-funded renewable energy projects commit--should the sponsor choose to sell the RECs associated with the project--that the sponsor would only receive discounts from the local utility provider rather than conduct a sale on the wider REC market (FAA 2010b). Another consideration is that the FAA rules on AERCs may even preclude the sale of RECs in some mandatory markets that define RECs to include "all environmental attributes."