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Guidelines for Integrating Alternative Jet Fuel into the Airport Setting (2012)

Chapter: Appendices: Primer on Alternative Jet Fuels

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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Suggested Citation:"Appendices: Primer on Alternative Jet Fuels." National Academies of Sciences, Engineering, and Medicine. 2012. Guidelines for Integrating Alternative Jet Fuel into the Airport Setting. Washington, DC: The National Academies Press. doi: 10.17226/14634.
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Appendices: Primer on Alternative Jet Fuels

This primer on alternative jet fuels presents a review and synthesis of available relevant infor- mation on alternative jet fuels and their adoption for use in the airport setting. The objective is to create a concise and comprehensive guide on the key aspects of alternative fuels that will affect airport application, thus providing a helpful reference guide to the airport manager and other stake- holders along the supply chain of alternative fuels. Each major topic is contained in a separate appendix. This primer provides a more detailed discussion of many of the topics contained in Sections 1 through 5 of the handbook that, for space and readability reasons, were not included in the hand- book body. In order to make it a useful reference document and consistent with the handbook, this primer repeats some of the information in the handbook. 71 A P P E N D I X A Introduction

In considering alternative fuels for aviation use, an initial barrier that must be considered is that the fuel must meet the requirements for use in aircraft. The specifications for jet fuel in the United States and around the world are established by standard-setting organizations such as ASTM International (www.astm.org) and the United Kingdom’s Ministry of Defence Standard 91-91 (www.dstan.mod.uk). The FAA refers manufacturers and operators of aircraft to these standards in Aviation Circulars. The latest AC to refer to alternative jet fuels is 20-24C (FAA 2010a). Aviation equipment manufacturers have also adopted these organizations’ standards. ASTM standard D1655 defines the specifications for conventional fuels for commercial use, such as Jet A and Jet A1. ASTM has also issued standards for all jet fuels from nonpetroleum sources under ASTM D7566. Fuels complying with ASTM D7566 are approved for blends of up to 50% synthetic fuel processes, with the remaining 50% derived from approved Jet A1 fuels. There is no formal definition of or standard for drop-in alternative jet fuels. Nevertheless, an informal definition for a drop-in fuel is one that is fully interchangeable with those fuels com- plying with ASTM D1655. This interchangeability must be possible throughout the entire prod- uct life cycle—from refinery to aircraft. This includes the intermediary distribution steps: pipelines, tank farms, and fuel trucks. Annexes of ASTM D7566 enable the approval of individual process types. The initial ver- sion of ASTM D7566 provides criteria for the production, distribution, and use of aviation turbine engine fuel produced from coal, natural gas or biomass using the Fischer-Tropsch process (see Section D.1). However, the standard is structured to accommodate other future types of synthetic fuels produced from nonconventional feedstocks and processes as they are developed. These new fuel types can be added to ASTM D7566 in annexes after they are qual- ified. For example, hydrotreated renewable jet or HEFA (see Section D.2) is expected to be qualified for aviation use soon. Jet fuel made from coal using the Fischer-Tropsch process has been in daily use for scheduled air- line service in South Africa for more than 20 years. The South African energy and chemical com- pany Sasol has produced SPK and other chemicals from locally sourced coal using its proprietary version of the Fischer-Tropsch process. When blended up to 50% with conventional jet fuel, Sasol’s SPK was approved for use as commercial jet fuel under the U.K.’s DEFSTAN 91-91 in 1998. Since 1999, this jet fuel blend has been used successfully by commercial airlines in aircraft refueled at South African airports, and since then South African Airlines has experienced no fuel-related problems (Roets 2009), including air worthiness, safety, maintenance, or storage and handling in bulk stor- age facilities (Moses 2008). Indeed, in 2008, DEFSTAN 91-91 approved Sasol’s unblended synthetic jet fuel as Jet A-1 fuel, for commercial use in all types of turbine aircraft (Sasol 2011). Furthermore, there have been numerous examples of flight tests by commercial and mili- tary aircraft using alternative jet fuels made with different technologies and feedstocks. A summary of flight demonstrations in commercial aircraft is shown in Table 15. The flight 72 A P P E N D I X B Certification and Drop-In Capability of Alternative Jet Fuels

tests showed no significant difference in the performance of the alternative jet fuel compared to conventional jet fuel. Furthermore, researchers at the FAA, Department of Defense, and private institutions are pursuing three other processes for approval in 2013–2014. As of this writing, these processes are known as fermentation renewable jet (FRJ), catalytic renewable jet (CRJ), and pyrolysis renewable jet (PRJ) (see Section D.4). Certification and Drop-In Capability of Alternative Jet Fuels 73 Date Airline or Other Sponsor Aircraft EngineMaker Fuel Producer Feedstock Technology Source Feb 2008 Airbus A380 Rolls- Royce Shell Natural gas Fischer- Tropsch Airbus 2011 Dec 2008 Air New Zealand B747- 300 Rolls- Royce UOP Jatropha HEFA Warwick 2009 Jan 2009 Continental B737- 800 GE/CFMI UOP Jatropha, algae HEFA DOE 2009 Jan 2009 Japan Airlines B747- 300 Pratt & Whitney UOP Camelina, Jatropha, algae HEFA Mecham2008 Oct 2009 Qatar A340- 600 Rolls- Royce Shell Natural gas Fischer- Tropsch Qatar Airways 2011 Nov 2009 KLM B747- 400 GE UOP Camelina HEFA North Sea Group 2011 Apr 2010 United A319 IAE Rentech Natural gas Fischer- Tropsch Kuhn 2009 Nov 2010 TAM A320 CFMI UOP Jatropha HEFA Karp 2010 Apr 2011 InterJet (Mexico) A320 CFMI UOP Jatropha HEFA Gross 2011 June 2011 Honeywell G450 Rolls- Royce UOP Camelina HEFA Chatzis 2011 June 2011 Boeing B747-8 GE UOP Camelina HEFA Lane 2011 July 2011 Lufthansa A321 CFMI Neste Oil Palm oil, rapeseed, animal fats HEFA Reals 2011 July 2011 KLM B737- 800 CFMI Dynamic Fuels Used cooking oil HEFA KLM 2011 July 2011 Finnair A319 CFMI SkyNRG Used cooking oil HEFA Mroue 2011 Aug 2011 Aeromexico B777- 200 GE ASA Jatropha HEFA Aeromexico 2011 Sept 2011* Thomson Airways B757 Rolls- Royce SkyNRG Used cooking oil HEFA Thompson 2011 2012* PorterAirlines Bomb- ardier Q400 PWC UOP Camelina HEFA Bombardier 2010 2012* Azul Embraer GE Amyris Sugarcane FRJ Advanced Biofuels 2009 2013* Air China B747-400 Pratt & Whitney UOP Jatropha HEFA Stanway 2010 *Announced as of Aug 31, 2011 Table 15. Alternative jet fuel flight demonstrations in commercial aircraft.

The two primary sources of feedstock for alternative fuels are fossil fuels and bio-derived feed- stocks. Fossil fuel feedstocks include coal and natural gas. Bio-derived feedstocks include plant oils, animal fats, crop residues, woody biomass, municipal solid waste, and other organic mate- rial. Each has relative strengths and weaknesses for the production of alternative jet fuel. Biofuels derived from starch, sugar, animal fats or vegetable oils are generally considered first-generation biofuels. Biodiesel, ethanol, and biogas are commonly recognized as first-generation biofuels that use established technologies. Fuels produced from biomass are referred to as second-generation biofuels and are considered to be more sustainable in the long term with a potentially smaller car- bon footprint. Second-generation biofuels are not produced commercially at this time because numerous technical challenges remain (Naik et al. 2010). The following is a discussion of each potential alternative jet fuel feedstock and the most important considerations for each. C.1 Fossil Fuels Coal and natural gas can be used to make alternative jet fuel with the FT process (see Sec- tion D.1) and are ideal feedstock for FT processes for a variety of reasons. Large FT plants are the most economical, and require ample supplies of feedstock to run at optimal capacity. Because of availability, established and cost effective transportation systems, and developed markets, coal and natural gas can support production at commercial scales. C.1.1 Sources and Availability Ample supplies of coal and natural gas at low per-unit costs support large rates of extraction for sustained periods of time. Costs and methods for coal and natural gas exploration and extrac- tion are well known, and large untapped deposits of both coal and natural gas exist in the United States and elsewhere. C.1.2 Economics and Logistics Coal and natural gas have well-developed markets, supply chains, pricing mechanisms, and risk management tools. From a transportation and logistical perspective, the required rail and pipeline infrastructure in the United States is well developed and is more cost effective than truck transportation. Coal is typically transported by rail, and natural gas is normally shipped by pipeline (EIA 2010). To take advantage of these cost-effective transportation modes, however, an alternative fuel processing facility would need to be located in proximity to existing infra- structure. Construction of new rail lines or pipelines is very expensive and time consuming and would likely compromise the viability of any alternative fuel project. For information of where 74 A P P E N D I X C Feedstocks for Producing Alternative Jet Fuels

existing rail and pipeline infrastructure is located, project developers can consult the National Atlas of the United States (http://www.nationalatlas.gov/natlas/Natlasstart.asp) and the U.S. Department of Transportation’s National Pipeline Mapping System (http://www.npms.phmsa.dot.gov/), respectively. Transportation costs for coal and natural gas have been decreasing over the last few decades. The average utility contract cost of coal transportation has decreased sharply from $17/ton in 1980 to about $12/ton in 2005, although the share of transportation as a percentage of delivered price has increased from about 22% to 35% in the same period (Bowen and Irwin 2007). In the case of natural gas, transportation and distribution costs constitute about half of the cost of the product for residential consumers, even as the price of the commodity has fluctuated over time (Natural Gas Supply Association 2010). The average duration of utility coal contracts is sig- nificantly longer than for agricultural commodities, although there has been a decrease from 22 years in the late 1970s to about 14 years in the late 1990s (Bowen and Irwin 2007). Similar to coal, the average contract length for natural gas has decreased from 20 to 25 years to about 8 to 15 years (Neumann and von Hirschhausen 2005). Most agricultural commodities are contracted on an annual basis (MacDonald and Korb 2011). The relevance of long contracts for feedstocks is that they give processors a better estimate of future costs, which helps in the financial plan- ning. Year-to-year contracts common in agricultural commodities do not offer this advantage for long-term planning. C.1.3 Environmental Considerations The life-cycle GHG footprint of alternative jet fuels from other fossil fuels can be two to three times that of conventional jet fuel (see Box 2). Alternative jet fuel produced through the FT process from natural gas can have a GHG footprint approximately 116% that of conventional jet fuel, while alternative jet fuel from coal can have a GHG footprint 230% that of conventional jet fuel (Stratton, Wong, and Hileman 2010). Carbon capture and the use of biomass in the Feedstocks for Producing Alternative Jet Fuels 75 Box 2. Brief introduction to life-cycle greenhouse gas analysis. Life-cycle GHG analysis estimates the amount of greenhouse gases (e.g., CO2) released in the full life cycle of an alternative fuel (see Section 5.1 for a more com- plete discussion). This includes emissions from the production, distribution, and combustion of an alternative fuel including extraction, inputs to production such as tillage, planting and harvesting biomass feedstocks, processing and conversion, transportation, and storage. It is a cradle-to-grave estimate of all GHG emissions from the production of the fuel. A key concept in life-cycle GHG analysis is land-use change. Land-use change can lead to indirect GHG emissions. For example, increased demand for feedstocks that compete for land with the existing food and feed production chain (e.g., corn, soy- beans) may lead to conversion of unused land, such as grassland or forests, to agri- culture production. This can result in an increase in CO2 emissions that would be included in the life-cycle GHG analysis. Thus, LCA results can show a significant increase in GHG emissions for alternative fuels made from renewable feedstocks because of indirect land-use change. Inclusion of indirect land-use changes in life- cycle analysis is currently a controversial and politically charged debate.

feedstock stream can reduce the GHG footprint to a fraction of that of conventional jet fuel. For example, the use of CCS can lead to alternative jet fuel from coal having a GHG footprint 111% that of conventional jet fuel. Depending on the assumptions of biomass content and land- use change (see more in Section E.1), alternative jet fuel can have a GHG life-cycle footprint 20% to 60% that of conventional jet fuel (Stratton, Wong, and Hileman 2010). Carbon capture and sequestration technologies are currently under development, and their cost and effective- ness are yet to be determined at a commercial scale. C.1.4 Advantages Fossil fuel feedstocks are abundant and available at low cost. They are complementary to the scale and substantial investment necessary to operate FT plants. Both coal and natural gas have well-developed markets and supply chains. Both have been actively traded for many years, so there is ample price history and sophisticated financial instruments, such as futures and options markets, to understand prices and hedge price volatility. Fossil fuel feedstocks, price, and availability are compatible with the large capital investments required to install and operate FT plants. C.1.5 Disadvantages Fossil fuels feedstocks may have a potentially unacceptable life-cycle GHG footprint—two to three times that of conventional jet fuel. FT plants tend to be very large and capital intensive, which may deter commercialization efforts, especially in today’s more conservative investment atmosphere. In addition, since there are not many commercial-scale examples in operation, it is difficult to evaluate their economics of production. C.2 Oils and Fats Plant oils and animal fats can be used as feedstocks for making alternative jet fuels via hydroprocessing (see Section D.2). Biodiesel is the only commercial-scale example of a renew- able fuel produced from vegetable oils and other fats. While HEFA and biodiesel are decidedly different products with different applications, the experience of the biodiesel industry illustrates the potential opportunities and challenges associated with the use of vegetable oils and animal fats as feedstock for alternative aviation fuels. C.2.1 Sources and Availability Many different plant oils can be used to make alternative jet fuel, including food oils such as soybean, canola, palm, sunflower, and coconut oil and nonfood oils such as Camelina, Jatropha, algae, and pennycress (Eidman 2007; Paulson and Ginder 2007; Carriquiry and Babcock 2008; IATA 2009; Moser 2009; USDA 2010i). Each has relative strengths and weaknesses. For exam- ple, mustard can be grown with relatively fewer production inputs, but yields less oil than other feedstocks such as canola (USDA 2010g; USDA 2010l). Some of these oils are currently produced at commercial or semicommercial scales in the United States. Others have not yet reached such large scales. Research is ongoing to improve the oil content (yields) and other characteristics that are advantageous to alternative jet fuel production. Nonfood oils such as those based on algae, Jatropha, pennycress, and Camelina are promising potential feedstocks with attractive charac- teristics (Qiang, Du, and Liu 2008; Moser 2009). They are adaptable, grow very quickly, and have higher oil content than other alternative fuel feedstocks (USDA 2010a). Jatropha, an oilseed plant historically grown in tropical areas, has high concentrations of oil and can be grown in poor- 76 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

quality soils not suitable for traditional agricultural crops. It may be adaptable in southern regions of the United States (FAO 2009; USDA 2010l). Pennycress, Camelina, and other tree oils also are promising potential feedstocks with high oil content that have the potential to be grown without competing for land availability with traditional crops. Microalgae have been shown to have particularly attractive characteristics. Alga is plant that grows in water and has a remarkable capability of producing large amounts of oil. Of the several types of algae, two of them—cyanobacteria and microalgae—grow in diverse environments, including wastewater and salt water. Microalgae and cyanobacteria produce oil via photosynthe- sis, in open or closed ponds, or in the dark using nutrients supplied by the growers (DOE 2010). Another remarkable property of algae is that, unlike other plants used for biofuels, they do not compete with food stocks for land and do not consume water. Some strains of algae have the potential to produce more than 30 times the amount of oil per acre per year than any other plant currently used to produce alternative fuels (Verrengia 2009); see Table 16. However, current production yields are not commercially viable. Jet fuel derived from algae holds great promise as a second-generation biofuel to satisfy the needs of the aviation industry. However, the technical promise is tempered by concerns about the financial and environmental viability of turning algae into fuel. The primary concern and unresolved issue with algae from open-pond and closed-pond systems is the energy cost and life- cycle carbon impacts of maintaining temperature and extracting water. These leave algae-based fuels as having potentially uncompetitive cost and unacceptable carbon life-cycle footprint out- comes based on currently reported research (Stratton, Wong, and Hileman 2010). The process of creating jet fuel from algae is still very much in the research stage. As a result, it is difficult to discuss economic and production issues in detail. Animal fats (tallow), frying oils, and greases may also be used to produce alternative jet fuel. Expanding the use of frying oils and greases may represent a potential alternative fuel feedstock. Generally considered waste products, these materials are more economically attractive than refined vegetable oils. However, quality control problems with this feedstock may produce unacceptable fuels and require additional processing (Eidman 2007; Canakci and Sanli 2008; USDA 2010q). These materials are also in limited supply, thereby constraining their use as a fuel on a commercial scale (Knothe 2010). Tallow, a rendered form of animal fat that is high in triglycerides, can also be used in the HJR processes to make alternative jet fuel (Bauen et al. 2009). Tallow is used in a wide variety of products, including margarine, cooking oil, soap, can- dles, and lubricants (CRB 2008). Availability of tallow is most likely to remain steady as it is a by-product of the meat processing industry. Feedstocks for Producing Alternative Jet Fuels 77 Feedstoc k O il Yield (gallons/acre/ ye ar) Soybean 48 Camelina 62 Sunflower 102 Jatropha 202 Oil palm 635 Algae 1,000–6,500 Table 16. Estimates of oil yield potential for different feedstocks (DOE 2010).

C.2.2 Economics and Logistics As is the case with the production of biodiesel made from oils and fats, feedstock cost is expected to be the largest cost component in the production of alternative jet fuel from plant oils. Some plant oils that could potentially support commercial-scale production of alternative jet fuel, such as soybean oil, are already expensive to produce. In addition, because soybean and other plant oils are also used for human and animal consumption and in the production of biodiesel, competition for this feedstock is likely to keep prices high. Currently, the high cost of feedstock is limiting the further development and commercialization of the biodiesel industry (Al-Zuhair 2007; Ng, Ng, and Gan 2009). Currently, biodiesel cannot compete with conven- tional diesel and likely will not in the foreseeable future without some form of public policy incentive (Al-Zuhair 2007; Carriquiry and Babcock 2008; Ng, Ng, and Gan 2009). Aviation alter- native fuels such as HEFA production would likely face similar challenges. Therefore, there is great interest in alternative oilseed feedstocks such as Jatropha, pennycress, and Camelina that can be produced at a lower cost. Soybean oil and other oilseed feedstocks have well-developed markets, available risk manage- ment tools, and well-developed supply chains. Markets, pricing mechanisms, risk management tools, and contract and supply chain considerations would all have to be developed for algae, Jat- ropha, and other feedstocks not currently produced at a commercial scale. Markets, transporta- tion, and infrastructure considerations for oilseeds not currently produced at a commercial scale, such as mustard or Camelina (both of which have characteristics similar to traditional oilseeds), would be expected to develop and function similarly to existing commodity markets and sys- tems (Olson, pers. comm.). Transportation and logistical considerations for bio-based feedstocks depend greatly on the type of feedstock. For traditional oilseeds such as soybean and canola, project developers can take advantage of existing transportation and logistics infrastructure. Currently, agriculture com- modities are largely transported by rail and truck. For new types of oilseeds, such as Camelina, it is likely that the existing truck and rail transportation and logistics systems will be sufficient. Like coal and natural gas feedstocks, the production facility would have to be located within reach of the existing infrastructure to enjoy the full benefits. If production of oilseeds for bio- fuels were to increase substantially, additional crushing and refining capacity would need to be developed. As is the case with current crushing and refining facilities, additional capacity for new oilseeds would need to be located in proximity to the commodity production area and existing transportation infrastructure to minimize capital costs. Supplies of tallow and municipal solid waste are likely to be constrained by the cost of trans- portation and other logistics. Tallow is typically stored in heated tanks and must be kept at a min- imum of 65°C to thwart the growth of bacteria and enzymatic activity (Food Science Australia 1997). Transportation costs can be expensive due to the need to maintain these specific ambient conditions. These materials are also in limited supply, thereby constraining their use as a fuel on a commercial scale (Knothe 2010). C.2.3 Environmental Considerations Alternative jet fuels from plant oils and fats may have a lower life-cycle GHG footprint compared to conventional jet fuel; however, the life-cycle GHG footprint of alternative jet fuels from plant oils is very dependent on land use. If the plant oil is grown on existing crop- land, the land-use change impact may be limited; however, if forest or grassland needs to be cleared to meet the demand for plant oil, the land-use impact would be significant. Plant oils that can grow in fallow or on marginal lands, such as Jatropha and Camelina, can mitigate some of these concerns. 78 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

C.2.4 Advantages Some plant oils are available in commercial quantities and have developed markets, supply chains, and transportation systems. Some alternative feedstocks have great potential. Some strains of algae have the potential to produce more than 30 times the amount of oil per acre per year than any other plant currently used to produce alternative fuels. C.2.5 Disadvantages Oil-based alternative jet fuel feedstocks will likely have high costs, similar to biodiesel. Cur- rently, feedstock costs make up 80% or more of the cost of HEFA. Improving the productivity of oil plants is critical to achieving competitive costs for alternative jet fuel. USDA has programs in place to improve yields over time, much like the manner in which food crop yields have improved over time. Current production yields for algae are not commercially viable and are still in the research stage. Algae-based fuels may not be cost competitive with conventional fuels and may have an unacceptable carbon life-cycle footprint. Tallow-based oils enjoy a steady supply, but storage and transportation issues may constrain their use as a feedstock. Furthermore, their limited supply may constrain their use on a large- scale commercial basis. C.3 Biomass Feedstocks Biomass feedstocks can consist of any biomass source but are generally divided into three cat- egories: energy crops, agricultural residues, and woody biomass. The potential supply of biomass is substantial, although there are considerable constraints related to its bulk. Biomass can be used with the FT process to produce alternative jet fuel. C.3.1 Sources and Availability Energy crops are grown specifically for biofuels production, including alternative jet fuel. In order to prevent competition with current agricultural production activities and in an attempt to reduce their production costs, energy crops will likely be grown on land that is currently seen as marginal for traditional crop production. In 1984, the U.S. DOE funded the Herbaceous Energy Crops Program (HECP). After evaluation of 35 energy crops of which 18 were perennial grasses, the DOE selected switchgrass as the native grass with the greatest potential as an energy crop. In 1991, the DOE’s Bioenergy Feedstock Development Program (BFDP), which evolved from the HECP, continued research on switchgrass and identified the following advantages as an energy crop: (1) capacity for high yields on poor-quality sites not suitable for conventional crops, (2) adaptability to a variety of soils and climatic conditions with relatively low input requirements, (3) easily integrated into conventional farming operations, (4) adaptable to once-per-year har- vesting, and (5) suitable for harvest with conventional hay equipment (Lewandowski et al. 2003; USDA 2010o). In recent years, researchers have focused attention on several other potential energy crops, includ- ing Miscanthus (Lewandowski et al. 2003; Busby et al. 2007; Khanna, Dhungana, and Clifford- Brown 2008; USDA 2010j), energy cane (Mark, Darby, and Salassi 2010), wheatgrass, and bluestem (Nyren et al. 2007). Results to date indicate that some alternative crops may outperform switchgrass in some locations. Energy crop production will likely vary regionally. Agricultural residues such as corn stover and wheat straw are other promising sources of bio- mass feedstock for alternative jet fuel production. Corn stover includes the leaves and stalks of Feedstocks for Producing Alternative Jet Fuels 79

the corn plant; wheat straw is the unharvested wheat stalk. These products account for most of the agricultural residues with feedstock potential (Maung and McCarl 2008). Agricultural residues have an advantage over energy crops because they are not dedicated to energy produc- tion. Corn and wheat are already under production for the grain produced by the plants, and therefore the production cost of the stover and straw is already covered (Gallagher 2006). How- ever, a farmer will likely require payment. It is important to keep in mind that not all of a field’s crop residues can be collected. Crop residues have important soil quality benefits, namely nutri- ent cycling and moisture retention. While potential supplies are substantial, research is ongoing to understand how much crop residue biomass can be removed without detrimental impacts. Woody biomass and by-products are also potential feedstocks. The lumber, mill, pulp, and paper industries have long used by-products of mill activities as a source of energy. Most avail- able supplies are currently consumed by the industry (Rousseau 2010). More recently, pyrolysis technology has been developed that uses woody biomass as a feedstock for liquid fuels; however, the conversion process is not yet competitive with petroleum fuels (Rousseau 2010). Milbrandt (2005) estimates the quantities of woody biomass potentially available for biofuels production. Recent declines in these industries, however, are driving down the costs of woody biomass and spurring interest in its use for producing alternative jet fuel (Lane 2010). The type and availability of biomass varies considerably based on geographic region. A list of some existing and potential feedstocks by region across the United States can be found at the USDA National Renewable Energy Lab’s interactive Biofuels Atlas (http://maps.nrel.gov/ biomass and http://www.nrel.gov/gis/mapsearch/index.html). The “Billion-ton Report” also details potential biomass resources (Perlack et al. 2005). C.3.2 Economics and Logistics Energy crops would need to be grown on marginal lands not appropriate for traditional agri- culture production in order to keep feedstock cost low. Absent production on marginal lands, energy crops will have to compete for land use with current agriculture production activities and provide a return to producers at least equal to current production. Agriculture residues such as corn stover and wheat straw have an economic advantage over dedicated energy crops because they are by-products of corn and wheat production. Even though the production costs of agri- cultural residues are already covered by existing revenues, producers will likely require additional incentives as compensation for harvest, collection, and transportation costs. Furthermore, agri- cultural residues have soil quality benefits such as nutrient cycling and moisture retention; there- fore, not all agriculture residues could be collected. There are numerous challenges associated with the use of dedicated energy crops and agricul- ture crop residues as alternative fuel feedstock. Because there are no widely established markets or infrastructure for these types of feedstocks, contracting and supply-chain considerations need to be resolved before producers would be willing to supply a dedicated energy crop or agricul- ture residue. Most energy crops take more than one year to establish, and it is likely there would not be an alternate market for energy crops during that time. Therefore, a producer may require an upfront payment and/or a multiyear contract before producing an energy crop (Leistritz et al. 2009). Furthermore, producers would need to receive a rate of return on energy crops at least equal to what they could expect to receive from current production activities. The Biomass Crop Assistance program created in the 2008 Farm Bill attempts to address these issues by providing payment to farmers for establishing energy crops (USDA 2010b). Harvest of energy crops and agricultural residues adds another dimension of complexity to the logistics of these feedstocks. On the one hand, biomass harvest is seasonal and the timing of the harvest may vary depending on crop and region of the county. On the other hand, alterna- 80 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

tive fuel processing facilities need feedstock year round in order to maximize utilization of cap- ital assets. Therefore, processing facilities will require storage of large quantities of feedstock (DOE 2003; Leistritz et al. 2009; Rentizelas, Tolis, and Tatsiopoulos 2009; Inman et al. 2010). Furthermore, the economics of transporting these bulky and not very dense materials limits their collection to a maximum distance of about 50 miles from the processing facilities (Aden et al. 2002; Hess, Wright, and Kenney 2007; Mapemba et al. 2007; Lazarus 2008; Leistritz et al. 2009). Densification techniques such as grinding, pelleting, and cubing have been examined as ways to improve the bulk density of biomass to improve storage and transportation logistics; however, densification adds to the cost of biomass (DOE 2003; Sokhansanj and Turhollow 2004; Carolan, Joshi, and Dale 2007; Kumar and Sokhansanj 2007; Brechbill and Tyner 2008; Petrolia 2008). The huge quantities of biomass required to support commercial-scale operations make trans- portation and logistical issues very challenging. Densification and pretreatment techniques to address these issues are being studied. Woody biomass not currently utilized for other products and processes, such as harvest residues, faces logistical challenges similar to crop residues and energy crops due to low bulk density. C.3.3 Environmental Considerations Assumptions about life-cycle analysis and land use can have a bearing on the life-cycle GHG footprint of alternative jet fuels made from biomass feedstocks. In order to prevent competing uses for land, dedicated energy crops will need to be grown on land that is marginal for tradi- tional agriculture. Assuming no changes in land use, the life-cycle GHG footprint of alternative jet fuels from biomass can be less than that of conventional jet fuels (see Section E.1). C.3.4 Advantages Energy crops may be able to grow on land not suitable for traditional agriculture, are adapt- able to various soils and climates, and integrate well with conventional agriculture. The use of marginal land for energy crops eliminates the competition for land with traditional agriculture commodity production, reduces production costs, and avoids food-versus-fuel concerns (see Box 3 for more information). Agriculture residues may be available in sufficient quantities to potentially support a commercial conversion facility. Corn stover and wheat straw have the greatest potential as low-cost, first-generation biomass feedstocks. C.3.5 Disadvantages Harvest, storage, transportation, and logistical challenges are major impediments. The low bulk density and the sheer volume of biomass needed to support a commercial conversion facil- ity represent significant hurdles to commercialization. In addition market, supply chain, con- tracting, and other producer issues would also need to be resolved before commercialization efforts would be feasible. C.4 Municipal Solid Waste C.4.1 Sources and Availability MSW includes a wide array of discarded materials such as residential and commercial garbage, plastics, textiles, wood, yard trimmings, and food scraps. In some areas, MSW can also include non- solid materials such as sludge from wastewater treatment plants. Given the diversity of materials involved with MSW, different technologies can be used to produce alternative fuels (Williams Feedstocks for Producing Alternative Jet Fuels 81

2007). For example, organic material such as food residues and yard clippings can be combined with FT processes to produce liquid fuels. Vegetable oils and other greases can be used with trans- esterification or hydrogenation processes to produce biodiesel or alternative jet fuel (Wiltsee 1998; IATA 2009). C.4.2 Economics and Logistics Once recyclables are removed, waste-to-energy providers and landfills compete for the remaining MSW. Depending on the locality, MSW generators may pay for its disposal. In some instances, however, depending on the market structure and scarcity value of the waste, MSW generators may receive payment for access to their waste. Because of MSW’s bulk, an alternative jet fuel processing plant would need to be sited close to existing waste flows. MSW may need to be preprocessed prior to conversion into feedstock. While the preprocessing technology exists, it can add cost to the entire process. Use of municipal waste as a feedstock provides waste producers with economic benefits that could include reduction of tipping and transportation costs, especially in locations where land- fills are fully depleted and where significant cost and energy resources are used to transport waste to remote locations. Broader community benefits could include reduction of landfills and the methane they produce (Brandes 2007) and potential reduction of greenhouse gases (Shi, Koh, and Tan 2009). The diverse nature of municipal waste necessarily involves diverse supply chains for different types of waste. In general, however, it is expected that project developers interested in using 82 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting Box 3. Questions regarding food versus fuel. The “food-versus-fuel” debate arises from questions related to the use of agricul- tural food commodities for the production of alternative fuels. The debate stems from a spike in animal feed costs and food prices in 2008 and the rapid develop- ment and expansion of the corn ethanol industry. Currently, nearly 35% of the domestic corn crop is used for ethanol production (USDA 2011). Some people fear that the use of corn as a feedstock for alternative fuel production will lead to higher food prices and perhaps even compromise food supplies (Brown 2007; Sagar and Kartha 2007; Vidal 2010). Others argue that the rapid increase in food prices in 2008 was the result of high energy costs, not corn ethanol production (Baffes and Haniotis 2010). Others contend that biofuels can be produced without affecting food production (Dale et al. 2010). The issue has become politically charged, and there is little consensus of the role of alternative fuel production on food produc- tion and prices. Second-generation feedstocks that are not used for food or animal feed and that do not have any indirect land-use effects (see Box 1) would in theory eliminate any potential food-versus-fuel debate. Examples of potential second- generation feedstocks are agricultural residues such as wheat straw and corn stover, dedicated energy crops such as switchgrass, woody biomass, municipal solid waste, alternative oilseed feedstocks such algae and Jatropha, and nonfood oilseeds such as mustard seed and Camelina. However, in order for second-generation feedstocks, with the exception of agricultural crop residues, to have no impact on food or feed production, they would have to be cultivated on land not currently used or suitable for traditional agriculture production.

municipal waste as feedstock will have to work within the established transportation and logis- tics infrastructure to minimize cost. C.4.3 Environmental Considerations Environmental benefits can be tailored to some extent. If an objective is to maximize life-cycle GHG footprint reduction, then plastics and tires can be left out of the feedstock. If an objective is to eliminate the use of landfills, plastics and tires can be included in the feedstock, although this would suboptimize the potential life-cycle GHG reduction. C.4.4 Advantages Municipalities may recapture some of their waste-collection costs by selling MSW to refiners. In addition, using MSW can reduce the need for landfills and decrease the associated methane and other greenhouse gasses. C.4.5 Disadvantages There are several challenges to using MSW as a feedstock, including consistency and reliability of supply, proximity of waste to the conversion facility, sorting, and preprocessing. The potential perception that an MSW-based alternative jet fuel plant and the accompanying transportation infrastructure degrade the local municipal environment must also be addressed. Furthermore, it needs to be noted that some may perceive use of MSW for fuel as competing with existing recycling programs by diverting waste that would otherwise be recycled to fuel production. Feedstocks for Producing Alternative Jet Fuels 83

While different technologies exist for the production of alternative fuels, the primary differences are the pathways used to convert materials to fuels. For alternative jet fuels, current technology pathways include (a) hydrotreatment of vegetable oils and/or animal fat to produce bio-synthetic paraffinic kerosene (bio-SPK) (also known as hydroprocessed esters and fatty acids), and (b) FT synthesis of biomass and/or coal and natural gas to produce SPK (see Figure 9). Esterification of vegetable oil or animal fat can be used to produce biodiesel (also known as fatty acid methyl ester, or FAME), but the process is not suitable for alternative jet fuels. Other promising pathways include fermentation, lingo-cellulosic conversion, and pyrolysis of biomass. In terms of processing technologies, this report focuses on FT and HEFA processes because they are the most advanced and have the highest likelihood of becoming commercially available in the short term. For example, aviation alternative fuels using the FT and HEFA processes have already been certified. In addition, several FT and HEFA projects have been proposed and are in devel- opment (see Appendix K). D.1 Fischer-Tropsch One process for producing alternative fuels of all kinds, not just jet fuel, is the Fischer-Tropsch process. The FT process uses a chemical reaction to transform a carbon-rich feedstock, such as coal, natural gas, or biomass, into a hydrocarbon fuel. There are variations of the FT process, depending on the feedstock. If the feedstock is coal, the process is known as “coal-to-liquid” or CTL. If the feed- stock is natural gas, the process is called “gas-to-liquid,” or GTL. If the feedstock is biomass, the process is called “biomass-to-liquid,” or BTL. Some FT facilities use a variation of the FT process, operating a biomass-and-gas-to-liquid (BGTL) or coal-and-biomass-to-liquid (CBTL) process. The typical product distribution of FT production runs is approximately 30% gasoline, 40% jet fuel, 16% diesel, and 14% fuel oil (IATA 2009). Jet fuel produced via this process is often referred to as synthetic paraffinic kerosene. If a higher proportion of concentration of a specific product is desired, such as jet fuel, further processing is required, but it would increase the pro- cessing cost and reduce the overall yield of the plant (Hileman et al. 2009). Carbon capture and sequestration involves capturing the gaseous CO2 released during a produc- tion process and capturing it through storage or by converting it into other carbon compounds that are not released into the atmosphere. CCS will help lower the life-cycle GHG footprint of alternative jet fuels by preventing CO2 in the processing stage from being released into the atmos- phere. Research is being conducted in finding more efficient means of capture, storage, and con- version (Herzog and Golomb 2004). These include algal systems that could potentially convert the gaseous carbon dioxide into carbon-based compounds and carbon-based oils through photo- synthetic activity. Other alternatives for CO2 storage include depleted oil and gas reservoirs and 84 A P P E N D I X D Production Technologies for Alternative Jet Fuels

Production Technologies for Alternative Jet Fuels 85 Bio-derived feedstocks Hydro- treatment Biodiesel (FAME)Bio-SPK (HEFA) SPK Vegetable oil/ animal fat Coal/natural gasBiomass Fossil fuel feedstocks Esterifi- cation Fischer-Tropsch synthesis Figure 9. Current technology pathways for the production of alternative fuels. Adapted from Altman (2010). Deoxygenation Selective Hydrocracking/ Isomerization Bio-derived oil Hydrogen Jet fuel, diesel Product Separation Water, CO2 Figure 10. Notional diagram of the HEFA process. Adapted from Anumakonda (2010). unminable coal seams. However, available technologies are still very expensive, and the regula- tory regime around CCS has not been fully developed. More information on CCS can be obtained from “Carbon Capture and Sequestration Technologies” (MIT 2011) and Technologies: Carbon Sequestration (NETL 2011). D.2 Hydroprocessed Esters and Fatty Acids HEFA is refined from plant oils (see Figure 10). During the HEFA process, raw oils react with hydrogen (hydrotreatment step), producing the by-products water and carbon dioxide. These by-products remove excess oxygen from the raw oils. Next, the deoxygenated oils again react with hydrogen to undergo hydrocracking—breaking long hydrocarbon chains into smaller ones. During the product separation stage, fuels are extracted by grade. In a typical refining run, the yield for jet fuel is about 10% of the overall output (Bauen et al. 2009). With selective cracking, the yield for jet fuel rises to 50% to 70% of the overall output, but with the same losses in yield and cost performance as with FT. D.3 Main Characteristics of the Fischer-Tropsch and HEFA Processes Table 17 lists the main characteristics of the FT and HEFA processes. A key conclusion from the comparison of HEFA and FT technologies is that FT is suited for large-scale operations in which a large number of products, particularly large quantities of gases and heavy liquids, can be managed in an advantageous manner. This large-scale operation also

necessitates adequate supply of large quantities of feedstock, achievable either by a robust feed delivery infrastructure or a concentrated source of feedstock. This is the reason that FT technol- ogy has been successful when coal or natural gas has been used as the feedstock, with FT plant sites co-located with or in proximity of large coal mining operations or oil and gas drilling oper- ations. The scattered and distributed nature of biomass availability makes it a challenging prob- lem for BTL plants. Co-feeding some amount of biomass along with coal for CBTL plants is sometimes a partial solution of this problem. Key challenges for HEFA technology are the restricted supply of plant oils and the resulting high price of these oils for alternative jet fuel production; however, as production of plant oils increases and the supply chains of these feedstocks strengthen, the potential exists for HEFA pro- duction to become commercially viable. Incentives and long-term supply contracts may be required to help this industry get started and grow. With time, as the supply chains for bio- 86 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting Characteristic Fischer-Tropsch SPK (FT SPK) Hydroprocessed Renewable Jet (HEFA or bio-SPK) Feedstock Biomass, coal, natural gas. Plant oils or animal fats. Cost of feedstock Very low for biomass. Low for coal. Medium for natural gas. High for commercial plant oils (e.g., soybean) because of high demand. High for plant oils not currently produced at commercial scales (e.g., Camelina) but expected to decrease as scale is achieved. Medium to low for animal fats. Cost of feedstock gathering and logistics High infrastructure and procurement costs for biomass collection and transport. Low for natural gas. Medium for coal. Medium to high for extracting plant oils, but low for transporting plant oils with existing infrastructure. Medium to high for animal fats. Production costs Low marginal cost of production. Low to medium marginal cost of production. Scale Very large (300 million GPY minimum, 3 billion GPY typical). Medium (7.5 million GPY minimum, 90–150 million GPY typical). Product quality High (meets critical jet fuel properties—like freeze and flash points—defined in the ASTM specification). High (meets critical jet fuel properties—like freeze and flash points—defined in the ASTM specification). By-products Large quantities (60%–80%) of by- products: diesel, high molecular waxes, lights, naphtha, LPG. Moderate quantities (~20%– 30%) of renewable diesel, LPG and naphtha. Capital requirements FT plants are very large—larger than typical crude oil refineries. Small-scale FT plants are being proposed, but typical capital investments are about $500 million for small scale (75 million GPY) and running up to billions of dollars for large scale (750 million GPY). Depends on scale. Smallest practical scale is about 7.5 million GPY for about $50 million; larger scale of 70 million GPY for about $250 million. Plant area or physical footprint Typical refinery size footprint is 10 to 15 acres. Large-scale refinery is about one-tenth the size of a standard refinery—roughly 1 to 2 acres. Life-cycle GHG footprint Very large for coal gasification without CCS. Medium for natural gas. Low for biomass ignoring land-use change. Medium for biomass including land-use change. Low for land-based plant oils ignoring land use. Very low for sea-based plant oils (e.g., algae). Medium for plant oils including land-use change. Table 17. Characteristics of the FT and HEFA processes.

derived feedstocks, including plant oils, biomass, and agricultural residue evolve, it is also con- ceivable that BTL and CBTL technology may also become economically viable at scale. D.4 Other Refining Technologies Other candidate technologies for producing aviation alternative fuels or bio-SPK include cel- lulosic conversion, fermentation, and pyrolysis. These pathways are currently known as catalytic renewable jet, fermentation renewable jet, and pyrolysis renewable jet, respectively (see Figure 11). These processes produce jet fuel from sugars obtained directly from cane, sorghum, or other sugar-producing feedstocks, or indirectly by extraction from cellulosic feedstocks. These processes are still in the development phase and no short-term commercialization is expected; however, these pathways have the potential to one day offer other options for alternative fuel production. More information about these processes is available from the National Advanced Biofuels Con- sortium (NABC 2010) and the Advanced Biofuels Association (ABFA 2011). ABFA and its mem- bers work closely with CAAFI and its sponsors to align policy and technical matters. Production Technologies for Alternative Jet Fuels 87 Bio-derived feedstocks Hydro- treatment Ethanol/ alcohols Bio-SPK (CRJ) SPK (PRJ) Vegetable oil/ animal fat Coal/natural gas Biomass Fossil fuel feedstocks Fermentation/ hydrolysis Pyrolysis/ liquefaction Cellulose conversion Esterifi- cation Fischer-Tropsch synthesis Biodiesel (FAME) Bio-SPK (HEFA) SPK SPK (FRJ) Future technology pathways Figure 11. Current and future technology pathways for the production of alternative fuels. Adapted from Altman (2010).

Alternative jet fuels have two principal potential environmental benefits. First, the overall life- cycle GHG footprint may be lower than that of conventional jet fuel. Second, PM emissions may be lower. Reductions in NOx have been documented for alternative ground fuels relative to con- ventional diesel fuel, but there is no current evidence to suggest that the same benefit extends to alternative jet fuels. The following sections discuss the GHG and PM benefits. E.1 GHG Life-Cycle Benefits A key benefit often associated with alternative fuels is the potential to reduce total life-cycle GHG emissions (specifically carbon reduction) in comparison with conventional petroleum- based fuels. This potential reduction is quantitatively estimated using the techniques of life-cycle analysis. Life-cycle analysis as applied to aviation fuel consists of estimating the amounts of various sub- stances produced (or consumed) during the complete process of obtaining and using the fuel. The process is broken down into various stages as the fuel is transformed from its raw form, trans- ported, and used. Depending on the exact feedstocks, processing technologies, and logistics used, the life-cycle carbon footprint of the resulting liquid fuel can be more, equal, or less than the con- ventional petroleum-based jet fuel. Thus, a life-cycle analysis for each particular alternative fuel is necessary before assigning GHG emissions reduction benefits. Beyond feedstock and process, the analyses will be project specific with variables such as direct and indirect land use in feedstock supply brought into consideration (EPA 1999). While numerous LCA methodologies can be found in the literature, the one that has been developed and peer reviewed and is being used for United States Air Force (USAF)/Department of Energy evaluation and is specific to aviation is contained in Framework and Guidance for Esti- mating Greenhouse Gas Footprints of Aviation Fuels (Allen et al. 2009). That approach was devel- oped using government funds to ensure that Department of Defense purchases of alternative fuels conforms to the LCA requirements of Section 526 of the 2007 U.S. Energy Independence and Security Act (Sissine 2007). The LCA process accounts for the six stages in the fuel-production life cycle: (1) acquisition of raw materials, (2) transport of these materials, (3) processing them into aviation fuel, (4) transport of fuel to the aircraft, (5) combustion of the fuel, and (6) end of life. (In the case of jet fuel, the end of life stage is not included in the analysis since the fuel is consumed in stage 5.) In the aggregate, the first four of these stages are often referred to as “well-to-tank” (where the tank is on the aircraft), and the combustion stage as “tank-to-wake.” Analysis of GHG emissions is performed for each of these stages and includes all inputs and processes associated with a given 88 A P P E N D I X E Air Quality and Greenhouse Gas Benefits

stage. Precise boundaries between each stage are defined so that each element is fully accounted for but without overlap between stages. Additionally, an overall system boundary is defined. A recent report (Stratton, Wong, and Hileman 2010) analyzed several feedstocks for the FT or HEFA processing of aviation fuels using this methodology (see Table 18 and Figure 12). The nonpetroleum feedstocks coupled with FT processing were coal, natural gas, and switchgrass, as well as coal and switchgrass combined. The nonpetroleum feedstocks coupled with HEFA pro- cessing were soybeans, palm, rapeseed, Jatropha, algae, and Salicornia. Depending on assumptions (particularly those associated with land-use changes associated with growth of the feedstocks), these pathways were estimated to have life-cycle GHG emissions ranging from less than 1% of the conventional crude petroleum pathway to over 8 times greater than this pathway. Several pathways have estimated life-cycle GHG emissions that are less than half of the crude-to-con- ventional-jet-fuel pathway (switchgrass to FT fuel, Jatropha oil to HEFA, and Salicornia to HEFA and FT fuel). The variability that can be expected for given processes and feedstocks when land use and other uncertainties (e.g., yield per acre, energy required for growth, harvesting, and water extraction) are considered can be observed in the last column in Table 18. There are other reports exploring the life-cycle GHG footprint of HEFA and FT processes for the production of alternative jet fuels. Figure 13 shows the results of an analysis of life-cycle GHG emissions for a variety of alternative fuels, including HEFA/HRJ, alternative (green) diesel, FT Air Quality and Greenhouse Gas Benefits 89 Pathway B io m as s Cr ed it R ec ov er y Fe ed st oc k Tr an sp or t Pr oc es si ng Fu el Tr an sp or t Co m bu st io n W TT N 20 W TT C H 4 La nd -U se Ch an ge To ta l Crude to conventional jet fuel 0 4.2 1.5 5.5 0.8 73.2 0.1 2.3 0 87.5 Crude to ULS jet fuel 0 4.2 1.5 7.3 0.8 72.9 0.1 2.4 0 89.1 Oil sands to jet fuel 0 19 1.3 5.5 0.5 73.2 0.1 3.1 0 102.7 Oil shale to jet fuel 0 41.2 0.6 3.3 0.6 73.2 0.2 2.5 0 121.5 Natural gas to FT fuel 0 4.6 0 20.2 1.2 70.4 0 4.6 0 101 Coal to FT fuel with (without) carbon capture 0 0.8 0.1 19.4 (117.2) 0.6 70.4 0 5.9 (5.7) 0 97.2 (194.8) Switchgrass to FT fuel -222.7 6.4 0.6 152.1 0.5 70.4 0.2 10.3 -19.8 to 0 -2.0 to 17.7 Coal and switchgrass to FT fuel, with carbon capture -44.3 1.2 0.2 21.9 0.5 70.4 2 4.9 -3.9 to 0 53.0 to 56.9 Soy oil to HEFA/HRJ -70.5 20.1 1.2 10.3 0.6 70.4 3.6 1.3 0 to 527.2 37.0 to 564.2 Palm oils to HEFA/HRJ -70.5 4.9 3.1 10.3 0.6 70.4 5.1 6.3 0 to 667.9 30.1 to 698.0 Rapeseed oil to HEFA/HRJ -70.5 17.2 3.1 10.3 0.6 70.4 22.4 1.3 0 to 43.0 54.9 to 97.9 Jatropha oil to HEFA/HRJ -70.5 16.7 1.5 10.3 0.6 70.4 9.1 1.2 0 39.4 Algae oil to HEFA/HRJ -70.5 29.6 0.3 10.3 0.6 70.4 8.1 1.8 0 50.7 Salicornia to HEFA/HRJ and FT fuel -105.3 36.8 1.1 38.3 0.5 70.4 4.6 1.3 -41.9 to 0 5.8 to 47.7 Note: Some totals do not sum due to rounding. Table 18. Life-cycle GHG emissions expressed as grams CO2 equivalent (g CO2e) per MJ of fuel energy content (adapted from Stratton, Wong, and Hileman 2010).

fuels, and conventional fuels (Kalnes, McCall, and Shonnard 2010; Shonnard, Williams, and Kalnes 2010). Similar to the observations from Stratton, Wong, and Hileman (2010), feedstock selection plays a critical role in the contribution of the life-cycle GHG footprint to the process path. Tallow-based diesel and alternative jet fuel produced from hydroprocessing have the lowest life- cycle GHG signature since tallow is essentially a waste product and has minimal life-cycle GHG inputs. Alternative jet fuel made from Jatropha also has a lower life-cycle GHG footprint com- pared to conventional jet fuel. Airports are encouraged to conduct or request from potential fuel producers detailed LCA analysis to determine the life-cycle carbon footprint of the fuels they intend to produce and the processes they intend to use. The previous estimates are meant to illustrate results from recent studies and are not intended to be a comprehensive or official representation of life-cycle carbon 90 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting 0 1 2 3 4 5 6 7 8 9 Crude to conventional jet fuel Crude to ULS jet fuel Oil sands to jet fuel Oil shale to jet fuel Natural gas to FT fuel Coal to FT fuel (no CCS) Switchgrass to FT fuel Coal and Biomass (w/ CCS) Soy oil to HEFA Palm oils to HEFA Rapeseed oil to HEFA Jatropha oil to HEFA Algae oil to HEFA Salicornia to HEFA and FT Figure 12. Relative life-cycle GHG emissions of several pathways for alternative jet fuels (conventional jet fuel = 1.0; adapted from Stratton, Wong, and Hileman 2010). Figure 13. Life-cycle GHG emissions for conventional and alternative fuels, including green diesel (GD), HRJ, FT syndiesel, and biodiesel (BD). Adapted from Kalnes, McCall, and Shonnard 2010.

estimates. Given the many uncertainties with respect to feedstocks, production and delivery, and land-use change impacts, this remains an intensely debated and active field of research. E.2 Reductions in Criteria Pollutants, Particularly PM2.5 Another potential benefit of using alternative fuels is the reduction in emissions that affect local air quality, in particular SOx and PM. These emissions can lead to respiratory diseases, such as asthma, and are major contributors to acid rain, smog, and reduced visibility (FAA 1997a; EPA 1999). In this section, an overview of the potential of alternative fuels to reduce or mitigate emis- sions of these pollutants is presented. Oxides of sulfur present in jet fuel are precursors and indicators of particle and PM2.5 forma- tion. PM2.5 is known to cause serious health problems and is regulated with separate standards by the EPA (EPA 2011). Furthermore, as a criteria pollutant, high levels of PM2.5 can lead to areas in which airports are located to be designated as non-attainment zones, with potential negative consequences to airport growth and operations. As alternative fuels are being qualified as blends with petroleum-based jet fuel, the alternative components of these fuels are essentially sulfur-free. Benefits of alternative fuel regarding PM2.5 emissions have been measured by the USAF and by commercial tests. Figure 14 shows the par- ticle emission index for conventional fuel, Fischer-Tropsch fuel, and a blend of the two at differ- ent thrust levels. The decrease associated with the blend becomes larger as the proportion of the Fischer-Tropsch fuel increases (Corporan et al. 2007). These benefits are substantial when com- pared to current petroleum-based fuels having typical sulfur contents of approximately 700 parts per million (Taylor 2009). In addition to sulfur content, PM formation is also linked to the presence of aromatic com- pounds in the fuel. Since levels of aromatics in HEFA fuels and fuels produced with Fischer- Tropsch processes are typically low (Hileman et al. 2009), there would also be a reduction in the generation of PM from these fuels due to this effect (Morser et al. 2011). Air Quality and Greenhouse Gas Benefits 91 Figure 14. Particulate emission index (EI) for immediately behind a CFM-56 engine using conventional, Fischer-Tropsch, and blended fuels as measured by AAFEX. Source: Beyersdorf and Anderson 2009.

Regional economic impacts are a function of the inputs used to produce a final good or service, in this case alternative jet fuel. Processing a commodity and producing a good con- tributes to the local or regional economy to the extent that local inputs are used. Payments for wages and salaries for plant employees; locally purchased supplies, materials, and utilities; and payments to local financial institutions represent new activity in the local economy as a result of production activities. These initial local expenditures are referred to as direct impacts. Direct impacts in turn set in motion subsequent rounds of spending and re-spending that result in secondary impacts called indirect and induced effects. The subsequent spending and re-spending as a result of additional economic activity is often referred to as the multi- plier effect. These effects are most often estimated using input–output models. IMPLAN and RIMS models are widely accepted and used for estimating regional economic impacts (Leistritz 2003). A number of factors affect the potential regional economic impact of an alternative fuel produc- tion facility: (a) choice of feedstock, (b) extent of study area, (c) nature of ownership, (d) specific model/analysis assumptions, and (e) differences in study areas. F.1 Choice of Feedstock The choice of feedstock will affect the degree of regional economic impact. The general assumption for agricultural inputs is that the product is already being produced and sold in an alternative market. For example, corn used in ethanol production would likely be used for animal feed or exported in the absence of ethanol production. Thus payments to produc- ers for the commodity with existing markets would occur regardless of the presence of a processing plant. The direct impacts of the processing operation would include payments for locally produced inputs such as labor and utilities but would not include commodity feed- stock purchases such as vegetable oil that already have established markets. However, if the feedstock has little or no alternative market, as is the case with agricultural residues, the sale of these feedstocks to an alternative fuels processing facility would represent a new rev- enue source for farmers. Accordingly, payments for feedstocks without established markets would be included in the estimate of regional economic impacts. Considering feedstock costs will likely represent a substantial operating expense for any processing facility; inclusion of feedstock cost would likely increase regional economic impacts substantially. Leistritz et al. (2009) compared the regional economic impacts of a biomass-based (cellulosic) ethanol plant with a corn-based facility. The cellulosic biorefinery had a much greater regional economic impact because payments to producers for feedstock represented new income to farmers and others in the supply chain while the corn used at a corn-based facility had other markets. 92 A P P E N D I X F Economic Benefits

F.2 Extent of Study Area The definition of the study area can also affect impact analysis results. Studies have estimated impacts for a single county (Peters 2007; Low and Isserman 2008), a small multi-county site area (Swenson and Eathington 2006), and the economy of an entire state (Hodur, Leistritz, and Hertsgaard 2006; Flanders et al. 2007). There is no right or wrong approach to defining the study area. The definition of the study area often depends on who constitutes the primary audience for the study (e.g., local leaders or state decision makers). Generally speaking, the larger the study area, the larger the regional economic impact. For example, impacts measured at the state level will always be greater than those for a single county or a multi-county area within the state. F.3 Nature of Ownership The degree of local ownership can have a substantial impact on a regional economy. If a pro- cessing facility is largely or wholly owned by farmers or other local investors, facility profits will be distributed to these local owners, and a substantial portion may be spent locally. If the facil- ity is owned by a corporation headquartered elsewhere, the profits and potentially some oper- ating expenses such as centralized accounting, marketing, and other administrative expenses may leave the local area. Local operating expenditures are likely to be greater for a locally owned facility, while many operational activities might be centralized off-site for a corporately owned facility. The extent of local ownership can have a substantial influence on impact estimates. Swenson and Eathington (2006) present estimates for a 50-million-gallon-per-year (MGY) ethanol plant employing 35 workers. With no local ownership, the project supported a total of 207 jobs (direct and secondary employment). When local ownership was increased to 25%, the direct and secondary employment increased by 15% to 239 jobs. At 50% local ownership, direct and second- ary employment increased 29% to 265 jobs, and at 75% local ownership it increased by 42% to 293 jobs. (It should be noted that this study was done at a time when profits in the ethanol industry were very high. Results would likely be different if current profit levels were used.) F.4 Model/Analysis Assumptions Differences in assumptions incorporated in the impact model and analysis procedure may also affect regional economic impacts. For example, Hodur, Leistritz, and Hertsgaard (2006) estimated the economic impacts of a North Dakota corn ethanol plant. Because very little of the corn that would supply the plant came from the local area, no local corn price premium was included in the analysis. Project attributes can also substantially affect impact estimates. The employment multi- plier in Hodur, Leistritz, and Hertsgaard (2006) might appear inflated at first glance. However, the plant was fueled by North Dakota lignite coal, and the coal purchased to fire the plant represented a net increase in coal production for the state. In fact, coal purchases represented 49% of the plant’s direct impacts. In this context, the resulting employment estimates appear reasonable. F.5 Differences in Study Areas Demographic and infrastructure characteristics of the local area that is home to an alternative fuels production facility will also affect regional economic impacts. A processing facility located in or near a substantial trade center with a somewhat diversified, self-sufficient economy will have larger secondary impacts, other things equal, than a sparsely populated rural site. Low and Isserman (2008) analyzed the impact of 100-MGY ethanol plants at two locations in Illinois. One site county was described as mixed rural with a population of 109,000, while the other site county was rural with a population of less than 9,000. Employment impacts (direct and secondary employment) in the more urbanized county were nearly twice that of the rural county with the smaller population. Economic Benefits 93

Demand for alternative jet fuel will be affected by the passage of state or federal legislation that mandates use of bio-derived fuels or taxes emissions from the use of jet fuel. To date, the U.S. Congress has not passed legislation that creates a market for carbon in the United States, but has done so for other pollutants (see Section G.2). Moreover, the global popularity of using credits for limiting pollutants and emissions makes it possible that additional variations on emissions trading will be mandated in the United States. Currently the EPA has purview over these issues and is a source of useful information, including summaries of national markets in different pollutants on its web site (EPA 2010b). Examples of existing cap-and-trade programs (which cap a maximum amount of emissions and allow those emitting them to trade emission credits) in the United States are the nationwide Acid Rain Program (EPA 2010a), the regional NOx Budget Trading Program (EPA 2010d) in the Northeast, and the Regional Greenhouse Gas Initiative, which limits GHG emissions from electricity generation in ten participating North- east states (RGGI 2011). G.1 National Ambient Air Quality Standards Airport activity is subject to compliance with all federal regulations, including EPA regula- tions under the CAA (FAA 1997a). The EPA establishes NAAQS for a series of criteria pollutants, including NOx, SO2, and PM, which can be present in or result from the exhaust of jet engine emissions. (Such emissions together account for a very small percentage of jet engine emissions.) Geographic areas in which concentrations of these pollutants are determined to be in excess of the NAAQS are designated as NAAs and are subject to formulating a SIP to bring the area back into compliance (FAA 1997a). SIPs can affect airports in two important ways. First, an airport in an NAA may be subject to regulation targeted at bringing the area back into compliance with NAAQS. Federal aviation statutes preclude state regulators from imposing emissions requirements on aircraft, but they can affect other non-aircraft sources at the airport, such as on-road vehicles (including cars, taxis, and shuttles), construction equipment, power plants, and other stationary sources. Second, if an airport is in an NAA and has plans for a development project, the airport has to show that the project will be in “conformity” and will not cause or contribute a further violation of a SIP before it can receive federal funding. It is important to note that one of the most problematic sources of emissions that may lead to a violation of a SIP is emissions from construction equipment. Alternative jet fuels may help airports in NAAs meet the goals specified in SIPs because of their potential to have lower emissions levels of criteria pollutants such as SOx, NOx, and PM as com- pared to conventional jet fuel. This may allow airports to save time and cost in the approval process for development projects. It may also allow airports to grow their operations without violating existing SIPs. 94 A P P E N D I X G Possible Economic Implications of Regulation

G.2 Emission Reduction Credits The Clean Air Act of 1990 created an opportunity for industry to buy and sell ERCs tied to atmospheric pollutants including sulfur dioxide (SO2), NOx, carbon monoxide (CO), PM, lead, and volatile organic compounds (VOCs) (EPA 1990). An airport operating within a non-attainment area could theoretically generate and sell ERCs if it can demonstrate that it is removing criteria pol- lutants through the supply of cleaner aviation fuel. Alternative aviation fuels can potentially contain less SO2 and PM than conventional petroleum-based jet fuel (see Section E.2). However, while creating a market for ERCs, the Clean Air Act also created restrictions based on New Source Performance Standards such that any entity operating a site subject to NSPS regulations must reduce emissions of criteria pollutants and cannot claim ERCs. G.3 Regional Greenhouse Gas Initiative The Regional Greenhouse Gas Initiative (RGGI) is a program in which ten states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont—have capped CO2 emissions from electric power generation and will reduce such GHG emissions by 10% by 2018 (RGGI 2011). Although it is limited to power gen- eration so has no impact on aviation GHG, RGGI is the first mandatory, market-based GHG emissions reduction program in the United States and could be used as a model for expansion into other industries. In the RGGI model, each state has individual CO2 budget trading programs that limit emissions of CO2 from electric power plants operating within the state, issue CO2 allowances, and establish participation in regional CO2 allowance auctions. Regulated power plants can use CO2 allowances issued by any of the states, so the ten programs act as a single regional compliance market for CO2 emissions. G.4 EPA Renewable Fuel Standards The Environmental Protection Agency adopted an RFS called RFS-2 in February 2010 (EPA 2010c). While aviation does not have a required biofuels contribution under RFS-2, producers of alternative fuel for aviation may generate benefits in the form of tradable credits for fuels merited by their ability to provide benefits as quantified by the Renewable Index Number of those fuels. G.5 Federal Rules for Purchase of Alternative Fuels Section 526 of the 2007 Department of Energy Authorization mandates that U.S. government buyers can only purchase alternative fuels if their life-cycle GHG footprint is less than that of petroleum-based fuels (U.S. Congress 2007). In the case of alternative jet fuels, this can be of rele- vance to airports that have or want to attract government customers such as the Air National Guard. Furthermore, the U.S. Air Force and DOE have published peer-reviewed procedures to help alternative jet fuel companies verify that their products meet the requirements of Section 526 (NETL 2008; Allen et al. 2009). These documents can also be of value to airports interested in a better understanding of the process of determining the life-cycle GHG footprint of alternative jet fuels and of overall compliance with Section 526. G.6 Carbon Markets The U.S. Congress has had difficulty in finding a political consensus on how to deal with greenhouse gas emissions, even as some states and municipalities pass rules and/or legislation that address this issue within their jurisdictions. The most notable example is California’s Global Warming Solutions Act of 2006, also known as Assembly Bill 32, which requires the state to Possible Economic Implications of Regulation 95

develop regulations to reduce GHG (CAEPA 2009). It is important to note that AB32 does not apply to jet fuel. As of the first quarter 2011, it seems unlikely that Congress will introduce a carbon market system within the United States in the near future. Nevertheless, there are developments in other parts of the world that may have an impact on U.S. airports and airlines. For example, the ICAO is currently analyzing a CO2 standard for new aircraft. The largest active market for carbon trading is in the European Union. The EU emissions trad- ing scheme is a cap-and-trade system—it caps the overall level of emissions and allows partici- pants to buy and sell allowances as they require (EC 2010). The ETS has been in effect since 2005 for specified energy-intensive activities (power stations and other combustion plants, oil refiner- ies, coke ovens, iron and steel plants, and factories making cement, glass, lime, bricks, ceramics, pulp, paper, and board), and as a result of growing European public concern over global warm- ing, the EU is leading the effort to control greenhouse gas emissions from aviation sources. EU legislation requires that all airlines landing at EU airports participate in the European Greenhouse Gas Emission Trading Scheme as of January 1, 2012, and monitor and report their CO2 emissions and ton-kilometer data from January 1, 2010 (EC 2003). These initiatives are being opposed by non-European airlines on the grounds that the EU has no jurisdiction over international flights because regulation of international flights is the exclusive right of ICAO, but the EU contends that since the European Greenhouse Gas Emission Trading Scheme treats all airlines entering the EU in the same manner, it is permitted under ICAO regulations. If it is determined that all airlines that fly into European airports are subject to the ETS, it is expected that airlines that use bio- derived fuel may use fewer allowances than with conventional petroleum-based jet fuel (EC 2003) and, therefore, may be able to reap an economic benefit. Even though there is still uncertainty with respect to aircraft GHG emission regulations, the airline industry has been proactive in adopting a common position of a commitment to carbon neutral growth starting in 2020 (IATA 2009). The industry realizes that alternative jet fuels with a life-cycle GHG footprint smaller than conventional jet fuel can help airlines meet their carbon- neutral growth goals. Furthermore, in the event that GHG emissions targets under the EU’s ETS or other potential cap-and-trade mechanisms become mandatory, alternative jet fuels may also help airlines meet their cap and reduce the need to purchase emissions credits. Airports that offer alternative jet fuels could provide benefit to airlines. It is important to indicate that carbon regulation, including cap-and-trade systems, will need to be crafted carefully to be effective at improving the environmental performance of air trans- portation. There is a concern among airlines that mechanisms that result in excessive monetary payments may affect the carriers’ ability to invest in new technology such as aircraft and engines with reduced fuel consumption. Furthermore, airlines are concerned that funds collected through environmental charges may not be re-invested in air transportation, and thus needed investments in air traffic control modernization, alternative jet fuels, and airport infrastructure may not occur. 96 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

The goal of this appendix is to provide guidance to project developers and other decision mak- ers with respect to the key financial considerations that must be addressed when considering an alternative fuels project. This is intended to serve as a road map to the issues that are most likely to surface when putting together the financial and business plan for this kind of facility. When creating the business case for alternative fuel processing facilities, the project developer needs to pay special attention to risk factors (i.e., those variables outside her/his control) that may have a substantial impact on the project’s economic viability. In particular, as of 2011, proj- ect developers need to recognize that alternative fuel facilities are likely to require large amounts of capital, employ technology that is unproven at scale, and operate in an uncertain market envi- ronment. As such, the projects would likely be considered high risk by financiers. Project devel- opers need to take into account that different financial supporters have different attitudes toward risk and require different kinds of assurances before committing to support a venture. H.1 Sources of Finance Project developers of alternative jet fuel production facilities can seek funding from both private- and public-sector organizations and may use a mixture of both to create a viable finance structure. H.1.1 Private Sector Private-sector funders are made up of a diverse range of private and publicly traded entities that offer different products, including equity, senior debt (similar to commercial bank loans), and mezzanine debt (debt with equity characteristics). Typically, projects require both equity and senior debt, and often mezzanine debt. The mix of these products is referred to as the proj- ect’s “capital structure.” Each of these products has a different risk/return profile: equity providers take on the highest level of risk within the capital structure and therefore require the highest rates of return to jus- tify their investments; providers of bank debt accept lower rates of return because they receive interest and get paid before equity holders if the investment goes bankrupt; mezzanine debt providers expect rates of return that are between equity and debt holders. H.1.2 Public Sector Public sources of financing include local, regional, and the federal governments. Project devel- opers should explore diverse local and regional initiatives that may be in place to support 97 A P P E N D I X H Financial Considerations

regional economic development. The alternative fuel industry is currently a high priority for the federal government because of its potential to generate jobs, reduce dependence on foreign oil, and improve the quality of the environment. The federal government, primarily through the USDA and DOE, is providing incentives such as grants, loans, loan guarantees, subsidies, and tax credits. The USDA offers extensive support programs to encourage rural development (USDA 2010e) and is committed to supporting the development of alternative aviation fuel as part of these ini- tiatives. USDA recently joined with CAAFI, the ATA, and the Boeing Company in a resolution to “accelerate the availability of sustainable aviation biofuels in the United States, increase domestic energy security, establish regional supply chains, and support rural development” (ATA 2010a). The agreement includes the formation of a Farm to Fly working group that will identify and facil- itate funding of feedstocks and production facilities focused on alternative aviation fuels. H.1.3 Biorefinery Assistance Loan Guarantee Program—Section 9003 of 2008 Farm Bill The USDA program of particular relevance to a developer of a jet fuel biorefinery is the Bio- refinery Assistance Loan Guarantee Program (USDA 2010n). This program, administered by USDA Rural Development, provides loan guarantees for the construction or retrofitting of rural biorefineries to assist in the development of new technologies for the development of advanced biofuel made from renewable biomass other than corn (USDA 2010d). Such loan guarantees can be used to support private-sector loans and are intended to make it easier to obtain financing by reducing the risks a banker would have to assume. As a result, this agency should be contacted by any airport that is interested in biorefineries. H.2 Business Case Evaluation Criteria In addition to being aware of the different possible sources of finance, it is helpful for project developers to understand business case evaluation criteria that are likely to be used by potential financial supporters. The evaluation of any business case proposal is a high-level assessment of the reasonableness of the project, including the assumptions regarding a project’s inputs and outputs, their impact on expenses and revenues, and how they affect the economic viability of the enterprise. A key aspect of the business case evaluation is to help identify the elements of the project that may have the greatest impact on its viability. Important evaluation criteria for alternative fuel business plans are discussed in the following six subsections. H.2.1 Customers and Other Stakeholders • Who are the customers; what is their interest in the project? • Are the customers willing to enter into binding purchase agreements to help reduce the financial risk and solidify the project’s financial viability? Would customers agree to long- term purchase agreements? Do the fuel buyers need to assume all the risk in a cost-plus contract or a fixed price agreement, or will the various participants in the project share in the risks? • Which stakeholders have the greatest interest in the project and does that interest translate into them being willing to take a greater share of the risk? These stakeholders may include users of the alternative jet fuel as well as users of alternative diesel, renewable electric power, and other by-products. 98 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

H.2.2 Demand for Alternative Jet Fuel • Is there sufficient demand for the product(s) in the region to justify an alternative jet fuel facility? What would be the minimum economic size for the processing facility? H.2.3 Feedstocks and Production Technology • What are the feedstock’s availability, supply reliability, and cost? • What is the project’s overall environmental sustainability, including its impact on water use, land use, and life-cycle GHG benefits? It is likely that projects that are identified as not sensi- tive to these considerations may face stiff opposition and may engender less community sup- port, both of which could increase the project’s risk profile. • Will new technologies for production of alternative fuels affect the project? For instance, novel production methods could divert feedstocks to more efficient processes or reduce the cost of competing fuels. H.2.4 Capital Costs • Can the required financial capital be attracted? This is particularly important for all projects involving new technologies. Is the engineering and design firm willing and able to guarantee both construction costs and development schedules? Are the technology providers willing and able to guarantee performance of their technology offering? H.2.5 Permitting and Regulatory Concerns • Have all regulatory, permitting, and social equity issues been identified and satisfactorily addressed? If not, the project may be delayed, resulting in higher capital costs. • If existing or new federal, state, and local governmental policy is important to the project’s economic viability, can the policy be changed during the project’s life and how would that affect the project’s viability? This applies to policies and regulations on which any GHG or other environmental credits and financial mechanisms rely and to feedstock or fuel price subsidies, if any. • Successful projects depend on all the involved parties honoring their contractual obligations. Which of those obligations are essential to the project’s success and what are the implications if one or more contracts are broken? This would include feedstock supply, infrastructure avail- ability, and customer purchases. H.2.6 Management Team • What is the quality and depth of the team that will manage this project? For new ventures in mature businesses, the business case evaluation can be based on bench- marks from existing businesses. The alternative fuels industry, in particular for aviation use, is a new and developing field, involving new technologies, feedstocks, and logistics that make it dif- ficult to identify reliable benchmarks for comparison. A good starting point for evaluating busi- ness cases for aviation alternative fuels is the information from demonstration projects [see Appendix J and IATA (2009)], although project developers need to be aware that this informa- tion may change as the industry matures. Over time, as commercial-scale projects are developed, more information will be available to help in the evaluation of this kind of venture. Financial Considerations 99

There are three general regulatory elements that should be considered in the evaluation of an alternative jet fuel project. For each one of these elements, this section details the main and asso- ciated information that the airport should consider when evaluating alternative jet fuel projects. The main regulatory elements are: 1. FAA policies and regulations, 2. Environmental reviews and permitting, and 3. Energy policy. The following subsections outline and present the important points associated with these three regulatory elements. I.1 FAA Policy and Regulatory Framework The FAA compiles and maintains a number of documents, including FAA Advisory Circu- lars, FAA Orders, and references to other documents that must be considered when assessing the viability of alternative fuel infrastructure. The following subsections identify these docu- ments and provide key excerpt material, when appropriate, to provide the reader with an overview of the policy and regulatory framework pertaining to conventional and alternative jet fuels in the airport setting. I.1.1 FAA Advisory Circulars, Orders, Regulations, and Peripheral Documentation FAA policies and regulations largely control what can and cannot be done in the airport set- ting. The construction and operation of alternative jet fuel infrastructure is no exception. The FAA compiles and maintains a number of documents, including ACs, Orders, and references to other documents that should be considered when evaluating the feasibility of placing alternative jet fuel infrastructure in the airport setting. In addition, given the complex technical issues sur- rounding fueling system and airfield design, engaging an aviation consultant engineer familiar with these topics may be advisable to assist with locating a processing facility. The FAA and FAA-related documents most likely to be relevant for alternative jet fuel projects are as follows (see Section 6 for more information): • FAA AC 150/5070-6B, Airport Master Plans • FAA AC 150/5200-33, Hazardous Wildlife Attractants on or Near Airports • FAA AC 150/5230-4A, Aircraft Fuel Storage, Handling, and Dispensing on Airports 100 A P P E N D I X I Regulatory Considerations

Regulatory Considerations 101 RUNWAY RUNWAY PROTECTION ZONE (RPZ) RUNWAY OBJECT FREE AREA (ROFA) CONTROLLED ACTIVITY AREA (CAA) CENTRAL RPZ BUILDING RESTRICTION LINE (BRL) NOT TO SCALE Figure 15. Controlled activity area. Source: Fig. 2-3, FAA AC 150/5300-13 (FAA 1989). RUNWAY CROSS SECTION INNER TRANSITIONAL OBSTACLE FREE ZONE (OFZ) RUNWAY OBSTACLE FREE ZONE (OFZ) HORIZONTAL SURFACE 150 FEET ABOVE AIRPORT ELEVATION NOT TO SCALE 1 3 or 6† †DETERMINED BY AIRCRAFT CATEGORY AND APPROACH PRECISION HEIGHT SPECIFIED BY EQUATIONS (PARAGRAPH 306, FAA AC150/5300-13) Figure 16. Obstacle free zones around runways. Source: Fig. 3-5, FAA AC 150/5300-13 (FAA 1989). • FAA AC 150/5300-13, Airport Design • FAA Order 5050.4B, National Environmental Policy Act (NEPA) Implementing Instructions for Airport Projects • FAA Order 5190-6b, Appendix R, Airport Compliance Manual • FAA Order 5190-7, Minimum Standards for Commercial Aeronautical Activities • FAA Order 1050.1E, CHG 1, Environmental Impacts: Policies and Procedures, Paragraph 304 • Title 14 of the Code of Federal Regulations (CFR) Part 77, Objections Affecting Navigable Airspace • Title 14 of the Code of Federal Regulations (CFR) Part 139, Certification of Airports • National Fire Protection Association (NFPA) 407, Standard for Aircraft Fuel Servicing • Best Practices for Environmental Impact Statement (EIS) Management • Environmental Desk Reference for Airport Actions As with any airport facility, fuel production and storage facilities must comply with FAA AC 5300-13, Airport Design (FAA 1989), which contains definitions for RPZs and ROFAs (see Figure 15 and Figure 16). This AC prohibits objects nonessential to air navigation or ground

maneuvering purposes in ROFAs and states that fuel storage facilities may not be located in the RPZ. FAA Order 5190.6B, Airport Compliance Manual (FAA 2009), reiterates that fuel storage facilities are a prohibited RPZ land use but mentions an exception for underground fuel storage tanks in controlled activity areas, which are the portions of the RPZ outside the central RPZ. Additionally, 14 CFR Part 77, Objections Affecting Navigable Airspace (FAA 1993), establishes standards for determining obstructions to air navigation by defining criteria for imaginary sur- faces that must not be pierced by any structure, including fuel production and storage facilities. Another consideration is that the proposed project must be shown on the airport layout plan, as indicated in FAA Order 5190-6B (FAA 2009). An unconditional ALP approval is required for the construction of an alternative jet fuel production facility on an airport. FAA AC 150/5230-4A, Aircraft Fuel Storage, Handling, and Dispensing on Airports (FAA 2004), states that NFPA’s 407 Standard for Aircraft Fuel Servicing (NFPA 2007) lists specifications for the design, operation, maintenance, and location of fuel storage areas and aircraft fueling devices. Gen- erally, it requires that fuel pumps and storage tanks and facilities be at or below ground level. How- ever, NFPA 407 itself does not give many specifics on the design and siting requirements of fuel facilities. NFPA 407 allows the authority having jurisdiction to establish these requirements. The authority having jurisdiction may be a federal, state, local, or regional department or individual. The constructions of alternative jet fuel facilities on or proximate to an airport will require an environmental review to adequately assess and disclose the potential for impacts to the environment from such a facility. FAA Order 5050.4B, National Environmental Policy Act (NEPA) Implement- ing Instructions for Airport Projects (FAA 2006b), provides information relative to the environmen- tal review process that may be required. Order 5050.4B specifies three types of reviews: categorical exclusions, environmental assessments, and environmental impact statements. The type of review required will be determined by the responsible FAA official with jurisdiction over the project. The type of review will also depend on the estimated significance of the impact of the project on the environment. In some cases, the extent of government agencies’ review expands depend- ing on the circumstances that are likely to be highly controversial on environmental grounds. Both FAA Order 1050.1E and FAA Order 5050.4B stress the importance of early contact with the FAA to avoid delays in the NEPA process. Alternative jet fuel processing plants located outside of the airport limits are not subject to the FAA policies and regulations governing on-airport facilities; however, near-airport and off- airport facilities must still comply with 14 CFR Part 77. For example, objects such as light poles, trees, construction cranes, and even tall buildings (sometimes miles away from the airport) can be in violation of 14 CFR Part 77 and would, therefore, present a potential hazard to aircraft operating in the area. Form 7460-1, Notice of Proposed Construction or Alteration, needs to be completed and filed with the FAA prior to construction for an airspace analysis and determina- tion for on- or off-airport projects. In addition to the FAA documents discussed previously, it is important to indicate other resources available to jet fuel handlers. For example, the American Transport Association publishes ATA Specification 103: Standard for Jet Fuel Quality Control at Airports (ATA 2009c). This doc- ument includes recommended specifications that have been developed to provide guidance for safe storage and handling of jet fuel at commercial airports. While these recommendations are not mandatory, they are very closely followed by all major airlines and airports in the United States. I.1.2 Airport Improvement Program Applicability Any costs associated with alternative jet fuel production are not AIP eligible. Refining and manufacturing of aviation fuels, whether from conventional or alternative feedstocks, are not aeronautical activities. The handling, storing, and delivery of jet fuel into an airplane may be con- 102 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

sidered an aeronautical activity as long as 100% of the fuel is delivered to aircraft on the airport and not distributed elsewhere. Therefore, on-airport fuel storage is eligible but only using non- primary airport entitlements. Furthermore, since the production of alternative fuels is not an aeronautical activity, any leases will need to be at fair market value. Ancillary project elements, such as site preparation and utilities, may be eligible for AIP funding. The following sections present more information on possible AIP applicability for certain fuel- related projects at airports. They are meant to illustrate some details of how AIP funding works and how it can relate to alternative jet fuel. For more information, airports are encouraged to contact their local FAA office. Contact information for the FAA regional offices is available at http://www. faa.gov/about/office_org/headquarters_offices/arp/regional_offices/. Fuel Facilities and AIP The AIP provides grants to public agencies and, in certain circumstances, to private owners and entities to plan and develop public-use airports (FAA 2010b). An airport improvement project must meet numerous requirements before becoming eligible for funding. In general, projects related to enhancing airport safety, capacity, security, and environmental concerns are eligible for AIP funding. On the other hand, projects related to airport operations and revenue-generating activities are usually not eligible for AIP funding. Projects related to fuel infrastructure are typically ineligible for AIP funding, but there are cer- tain circumstances under which they become eligible. For example, Paragraph 515(a) of the Air- port Improvement Program Handbook states that new fuel farms at non-primary airports may be eligible for AIP funding provided that financing for other airfield projects with higher priority has been secured (FAA 2005b). Furthermore, the FAA Vision 100—Century of Aviation Reauthoriza- tion Act included a provision to allow for revenue-producing facilities such as hangars and fuel farms to obtain AIP funding if certain conditions are met (U.S. Congress 2003). The intent of the policy is to “support the construction of new facilities which add additional revenue producing capability for the facility.” Before any AIP funding is allowed under this provision, a number of conditions must be met, including (a) a determination by the FAA that the airport’s airside needs have adequate funding, (b) verification that current FAA Safety Area and Runway Protection Zone standards are being met, and (c) that the federal share of these facilities is funded with non-primary entitlements (FAA 2010b). These provisions refer specifically to fuel storage; however, AIP funding for alternative jet fuel production is not eligible. Refining and manufacturing of aviation fuels, whether from conven- tional or alternative feedstocks, are not aeronautical activities. Definition of Aeronautical Activities and Its Relationship to Alternative Fuels Production The definition of an aeronautical activity as defined in AC 150/5190-7 includes “any activity that involves, makes possible, or is required for the operation of aircraft or that contributes to or is required for the safety of such operations” (FAA 2006a). Furthermore, AC 150/5190-7 states that aeronautical activities include “any other activities that, because of their direct relationship to the operation of aircraft, can appropriately be regarded as aeronautical activities.” Common aeronautical activities include but are not limited to general and corporate aviation, air taxi and charter operations, scheduled and nonscheduled air carrier operations, and sale of aviation petroleum products. The handling, storing, and delivery of jet fuels into an airplane may be considered an aero- nautical activity as long as 100% of the fuel is delivered to aircraft on the airport and not distrib- uted elsewhere. Therefore, on-airport fuel storage (but not production) may be eligible but only using non-primary airport entitlements. Regulatory Considerations 103

Other Considerations Regarding AIP and Alternative Jet Fuel Facilities In addition to the items discussed previously, there are other considerations related to AIP and associated mechanisms that should be considered, including: Section 25, Airport Revenues of the FAA’s Airport Sponsor Assurances, specifies require- ments for those airports having to meet grant assurances (FAA 2005c). One of the provisions states that “all revenues generated by the airport and any local taxes on aviation fuel . . . will be expended by it for the capital or operating costs of the airport; the local airport system; or other local facilities which are owned or operated by the owner or operator of the airport and which are directly and substantially related to the actual air transportation of passengers or property; or for noise mitigation purposes on or off the airport.” Consequently, revenues from the sale of alternative jet fuel would have to be re-invested in the airport or airport system in order to meet grant assurances. The Airport Grant Assurance Compliance Certification Form provides further support to this interpretation. Section K, Utilization of Airport Revenue, states that airports subject to any fed- eral agreement are obliged to “apply revenue derived from the use of airport property toward the operation, maintenance, and development of the airport. Diversion of airport revenue to a non-airport purpose must be approved by the FAA” (FAA 2005a). Other questions regarding compliance with grant obligations and other funding mechanisms for those areas of alternative jet fuel production and distribution for which implications to grant assurances are new in nature or otherwise unclear are best handled by coordinating with the appro- priate local Airport District Office. In addition, adherence to items in the Airport Sponsor Assur- ances (FAA 2005c) and Airport Grant Assurance Compliance Certification Form (FAA 2005a) will provide the best avenue for compliance. I.2 Environmental Reviews and Permitting Environmental reviews and permitting will be requisite activities in the planning process for any alternative jet fuel production and distribution project. Jurisdictions at the federal, state, and local levels require permits for those activities or facilities that they view as affecting the environ- ment, safety, or equity of the surrounding population. Alternative jet fuel plants affect each of these three components. In general terms, the main categories of interest in the environmental review and permitting process tend to be the following: • Water quality, including environmental impact on drinking water, groundwater, wastewater, and surface waters including storm water, coastal areas, wetlands, or floodplains. • Air quality, including environmental impact of gaseous and other emissions. • Impacts to endangered species and historic, coastal, or other environmental resources by facility construction, operation, maintenance, or access. • Land quality, including solid waste disposal, hazardous waste handling and disposal, and spill prevention, reporting, and cleanup. • Land-use planning and zoning, including impacts to shared infrastructure such as roads and railways. I.2.1 Environmental Review At the federal level, alternative jet fuel projects need to comply with NEPA and applicable laws protecting sensitive environmental resources. NEPA outlines a process by which agencies are required to determine if their proposed actions have significant environmental effects. Depending on a number of factors, including the severity of the environmental effects, a CE, EA, or EIS may 104 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

be required (see FAA Order 1050.1E for more information). Environmental effects that may need to be analyzed include growth-inducing effects related to changes in land use, population den- sity, and related effects on air and water and other natural systems, including potential impacts to ecosystems that an action may cause. In particular, the environmental issues addressed in the Envi- ronmental Desk Reference for Airport Actions (FAA 2007) or Appendix A of Order 1050.1E should be investigated during the NEPA process. This must occur thoroughly before FAA makes a deci- sion on approving an alternative jet fuel facility. For alternative jet fuel projects on-airport, airports should refer to FAA Order 1050.1E, which is the FAA’s umbrella guidance for NEPA compliance. Installation of on-airport fuel facilities requires the FAA to issue an unconditional approval to an airport layout plan. This requires the FAA to complete its environmental analyses under NEPA and other special pur- pose laws (FAA 2007). At the state and local level, there is a high degree of variation in terms of environmental review and permitting requirements and regulations. Many states are developing review processes and integrated guidance materials on environmental review and permitting activities relative to infra- structure that may be applicable to alternative jet fuel projects (see Section 6.2). Furthermore, the EPA maintains a database of state-specific regulatory information at http://www.epa.gov/lawsregs/ states/index.html#state. Readers should consult this resource for guidance specific to their local conditions. I.2.2 Environmental Permitting This subsection provides an overview of federal, state, and local permitting processes to iden- tify the breadth of permitting requirements that might be expected in developing alternative fuel production, storage, and distribution infrastructure. This is not intended to be a comprehensive review since requirements and processes vary from jurisdiction to jurisdiction. There are various motivations for permitting. Environmental permitting encompasses numerous and detailed processes instituted to ensure protection of public health, safety, and environmental quality. These permitting requirements vary from state to state and also have local nuances with respect to county, city, and other jurisdictional requirements—and they apply to the production of alternative fuels as they do to any other facility. In addition, federal require- ments under NEPA and other federal regulations may be applicable to alternative jet fuel facili- ties depending on location and proximity to state or federal waters, endangered species, and historic and archeological resources. Most of the existing guidance issued by jurisdictions pertains to biodiesel facilities, not specif- ically to alternative jet fuel. However, the permitting process for biodiesel should be a reason- able approximation for that of alternative jet fuel. For example, the State of Washington has two publications pertaining to biodiesel permitting. One of them is a fact sheet that lists the permits, regulations, and tax benefits associated with a biodiesel plant (State of Washington 2010a). Another example appears at the State of Washington’s Department of Ecology website (State of Washington 2010b). Table 19, taken from that website, lists the permits that a biodiesel manu- facturer should consider; furthermore, the department notes that these are the commonly required permits but that the permits needed are not limited to those listed in the table. This qualification confirms the uncertainty inherent in the permitting process. I.2.3 Land Use and Zoning in the Vicinity of Airports Being a good neighbor is often a principle that airports adopt since it can enable a mutually beneficial relationship between airport operators and surrounding developments and avoid Regulatory Considerations 105

potentially costly litigation. In order to avoid conflict with airport surroundings, land-use zon- ing must be done carefully in the areas near an airport. In general, zoning rules and regulations vary considerably from one jurisdiction to another, and it is not practical to summarize them in this document. Airports should consult ACRP Report 27: Enhancing Airport Land Use Compatibility (Ward et al. 2010) for a deeper discussion of this topic. Nevertheless, there are a few general observations that can help airports evaluate alter- native fuel projects with respect to zoning: 106 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting Jurisdiction Type of Permit City and county Building Preliminary/final plat Grading Water system Shoreline Right of way Utility Site plan review Septic system Floodplain development Variance (zoning, shoreline, etc.) Outdoor burning State Dept. of Fish and Wildlife Hydraulic project approval Bald eagle management Grass carp Shooting preserve Dept. of Natural Resources Forest practices Aquatic lease Burning (forest slash) Reclamation Dept. of Ecology Water rights Well drilling National Pollutant Discharge Elimination System (NPDES) Water quality certification Storm water Underground storage tank certification Dangerous waste Air Authority/Dept. of Ecology New source review, for a business or industry Notice of intent, for demolition projects Federal U.S. Army Corp of Engineers Section 10 (Navigable Waters) Section 404 (Fill in Waters) U.S. Coast Guard Section 9 (Bridges) National Marine Fisheries/U.S. Fish and Wildlife Endangered Species Act consultation Table 19. Examples of commonly required permits (State of Washington 2010b).

• Obstacles to air navigation: The FAA requires that there be no object, man-made or natural outgrowth, that is 200 ft from the ground level of the airport and within a 3-nautical-mile radius of the established reference point of the airport. Other requirements are listed in FAR Part 77. • Noise assessment: If construction of alternative jet fuel facilities would require modifications to existing airspace procedures, a proper EIS is needed before the FAA could approve route changes when there is a significant noise impact on the affected population. See Section I.2.1 for more information on EISs. • Agricultural land near airports: The FAA recommends against using airport property for agricultural production because agricultural crops can attract wildlife during some phase of production (FAA 1997b). If the airport requires agricultural crops as a means to produce income necessary for the viability of the airport, it needs to follow the crop-distance guide- lines established in AC 150/5300-13, Appendix 17. Airports should be advised that the FAA may require a WHA or WHMP when specific triggering events occur on or near an airport, as specified in 14 CFR Part 139, Certification of Airports. Such events include an air carrier aircraft striking wildlife, an air carrier aircraft engine experiencing an engine ingestion of wildlife, or observing wildlife of a size or in numbers capable of causing an aircraft strike or engine ingestion. The WHA plan must be conducted by biologists with the appropriate train- ing and education specified in AC 150/5200-36. Agricultural land use is compatible with air- port operations from a noise sensitivity perspective (FAA 2001). I.2.4 Additional Notes on Permitting One significant risk with the permitting process is that it can stall a project’s implementation or scuttle it entirely. Because of this risk, incorporating adequate lead time is absolutely neces- sary to meet all permitting requirements and not to incur delays in project coordination, plan- ning, design, engineering, site preparation, construction, and inspection necessary for the development of alternative fuel infrastructure. Front-end planning for permitting with appro- priate time buffers for areas of risk or uncertainty will allow for some flexibility in schedule adherence given the numerous permitting requirements that will inevitably vary with selection of a particular site. This section has emphasized the motivation, complexity, and uncertainty associated with per- mitting. Because each alternative jet fuel facility carries its own risks, the permitting process is almost customized to each situation. Therefore, an airport that seeks to install alternative jet fuel facilities of any type should refer to a consultant with expertise in this matter and incorporate the recommendations into the project plan. I.3 Energy Policy Support for alternative jet fuel projects comes from various entities and policies, including the federal government and NGOs. This section summarizes some of the most visible entities and policies and indicates how they may be helpful to alternative jet fuel projects: • White House energy policy The current administration in the White House has a policy framework that supports both biofuels production and the allocation of those funds to aviation fuel sources. These policies include but may not be limited to the following: – On May 5, 2009, the biofuels policy framework established the USDA’s commitment to allocate funds to biofuels development. USDA announced its approach to meeting that commitment in June 2009 (USDA 2009). Regulatory Considerations 107

– In February 2010, the Biofuels Interagency Working Group issued its report highlighting aviation fuel deployment. The report specifically calls for using pre-established market out- lets and customer purchase commitments to stimulate production of feedstocks and bio- fuels (USDA 2010h). • The FAA Office of Environment and Energy sets policy and offers programs to monetize the benefits of using alternative fuels. Relevant initiatives sponsored by this office include: – Next Gen Environmental Working Group. This group, part of JPDO, sets goals for car- bon and particle emission reductions. As part of NextGen, FAA and project contributors have the objective of finding ways for aviation to grow without increasing its environmen- tal impact. Much of the progress in quantifying the life-cycle carbon benefits of alternative fuel is a result of programs initiated to accommodate those goals. – PARTNER Project 28: Environmental Cost-benefit Analysis of Alternative Jet Fuels. This project quantifies aviation-specific GHG levels for a range of alternative fuel options that may be proposed for adoption by airports and their stakeholders (PARTNER 2010c). The analysis includes effects of land use (direct and indirect) and provides uncertainty bands to set the range of possibilities for outcomes. – PARTNER Project 20: Emissions Characteristics of Alternative Aviation Fuels. This project characterizes particle emission measurements for a series of alternative fuels (PARTNER 2010a). – PARTNER Project 27: Environmental Cost-Benefit Analysis of Ultra Low Sulfur Jet Fuels. This project established the health effects of particles for use in conjunction with the FAA’s APMT suite (PARTNER 2010b). The FAA has other programs that can be of interest to alternative aviation fuel projects. These include: – Voluntary Airport Low Emissions Program: VALE was established in 2004 to help com- mercial service airports in designated air quality non-attainment and maintenance areas reduce airport ground emissions (FAA 2011b). VALE allows airport sponsors to use the AIP and PFCs to finance low-emission vehicles, refueling and recharging stations, gate elec- trification, and other airport air quality improvements. While VALE is restricted to ground emissions, it could still be helpful for alternative jet fuel projects. For example, airports that participate in VALE gain valuable experience structuring projects and handling alternative fuels that could be useful for alternative jet fuel projects. Furthermore, some stationary sources that contribute to ground emissions, such as back-up generators, could theoreti- cally use alternative jet fuel. – Sustainable Master Plan Pilot Program: This program was recently introduced by the FAA. Participants evaluate ways to make sustainability a core objective at every airport (FAA 2011a). The program funds long-range planning documents at 10 airports around the country. These documents, called Sustainable Master Plans and Sustainable Man- agement Plans, will include initiatives for reducing environmental impacts, achieving economic benefits, and increasing airport integration with local communities. The pro- gram is projected to end in late 2012. This program may provide valuable information to airports interested in integrating alternative jet fuel projects into their sustainability initiatives. • Programs to fund studies and other nonrecurring investments in alternative fuels The following programs exist at the federal, state, or local levels: – 2008 USDA Budget Authorization, section 9000 for renewable energy proposed rules asso- ciated with BCAP (USDA 2010c). – Federal and state policies and programs for rural renewable project evaluation and devel- opments, such as value added grants and state enterprise grants (USDA 2010p; USDA 2010m). 108 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

– Organized state and local policies and coalitions to promote regional growth, for example the State of Georgia’s Centers for Innovation (GCI 2011). – Military Title III programs, which can enable initial plant construction for national defense priorities (Finnessy 2006). • Policies to allow recurring support for energy projects These policies can take a variety of forms, including tax incentives, insurance for crops, and tax credits for the alternative fuels. These programs exist at the federal, state, or local levels: – Possible price supports for growers and price collars for buyers and sellers, similar to those available for food crops (USDA 2010k). – Crop insurance similar to that available for food crops (USDA 2010f). – DOD policies involving alternative fuel commitments, such as the plan to have 50% of continental U.S. military jet fuel consumption sourced from synthetic fuel blends (Andrews 2009). – Tax credits, such as the one-dollar-per-gallon tax credit for biofuels (currently renewed on a year-by-year basis) (American Fuels 2010). • Nongovernmental, industry trade association stakeholder goals and policies – IATA and its stated industry goal of carbon neutral growth by 2020 (IATA 2010). – Air Transport Association policy on alternative fuels (ATA 2010c). – ATA/AIA biofuel producer policy letter to President-Elect Obama (Altman 2010). – Airport associations, such as Airport Council International–North America sustainability and business policies (ACI–NA 2010). – Roundtable on Sustainable Biofuels best practices (RSB 2010). – Growers association policies and plans: Projects such as value-added grants need to be sub- mitted for funding—in many cases through agricultural institutions. Therefore, the poli- cies of these organizations are relevant for planning purposes. One example of this process is afforded by a proposal made via the Ohio Soybean Growers Association (OHSOY 2010) for a brownfield plant conversion to produce alternative jet fuel. – Environmental NGOs: Several environmental NGOs, such as the National Resources Defense Council and the World Wildlife Federation, have participated in alternative jet fuel forums at the request of CAAFI in the United States and SWAFEA in Europe. • Public/Private Partnerships and Coalitions Several organizations focused on the development and deployment of alternative jet fuels have been formed over the past few years. These include: – Commercial Aviation Alternative Fuels Initiative: CAAFI is a coalition of government and private-sector organizations, including the FAA Office of Environment and Energy; AIA, representing manufacturers; ATA, representing airlines; and ACI–NA, representing airports (CAAFI 2010). CAAFI’s 350 members represent nearly 250 separate entities, including some 17 U.S. government agencies. CAAFI is organized around four working groups covering qualification of fuels for safe use, environmental benefit calculation, research and development of all feedstocks and processes, and deployment. These working groups operate in concert with the ATA Energy Council of fuel buyers and some 50 energy company stakeholders. CAAFI seeks to facilitate deployment of alternative jet fuels, and its airline sponsor (ATA) has been involved with several ACRP problem statements related to alternative jet fuel. – ATA/Defense Energy Support Center Alliance: In March 2010, ATA signed an agreement with the DLA (formerly DESC) to pursue joint policies for the purchase of alternative fuels. The alliance seeks to align purchasing policies, promote deployment, and pursue common economic policies (ATA 2010b). – Farm to Fly: The Farm to Fly coalition of interest between the U.S. Department of Agricul- ture, the airline industry (ATA), and Boeing was formed in July 2010 as the result of dialog Regulatory Considerations 109

between the Secretary of Agriculture and industry representatives (ATA 2010a). It specifi- cally seeks to encourage deployment activity, initially working on bottom-up models for developing fuel supplies for aviation regions of the United States. The concept is beginning with studies in the Pacific Northwest and Hawaii. – Regional coalitions: There are also regional initiatives focused on partnerships for the development of alternative fuel projects in specific geographic areas. Examples include the Georgia Center of Innovation for Energy (GCI 2011), the Hawaii Renewable Energy Alliance (HREA 2011), Clean Fuels Ohio (CFO 2011), and the Sustainable Aviation Fuels Northwest in the U.S. Pacific Northwest (SAFNW 2011a). SAFN just published a detailed report analyzing and evaluating the potential for alternative jet fuel production in their region (SAFNW 2011b). 110 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

Drop-in alternative jet fuels will be able to share the same transportation, storage, and han- dling infrastructure as conventional jet fuel. Thus, from a logistical point of view, there should be no difference between alternative and conventional jet fuel. However, since jet fuel infrastruc- ture is typically a shared resource serving many customers, all users must agree to the alternative jet fuel being present in the distribution chain. The main options for transporting alternative or conventional jet fuel to the airport are listed in the following: • Pipeline: This is the most cost-effective option for transporting the finished fuel, especially if the processing plant and the airport already have pipeline access. • Rail or barge: Rail or barges are the next most cost-effective options for transporting finished fuel. As in the case of pipelines, the maximum benefit is achieved if both the processing plant and the airport already have access to rail or barges. • Truck: This is the least cost-effective option for transporting the finished fuel; however, truck transportation provides the most flexibility because it does not require the existence of expen- sive infrastructure such as pipelines or railways. Thus, in the absence of pipelines or railways, truck transportation may be the most practical option. One important consideration that should be highlighted is the potential need for blending infrastructure. Since thus far alternative jet fuels have only been certified as a blend (up to 50% in the case of FT), there will have to be a place in the supply chain, prior to reaching the wing of the aircraft, where alternative and petroleum-based jet fuels are blended. This will most likely consist of separate storage for conventional jet fuel, alternative jet fuel, and the blend. Logical locations for blending facilities are points along the supply chain where alternative and conven- tional fuel would intersect. For example, injection points at pipelines that transport jet fuel and airport fuel farms are likely locations. 111 A P P E N D I X J Transportation and Logistics of Alternative Fuels

There have been several announcements of alternative jet fuel projects. These early projects are important because they demonstrate interest from several different stakeholders, including airports, airlines, and fuel producers, in this technology. While it is expected that the number of announced projects will increase over time, following is a representative sample of the type of projects that have been announced. K.1 Rentech—Rialto In the summer of 2009, Rentech, Inc., and Aircraft Service International Group (ASIG) made an agreement with eight airlines to produce 1.5 million gallons of renewable synthetic diesel fuel (RenDiesel) to support ground service equipment at LAX (ATA 2009b). The airlines that have partnered with Rentech are Alaska Airlines, American Airlines, Continental Airlines, Delta Air Lines, Southwest Airlines, United Airlines, UPS Airlines, and US Airways. Production of RenDiesel is planned to begin in 2012 at a facility in Rialto, CA. Primary feedstock will be urban woody green waste such as yard clippings. K.2 Rentech—Natchez Under the Natchez Project, Rentech, Inc., has made a nonbinding memorandum of under- standing (MOU) with 13 airlines to produce 16,600 barrels of renewable synthetic jet fuel per day (Rentech 2010). The Natchez Project could potentially produce 400 million gallons of syn- thetic fuel per year. The airlines that have partnered with Rentech are Air Canada, AirTran Air- ways, American Airlines, Atlas Air, Delta Air Lines, FedEx Express, JetBlue Airways, Lufthansa German Airlines, Mexicana Airlines, Polar Air Cargo, United Airlines, UPS Airlines, and US Air- ways. The Natchez Project synthetic fuel production will be located at a 450-acre facility in Adams County, MS, near the city of Natchez. This facility will have access to many feedstocks, including petcoke and biomass, and several modes of distribution will be available. K.3 Altair Altair signed a MOU with 14 airlines to produce 75 million gallons of alternative jet fuel and diesel fuel per year (Heim 2009). The airlines that have partnered with Altair are Air Canada, American Airlines, Atlas Air, Delta Air Lines, FedEx Express, JetBlue Airways, Lufthansa Ger- man Airlines, Mexicana Airlines, Polar Air Cargo, United Airlines, UPS Airlines, US Airways, Alaska Airlines, and Hawaiian Airlines. Altair fuel production is planned to begin in the fourth 112 A P P E N D I X K Publicly Announced Aviation Alternative Fuel Projects

quarter of 2012 at the Tesoro refinery in Anacortes, WA (ATA 2009a). Altair’s bio-jet fuel will be blended with petroleum-based jet fuel at the Tesoro refinery and piped to Seattle–Tacoma International Airport for use in aircraft and heavy machinery. The primary feedstock will be Camelina oil. K.4 Solena Solena Group, Inc., has partnered with British Airways PLC to produce 16 million gallons of jet fuel and diesel fuel per year for 10 years (Solena Group 2010). The location of biofuel pro- duction is still undecided, but will potentially be near Dagenham in east London. Construction should begin in 2011, and production is scheduled to begin mid-2014. The facility will report- edly be a waste-to-biofuels plant, using feedstocks such as plastics, paper, and food leftovers. British Airways hopes to recruit other airlines into this venture. Publicly Announced Aviation Alternative Fuel Projects 113

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TRB’s Airport Cooperative Research Program (ACRP) Report 60: Guidelines for Integrating Alternative Jet Fuel into the Airport Setting identifies the types and characteristics of alternative jet fuels; summarizes potential benefits; addresses legal, financial, environmental, and logistical considerations and opportunities; and aids in evaluating the feasibility of alternative jet fuel production facilities.

The report also summarizes issues and opportunities associated with locating on- or off-airport alternative jet fuel production facilities and their fuel storage and distribution requirements.

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