National Academies Press: OpenBook

The Carbon Market: A Primer for Airports (2011)

Chapter: Front Matter

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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2011. The Carbon Market: A Primer for Airports. Washington, DC: The National Academies Press. doi: 10.17226/14607.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2011. The Carbon Market: A Primer for Airports. Washington, DC: The National Academies Press. doi: 10.17226/14607.
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Page iii
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2011. The Carbon Market: A Primer for Airports. Washington, DC: The National Academies Press. doi: 10.17226/14607.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2011. The Carbon Market: A Primer for Airports. Washington, DC: The National Academies Press. doi: 10.17226/14607.
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Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2011. The Carbon Market: A Primer for Airports. Washington, DC: The National Academies Press. doi: 10.17226/14607.
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Page vi
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2011. The Carbon Market: A Primer for Airports. Washington, DC: The National Academies Press. doi: 10.17226/14607.
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Page vii
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2011. The Carbon Market: A Primer for Airports. Washington, DC: The National Academies Press. doi: 10.17226/14607.
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Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2011 www.TRB.org A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP REPORT 57 Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation The Carbon Market: A Primer for Airports Melissa Ritter Greg Bertelsen PACE GLOBAL ENERGY SERVICES Fairfax, VA Zoe Haseman LEIGHFISHER Burlingame, CA

AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans- portation of people and goods and in regional, national, and inter- national commerce. They are where the nation’s aviation system connects with other modes of transportation and where federal respon- sibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Coopera- tive Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near-term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon- sored by the Federal Aviation Administration (FAA). The ACRP carries out applied research on problems that are shared by airport operating agencies and are not being adequately addressed by existing federal research programs. It is modeled after the successful National Coopera- tive Highway Research Program and Transit Cooperative Research Pro- gram. The ACRP undertakes research and other technical activities in a variety of airport subject areas, including design, construction, mainte- nance, operations, safety, security, policy, planning, human resources, and administration. The ACRP provides a forum where airport opera- tors can cooperatively address common operational problems. The ACRP was authorized in December 2003 as part of the Vision 100-Century of Aviation Reauthorization Act. The primary partici- pants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport oper- ating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International-North America (ACI-NA), the American Association of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), and the Air Transport Association (ATA) as vital links to the airport community; (2) the TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academies formally initiating the program. The ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research orga- nizations. Each of these participants has different interests and respon- sibilities, and each is an integral part of this cooperative research effort. Research problem statements for the ACRP are solicited periodically but may be submitted to the TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by iden- tifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel, appointed by the TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport pro- fessionals, the intended users of the research products. The panels pre- pare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing cooper- ative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended end-users of the research: airport operating agencies, service providers, and suppliers. The ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties, and industry associations may arrange for work- shops, training aids, field visits, and other activities to ensure that results are implemented by airport-industry practitioners. ACRP REPORT 57 Project 11-02/Task 18 ISSN 1935-9802 ISBN 978-0-309-21368-4 Library of Congress Control Number 2011941329 © 2011 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB or FAA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the Airport Cooperative Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. Published reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at http://www.national-academies.org/trb/bookstore Printed in the United States of America

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board’s varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org

CRP STAFF FOR ACRP REPORT 57 Christopher W. Jenks, Director, Cooperative Research Programs Crawford F. Jencks, Deputy Director, Cooperative Research Programs Michael R. Salamone, ACRP Manager Joseph Navarrete, Senior Program Officer Melanie Adcock, Senior Program Assistant Eileen P. Delaney, Director of Publications Maria Sabin Crawford, Assistant Editor ACRP PROJECT 11-02/TASK 18 PANEL Field of Special Projects Stephen P. Gordon, Oakland International Airport, Oakland, CA Rusty T. Hodapp, Dallas/Fort Worth International Airport Board, DFW Airport, TX John E. Putnam, Kaplan, Kirsch, and Rockwell, Denver, CO Meenakshi Singh, Cleveland Airport System, Cleveland, OH Mary L. Vigilante, Synergy Consultants, Inc., Seattle, WA Thomas W. Cuddy, FAA Liaison AUTHOR ACKNOWLEDGMENTS The research reported herein was performed under ACRP Project 11-02 (Task 18) by Pace Global Energy Services (Pace Global) and LeighFisher Inc. (LeighFisher). Pace Global was the contractor for this study, with LeighFisher serving as the subcontractor. Melissa Ritter, Director of Environmental Markets and Policy at Pace Global, was the Principal Inves- tigator. The other key authors of this report are Zoe Haseman, Associate Director at LeighFisher, and Greg Bertelsen, Manager of Environmental Markets and Policy at Pace Global. C O O P E R A T I V E R E S E A R C H P R O G R A M S

ACRP Report 57: The Carbon Market: A Primer for Airports provides the airport commu- nity with current, relevant information on carbon and other environmental credit trading markets, potential opportunities, and challenges to airport participation in these markets. Carbon and other environmental markets are dynamic and present new terms and con- cepts. The Primer will therefore be of interest to anyone desiring a basic understanding of current markets in the context of airports, including their structure, driving forces, sponsor obligations, and the impacts of current policies. The growing concern for the impact of CO2 emissions on the environment has led to poli- cies and regulations designed to control and limit greenhouse gas emissions. One outcome of these regulations has been the development of carbon markets, where carbon credits are bought, sold, and traded as a market-based approach to control emissions. Airports are now exploring whether there may be revenue opportunities generated by selling credits in the car- bon market. However, as the carbon credit market is complex and continually evolving, deci- sion makers are faced with many questions regarding airport participation, including the kind of credits airports can create or trade, who can take credit for various actions at an airport, the minimum level of credits needed to be marketable, and how carbon trading would affect air- port compliance obligations, including grant assurances made to the federal government. The research, led by Pace Global Energy Services, shows that, while airports can poten- tially gain monetary or reputational value by hosting carbon offset and renewable energy projects, the opportunities for airports are limited for several reasons. First, the lack of a fed- erally mandated, comprehensive carbon trading scheme limits demand for overall credits. Second, the kinds of projects that can be practically implemented at airports are not often conducive to selling the credit associated with the activity. Finally, there are regulatory fac- tors that limit the types of projects that can be implemented on airport property. The Primer also examines the potential opportunities of renewable energy credits for airports, which are also a tradable instrument. The Primer is organized into six chapters. Chapter 1 provides an introduction and back- ground to greenhouse gases, carbon markets and instruments, carbon projects at airports, and unique issues airports may face. Chapter 2 evaluates typical airport projects relative to their marketability in carbon markets. An overview of North American compliance carbon markets is provided in Chapter 3. Chapter 4 provides an overview of the global carbon mar- ket, while Chapter 5 describes renewable energy and associated markets. Finally, Chapter 6 outlines how offset credits and renewable energy certificates are traded and the implication of retiring credits. Throughout the document, the reader will find relevant case study exam- ples drawn from several airports. The Primer also includes a list of abbreviations and acronyms as well as a glossary. F O R E W O R D By Joseph D. Navarrete Staff Officer Transportation Research Board

1 Summary 5 Chapter 1 Introduction and Background 6 1.1 Overview of GHGs 8 1.2 Overview of Carbon Markets and Instruments 9 1.3 Carbon Projects at Airports 10 1.4 Airport Constraints as Related to Carbon Credits and Other Revenue Opportunities 12 1.4.1 Use of Airport Revenue and Revenue Diversion 12 1.4.2 Airport Layout Plan and Compatible Land Use 13 1.4.3 Use Agreements and Bond Resolutions 14 Chapter 2 Carbon Offset and Value Opportunities for Airports 14 2.1 Offset Credit Origination 15 2.1.1 Airport Offset Project Applicability 15 2.1.2 Methane Destruction 17 2.1.3 Land Use Changes 20 2.1.4 Industrial Pollutants 21 2.1.5 Energy Efficiency 23 2.2 Voluntary Carbon Markets and Initiatives 24 2.2.1 Offset-Based Programs 25 2.2.2 Legally Binding Voluntary Programs 26 2.3 Role of the GHG Inventory in Airport Carbon Management 29 Chapter 3 North American Compliance Carbon Markets 29 3.1 State and Regional Regulatory Compliance Markets 30 3.1.1 Regional Greenhouse Gas Initiative 31 3.1.2 California Assembly Bill 32 31 3.1.3 Western Climate Initiative 32 3.2 Federal Approaches to Limiting GHGs 32 3.2.1 Legislative Attempts 32 3.2.2 Regulatory Approaches 34 Chapter 4 State of the Global Carbon Markets and Aviation: Regulatory Requirements and Voluntary Stewardship 34 4.1 Global Compliance Carbon Market Overview 36 4.1.1 European Union 37 4.1.2 New Zealand 38 4.1.3 Other Developed Economies 38 4.1.4 Developing and Emerging Economies C O N T E N T S

39 Chapter 5 Renewable Energy and Associated Markets 39 5.1 Renewable Energy Certificates 41 5.2 REC Markets 46 5.2.1 Energy Efficiency Credits “White Tags” 48 5.3 Voluntary Airport Low Emission Program (VALE) 49 5.3.1 VALE Program Description 49 5.3.2 RECs and AERCs 51 Chapter 6 Trading Offset Credits and RECs 51 6.1 Implications of Retiring and Trading Environmental Instruments 52 6.2 Overview of Carbon and Environmental Instrument Trading 53 6.2.1 Exchanges 53 6.2.2 Wholesale Brokers 54 6.2.3 Retail Brokers 55 6.2.4 Bilateral Transactions 55 6.3 Offtake Demand Drivers 58 References 60 Acronyms 62 Glossary Note: Many of the photographs, figures, and tables in this report have been converted from color to grayscale for printing. The electronic version of the report (posted on the Web at www.trb.org) retains the color versions.

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TRB’s Airport Cooperative Research Program (ACRP) Report 57: The Carbon Market: A Primer for Airports provides information on carbon and other environmental credit trading markets, and highlights the potential opportunities and challenges to an airport's participation in these markets.

The primer also addresses the new terms and concepts related to the carbon and other environmental markets.

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