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

Chapter: Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?

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Suggested Citation:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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:"Section 3 - How Can Alternative Jet Fuels Be Integrated into the Airport Setting?." 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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3.1 Introduction to Evaluation Framework This section describes a framework for evaluating options to integrate alternative jet fuels into the airport setting. Given that this is a new and developing field, it is likely that many readers will not be as familiar with these kinds of projects and technologies as they are with other common proj- ects at airports. Thus, it is possible that outside experts may have to be engaged to help with parts or the entire framework presented here. Ideally, as the field of alternative jet fuel expands and matures, these projects will become more commonplace and less outside help will be required. Following are a set of questions to help readers assess their understanding and comfort with the different elements that need to be considered when evaluating alternative jet fuel projects. Answers to these questions provide a means to identify the areas where internal capabilities are sufficient and those where internal capabilities need to be developed or outside expertise may be recommended. The assessment questions can be classified in six categories: 1. Alternative jet fuel type: What feedstock and processing technologies can be implemented at my airport? 2. Safety: Has the alternative jet fuel been certified for use in aircraft and with existing jet fuel infrastructure? 3. Environmental goals: How can the environmental characteristics of the alternative jet fuel be used to help achieve my environmental goals? 4. Logistics: How will the alternative jet fuel be delivered to the airport at minimal to no incremen- tal cost? How is the need to provide additional facilities (e.g., storage, blending) being minimized? 5. Business case: How can state, federal, and private-sector programs be harvested to evaluate project merits and cost? 6. Overall evaluation: Do I have satisfactory answers to the previous questions? After completing the assessment questions, the reader should evaluate which areas have enough in-house capabilities and which areas would benefit from outside consultation. Once the reader is satisfied that enough expertise is available, the next step is to follow the alternative jet fuel evaluation framework described in the next section. Even if not enough in-house expertise is available, the material in this handbook should provide enough background information to enable the reader to intelligently evaluate the support from outside experts. 3.2 Alternative Jet Fuel Projects Evaluation Framework The alternative jet fuel projects evaluation framework consists of three steps: (1) understand- ing who the stakeholders are (Section 3.3), (2) formulating the options and performing an ini- tial screening (Section 3.4), and (3) conducting a comparative evaluation (Section 3.5). Figure 3 illustrates the framework’s steps. 25 S E C T I O N 3 How Can Alternative Jet Fuels Be Integrated into the Airport Setting?

Using the approach in Figure 3 helps the airport understand the needs of relevant stakehold- ers and apply a series of evaluation criteria to narrow down the multiple options for bringing alternative jet fuel to airports to the most promising few. The result of this process is a few options for a more detailed analysis. This is likely to be an iterative process since there are many factors to consider and the field is evolving rapidly. 3.3 Stakeholder Analysis Stakeholder analysis is important when evaluating alternative jet fuel projects. An airport that considers engaging in such an effort must have a clear picture of what its customers need before allocating scarce resources. It is also helpful for airports to understand the incentives of other players that may contribute to the success of the project. Who are the stakeholders likely to be involved in an alternative jet fuel project? Many stakeholders may become involved in an alternative jet fuel project. Following is a par- tial list of those expected to play a significant role and whose participation will be required for a successful outcome. • Feedstock suppliers • Fuel producers • Airports 26 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting Initial screening of options Comparative evaluation of screened options Stakeholder analysis Possible option 1 Possible option 2 Possible option 3 Possible option 4 Detailed analysis Evaluation of screened option 1 Evaluation of screened option 2 Figure 3. Framework to identify and compare options to bring alternative fuels to airports.

• End users • Government entities – Municipalities – States – Federal government • Funding sources – Public – Private It is also important to note that alternative fuel projects may not be uniformly supported by all community groups. As discussed in Section 4.1, there are relevant concerns with respect to how alternative jet fuels are produced, in particular if they involve feedstocks that may compete with food or water supplies. Airports must be prepared to address these concerns to ensure opposition does not threaten a good, environmentally beneficial project. Thus, it is recom- mended that airports proactively engage in (1) communication—provide information about the project and opportunities for the public to meet with airport officials and voice concerns, and (2) preparation—acquire thorough knowledge of the project and its potential impacts and have valid answers for concerns that may be raised. What do the stakeholders require to participate in an alternative jet fuel project? Alternative jet fuel projects are more likely to be successful when stakeholders actively sup- port them. Stakeholders have different needs and reasons for participating in an alternative jet fuel project. Following are some typical high-level needs by type of stakeholder. • Feedstock suppliers: higher financial returns than from supplying traditional feedstock to tra- ditional customers; mechanisms to protect financial returns (e.g., crop insurance). • Fuel producers: public-/private-sector financing; long-term supply and offtake contracts that match the terms of the financing arrangements; returns according to the risk of the project. • Airports: no or minimal changes required to existing fueling infrastructure and processes; 100% confidence that alternative fuels are indeed drop-in. • End users: alternative jet fuel cost that is competitive in terms of price with conventional jet fuel; 100% confidence that alternative fuels are indeed drop-in. • Government entities (municipalities, states, federal government): quantifiable and non- quantifiable economic and political benefits. • Funding sources (private sector): expected rates of return according to the risk of the project. • Funding sources (public sector): consistency with the political agenda of the entity; consis- tency with legislative mandates; best use of limited available funds. How can the interests and needs of stakeholders be identified? The interests and needs of stakeholders can be identified and documented using “Worksheet 1: Stakeholder Analysis,” in Section 5.2.1. This worksheet provides a detailed template that can be useful to understand the needs of each stakeholder, determine whether or not the project meets those needs, and identify exactly what specific actions must be taken to ensure that the stakeholder actively and energetically supports the project. 3.4 Initial Screening of Options This step helps the airport make an initial selection of options for producing alternative jet fuels. Given the large number of possible feedstock and technology combinations, it is helpful to isolate a handful of options to consider. The location of the processing facility and the investment’s time How Can Alternative Jet Fuels Be Integrated into the Airport Setting? 27

horizon provide the best means of focusing the analysis. The options selected through this initial screening can then undergo a more detailed evaluation. Before starting the initial screening step, it is important for the reader to keep in mind the following two considerations: 1. Location of the processing plant with respect to the airport: Local political and land con- siderations are likely to have a significant impact on the proximity of the processing plant to the airport. For ease of analysis, the proximity options are characterized as follows: a. On-airport: The processing plant is located within the airport boundary or on airport-owned land. b. Near-airport: The facility is outside the airport’s boundary and jurisdiction but close enough that dedicated transport of the fuel from the processing plant to the airport is economically viable. c. Off-airport: The plant is sufficiently distant from the airport that fuel must be transported to the airport using the existing transportation infrastructure, such as rail or pipeline, for the project to be economically viable. The process in this handbook is designed to help airports evaluate the options once the prox- imity decision is made. Thus, the first decision that airports need to make is to identify where the processing plant is likely to be located. This decision should be based on where sufficient land would be available for the type of facility being considered (see Section 2.3), access to feedstocks, and access to end users. It is likely that the location decision will have to be revised as more infor- mation becomes available. If it is not possible to select the location, it is possible to carry out the analysis considering different locations, but the analysis becomes more complex. 2. Time horizon considerations: Alternative jet fuel projects have long time horizons. Airports should plan on 4 to 5 years to obtain the permits and design, finance, and build the produc- tion facility—once the technology and site have been chosen. The production facility should have an economic life of 10 to 20 years. New alternative jet production technologies are likely to be available every 2 to 3 years; therefore, it is necessary to analyze all existing and potential candidate technologies before committing to one. Help from outside experts is recommended. The initial screening of options to produce alternative jet fuel is based on two criteria: a feedstock screen and a technology screen, as shown in Figure 4. 28 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting 2. Technology screen - Availability of technology - Compatibility with feedstock - High-level siting evaluation Possible option 1 Possible option 2 Possible option 3 Possible option 4 Initial screening of options 1. Feedstock screen - Availability of feedstock - Proximity to processing plant Figure 4. Initial screening of options.

Airports should consider both screens with respect to the possible location of the alternative jet fuel project (on-airport, near-airport, and off-airport). This may be a repetitive process since the location decision and the screens depend on each other. The screening criteria are explained in the following: • Feedstock screen – What feedstocks are available? Consideration should be given to fossil feedstocks and bio-derived feedstocks. A great deal of work is being done to identify the availability of feedstocks for alternative jet fuel by geographic region. Therefore, it is important to obtain the most recent research. CAAFI is a good resource for the most up-to-date information. Other resources are the National Renewable Energy Lab’s interactive Biofuels Atlas (http://maps.nrel.gov/biomass) and the DOE’s Bioenergy Knowledge Discovery Network (https://bioenergykdf.net/). – What is the proximity of the feedstock to the processing plant (economics)? The trans- port of the feedstock to the processing plant is a key determinant of the cost of the feed- stock, and therefore it has a significant influence on the economic viability of the alterna- tive jet fuel. For fossil fuels, plant oils, and animal fats, it is advisable that the processing plant be located close to existing transportation infrastructure such as pipelines, railways, or waterways. For biomass feedstocks, it is widely accepted that the processing plant should be no farther than 50 miles from where the feedstocks are harvested. • Technology screen – What technologies are available? This screen is highly affected by the time frame. If the airport wants to have a project in operation within 5 years, the technology will likely be limited to FT and hydroprocessing of plant oils or animal fats. If a longer time frame is considered, there are likely to be many options. For the purposes of this handbook, the conversation centers on FT and hydroprocessing since they are the best candidates for near-term implementation. What technologies are compatible with the feedstocks identified in the feedstock screen? The feedstocks identified in the previous step also determine the technology that can be used. For example, FT can be used with coal, natural gas, or biomass, while hydroprocessing can be used with plant oils or animal fats. CAAFI and the other resources in Section 1.6 should be consulted regarding the latest developments in each of these technologies. How much area is required to build the plant? A high-level estimate of the land required to build the processing plant is useful at this point. In general, FT plants require a minimum of 10 to 15 acres, while hydroprocessing plants need a minimum of 1 to 5 acres. At the end of the initial screening, the reader should have identified a number of options to pro- ceed with a comparative evaluation. At this point in the analysis, each option is determined by three elements: (1) location (on-airport, near-airport, off-airport), (2) production technology, and (3) feedstocks. 3.5 Comparative Evaluation of Screened Options This section evaluates the options identified in the initial screening with respect to four cate- gories: (1) regulatory, (2) environmental, (3) logistical, and (4) financial. This is envisioned to be a simple green/yellow/red rating of each option in each of the four categories that results in a net assessment of each option relative to the others. The purpose of this evaluation is to identify those options that would be ready to undergo a more detailed analysis (see Figure 5). For each category, the green/yellow/red rating provides guidance regarding how well each alternative fuel option meets the requirements of that category. A green rating means that there How Can Alternative Jet Fuels Be Integrated into the Airport Setting? 29

are no obstacles, yellow means that some obstacles exist that can be remediated, and red means that significant challenges are present and the option needs to be redrawn. Additional detail that can be used to evaluate options against each criterion is discussed in the following sections. 3.5.1 Regulatory What are the main regulatory elements that should be considered in the evaluation of an alternative jet fuel project? There are three general regulatory elements that should be considered in the evaluation of an alternative jet fuel project. For each of these elements, this handbook indicates the main ques- tions and associated information that the airport should consider when evaluating alternative jet fuel projects. For more detailed information, please consult the references indicated in the fol- lowing and in Section 6. In addition, given the complex technical issues surrounding fueling sys- tem and airfield design, engaging an aviation consultant engineer familiar with these topics may be advisable to assist with locating a processing facility. The main regulatory elements discussed here are as follows: • FAA policies and regulations • Environmental reviews and permitting • Energy policy FAA policies: How do FAA policies and regulations affect airport plans to produce and distribute alternative jet fuels? FAA policies and regulations largely control what can or cannot be done in the airport setting. The construction and operation of alternative jet fuel infrastructure is no exception. The FAA 30 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting Screened option 1: Financial Regulatory Logistical Environmental Red YellowGreen Total Screened option 2: Financial Regulatory Logistical Environmental Red YellowGreen Total Screened option 3: Financial Regulatory Logistical Environmental Red Yellow Green Total Screened option 4: Financial Regulatory Logistical Environmental Red Yellow Green Total Comparative evaluation of screened options Selected options to be pursued with a more detailed analysis Figure 5. Methodology for comparative evaluation of the screened options.

compiles and maintains a number of documents, including Advisory Circulars (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. The FAA and FAA-related docu- ments most likely to be relevant for alternative jet fuel projects are as follows (see Section 6.1 for full citations): • 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 • 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 Part 77, Objections Affecting Navigable Airspace • Title 14 of the Code of Federal Regulations 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 Together, these documents point to three key items: (1) compliance with all applicable airport design specifications, (2) an evaluation of environmental impacts, and (3) proper documentation of proposed changes. These items are briefly discussed in the following subsections. In addition to the FAA documents listed previously, it is important to indicate other resources available to jet fuel handlers. For example, the American Transport Association (ATA) pub- lishes ATA Specification 103: Standard for Jet Fuel Quality Control at Airports (ATA 2009c). This document includes recommended specifications that have been developed to provide guid- ance for safe storage and handling of jet fuel at commercial airports. While these recommen- dations are not mandatory, they are very closely followed by all major airlines and airports in the United States. FAA policies: What airport design specifications and standards should be consulted when planning siting and design of an alternative jet fuel processing plant? Alternative jet fuel processing facilities located on the airport are subject to the same FAA policies and regulations governing any other type of airport facility. In particular, on-airport processing plants and storage facilities must comply with FAA AC 5300-13, Airport Design, which forbids locating fuel storage facilities in the runway protection zones (RPZs). In addi- tion, AC 5300-13 does not allow objects not essential to air navigation or ground maneuver- ing purposes, such as fuel processing facilities, in the runway object free areas (ROFAs), run- way safety area (RSAs), or obstacle free zones. Also of importance is 14 CFR Part 77, Objections Affecting Navigable Airspace, which establishes standards for determining obstruc- tions to air navigation by defining criteria for imaginary surfaces 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 (ALP), as indicated in FAA Order 5190-6b. Near-airport and off-airport 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 How Can Alternative Jet Fuels Be Integrated into the Airport Setting? 31

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 determination for either on-airport, near-airport, or off-airport projects. FAA policies: Are alternative jet fuel projects at airports eligible for Airport Improvement Program funding? Costs associated with alternative jet fuel production are not Airport Improvement Program (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 fuels to an airplane may be considered 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, leases will need to be at fair market value. For more information, airports are encouraged to contact their local FAA office. Contact information for FAA regional offices is available at http://www.faa.gov/about/office_org/ headquarters_offices/arp/regional_offices/. FAA policies: What items must be considered to ensure compatible planning with existing and future surroundings? 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 avoids potentially costly litigation. In order to avoid conflict with airport surroundings, land-use zoning 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 alternative fuel projects with respect to zoning: • Obstacles to air navigation: The FAA requires that there be no object, man-made or natural outgrowth, 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 Federal Aviation Regulations (FAR) Part 77. • Noise assessment: If construction of alternative jet fuel facilities requires modifications to existing airspace procedures, the FAA and airport would need to comply with NEPA require- ments. This may require a proper environmental impact statement (EIS) before the FAA can approve route changes when there is a significant noise impact on the affected population. Noise impacts from the alternative jet fuel facility on the immediate surroundings should also be investigated for potential permitting review requirements. • Agricultural land near airports: The FAA recommends against using airport property for agricultural production because agricultural crops can attract wildlife (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 guidelines established in AC 150/5300-13, Appendix 17. Airports should be advised that the FAA may require a wildlife hazard assess- ment (WHA) or a wildlife hazard management plan (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 aircraft striking wildlife, an aircraft engine ingesting 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 appropriate training and education as spec- 32 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

ified in AC 150/5200-36. Agricultural land use is compatible with airport operations from a noise sensitivity perspective (FAA 2001). Environmental reviews: What environmental review requirements should be considered? Jurisdictions at the federal, state, and local levels require permits for those activities or facilities they view as affecting the environment, safety, or equity of the surrounding population. Alterna- tive 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, and floodplains. • Air quality, including environmental impact of gaseous and other emissions. • Impacts to endangered species or 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. Environmental reviews: What guidance is there to meet the environmental permitting requirements? 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 the severity of the environmental effects, a categorical exclusion (CE), environmental assess- ment (EA), or EIS may be required (see FAA Order 1050.1E for more information). In particu- lar, the environmental issues addressed in the Environmental Desk Reference for Airport Actions (FAA 2007) or Appendix A of Order 1050.1E should be investigated during the NEPA process. This must occur before the FAA can make a decision on approving an alternative jet fuel facility. For alternative jet fuel projects on the airport, airports should refer to FAA Order 1050.1E, which is the FAA’s umbrella guidance for NEPA compliance. Installation of on-airport fuel facil- ities 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 laws, such as special pur- pose laws, protecting sensitive species (see the Desk Reference for Airport Actions for more infor- mation). Other actions of the FAA that may be applicable to alternative jet fuel production include federal funding and release of federal lands. Additional reviews related to Clean Air Act statutory programs, such as New Source Review and New Source Performance Standards, may be required. These address construction permits or installation of emission control technologies for new facilities or modification of existing major sources that might result from locating an alternative jet fuel facility at or near an airport. Note that these reviews are not limited to non-attainment areas. A Clean Water Act permit may also be required. At the state and local level, there is a high degree of variation in terms of environmental review and permitting requirements and regulations. They often vary from one jurisdiction to the next. Many states are developing review processes and integrated guidance materials on environmental review and permitting activities relative to infrastructure 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. How Can Alternative Jet Fuels Be Integrated into the Airport Setting? 33

How can the FAA’s regulatory and environmental review considerations of an alternative jet fuel project be evaluated? To evaluate the regulatory aspects of an alternative jet fuel project, use “Worksheet 2: Regula- tory Considerations,” provided in Section 5.2.2. The following evaluation guide is recommended for grading the different options after Table 9 in the worksheet has been completed: • Green: The project can meet all regulations and other considerations. (Only boxes in “Meets Regulation/Consideration” column are checked.) • Yellow: The project is likely to meet all regulations and other considerations with some extra effort. (Most boxes in “Meets Regulation/Consideration” column and only a few in “Likely to Meet Regulation/Consideration” column are checked.) • Red: The project cannot meet all regulatory and other considerations. (One or more boxes in “Does Not Meet Regulation/Consideration” column are checked.) After completing the grading, fill in the appropriate circle in the “Green,” “Yellow,” or “Red” column in the “FAA regulations and environmental review” row of “Worksheet 6: Evaluation Summary” in Section 5.2.6. Energy policy: What governmental and nongovernmental entities have stated their support for alternative jet fuel projects? Support for alternative jet fuel projects comes from various entities and policies, including the federal government and nongovernmental organizations (NGOs). This section summarizes some of the most visible entities and policies and indicates how they may be helpful to alternative jet fuel projects: • The current administration in the White House: The White House has a policy framework that supports both biofuel production and the allocation of funds to aviation fuel sources. These policies include a commitment made in 2009 by the USDA to allocate funds to biofuels development (USDA 2009) and the 2010 Biofuels Interagency Working Group report high- lighting aviation fuel deployment. This report calls for using pre-established market outlets and customer purchase commitments to stimulate production of feedstocks and biofuels (EPA 2010e). These policy support statements culminated in August 2011 with a White House initiative that provides a $510 million, 3-year commitment by the Navy, USDA, and DOE of multiple alternative fuel projects (The White House 2011). White House policy statements are of significance to airports since they can help airport leadership establish priorities and identify agencies tasked by the White House to implement alternative fuel support programs. • FAA: 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: NextGen Environmental Working Group: This group, part of the Joint Program Develop- ment Office (JPDO), sets goals for carbon and particle emission reductions associated with aviation traffic growth projections enabled by NextGen. One important use of alternative fuels is to offset carbon growth associated with this traffic growth. Partnership for Air Transportation Noise and Emission Reduction (PARTNER) Proj- ect 20—Emissions Characteristics of Alternative Aviation Fuels: This project character- izes particle emission measurements for a series of alternative fuels (PARTNER 2010a). Airports can use Project 20’s measured outcomes to establish actual particle outcomes for specific process outputs under consideration. 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 Aviation Portfolio Management Tool (APMT) suite (PARTNER 2010b). While not an alternative fuel in itself, low-sulfur versions of conventional jet fuel are currently under evaluation by FAA as a possible complement to alternative fuel options to contain sulfur and related particle costs. 34 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

PARTNER Project 28—Environmental Cost-Benefit Analysis of Alternative Jet Fuels: This project quantifies aviation-specific GHG emission levels for a range of alternative fuel options that may be proposed for adoption by airports and their stakeholders (PARTNER 2010c). Airports can use these results in conjunction with Section 2.4 to establish the actual GHG benefits for specific feedstocks and processes. The FAA has other programs that may be of interest for alternative aviation fuel projects. These include: Voluntary Airport Low Emissions (VALE) Program: VALE was established in 2004 to help commercial 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 passenger facility charges (PFCs) to finance low-emission vehicles and certain infrastructure projects. However, projects that use alternative jet fuels are not eligible for funding under VALE. Participation in the program could still be valuable for airport spon- sors as a means to gain valuable experience structuring projects that reduce air emissions using other clean-energy fuels. Sustainable Master Plan Pilot Program: This program was recently introduced by the FAA and is evaluating ways to make sustainability a core objective at every airport (FAA 2011a). It is funding long-range planning documents at 10 airports around the country. These doc- uments, called Sustainable Master Plans and Sustainable Management Plans, will include initiatives for reducing environmental impacts, achieving economic benefits, and increas- ing airport integration with local communities. The program 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. • 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; Aero- space Industry Association (AIA), representing manufacturers; ATA, representing airlines; and Airport Council International–North America (ACI–NA), representing airports (CAAFI 2010). CAAFI’s 350 members represent nearly 250 separate entities, including some 17 U.S. government agencies. CAAFI may be contacted through its public website, www.caafi.org. Airport personnel can also join CAAFI for no membership charge and gain access to all documentation and guid- ance on its password-protected site. ATA/Defense Logistics Agency Alliance: In March 2010, the ATA signed an agreement with the Defense Logistics Agency (DLA, formerly the Defense Energy Support Center or DESC) to pursue joint policies for the purchase of alternative fuels. The alliance seeks to align pur- chasing policies, promote deployment, and pursue common economic policies (ATA 2010b). The alliance covers over 90% of all jet fuel purchased in the United States. It main- tains teams on deployment, contracting, and the environment, and will work with potential project developers to establish means of best accessing those markets. Farm to Fly: The Farm to Fly coalition of interest between U.S. Department of Agriculture, the ATA, and Boeing was formed in July 2010 (ATA 2010a). The coalition brings together agriculture, energy, and aviation interests to support deployment activity, initially working on bottom-up models for developing fuel supplies for aviation regions of the United States. Other regional coalitions: There are regional initiatives focused on partnerships for the de- velopment 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 How Can Alternative Jet Fuels Be Integrated into the Airport Setting? 35

Northwest (SAFN) in the U.S. Pacific Northwest region (SAFNW 2011a). SAFN just pub- lished a detailed report analyzing and evaluating the potential for alternative jet fuel production in their region (SAFNW 2011b). • Aviation-related nongovernmental organizations: The entities listed in the following may help airports in the development and evaluation of alternative jet fuel projects by sharing best practices, case studies, and other expertise. International Air Transport Association and its stated industry goal of carbon neutral growth by 2020 (IATA 2010). Air Transport Association and its policy on alternative fuels (ATA 2010c). Airport Council International–North America (ACI–NA) and its sustainability and business policies (ACI–NA 2010). Sustainable Aviation Fuel Users Group and its policies (SAFUG 2011). Non-aviation-related nongovernmental organizations: There are nongovernmental organi- zations not directly associated with aviation that have participated in alternative jet fuel forums and are aware of the development of alternative jet fuel. Even though their policies are not necessarily focused exclusively on aviation alternative fuels, they offer different perspectives that may be important to consider when evaluating projects. These entities include: Roundtable on Sustainable Biofuels (RSB) and its best practices (RSB 2010). 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 the Sustainable Way for Alterna- tive Fuel and Energy in Aviation (SWAFEA) in Europe. Energy policy: What programs exist to fund studies and other nonrecurring investments in alternative jet fuels? Readers should consult with CAAFI to determine which of the programs presented in the fol- lowing can be useful to identify and support potential alternative jet fuel projects at their facilities. The following programs may exist at the federal, state, or local levels: • Biomass Crop Assistance Program (BCAP) associated with the 2008 USDA Budget Autho- rization section 9000 for renewable energy (USDA 2010c). • Value-added grants and state enterprise grants for rural renewable energy project evaluation and development (USDA 2010p, USDA 2010m). The execution of this type of projects needs to be submitted for funding in many cases through agricultural institutions. One example of this process is afforded by a proposal made via the Soy Bean Growers Association in Ohio (OHSOY 2010) for a brownfield plant conversion to produce alternative jet fuel. • Military Title III programs that can enable initial plant construction for national defense priorities (Finnessy 2006). • The August 2011 three agency announcement to support the development of advanced bio- fuels is supported by a $510 million commitment (The White House 2011). The rules con- cerning how these funds will be used have not been finalized as of October 2011, but it is expected that this program will be an important source of funding for alternative aviation fuel projects over the next 3 years. Energy policy: What programs exist that may allow recurring support for alternative jet fuel projects? The following policies may take a variety of forms, including tax incentives, insurance for crops, and tax credits for alternative jet fuels. The details of these policies may still have to be refined, so airports are encouraged to contact CAAFI for guidance. These programs may exist at the federal, state, or local levels: 36 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

• Federal and state government programs: The federal government and many states offer incentives for the development of alternative fuels. The Department of Commerce keeps a list of those programs that could apply to alternative jet fuel or avgas projects (DOC 2011). The Department of Energy maintains a full list of incentives for all sorts of alternative fuel pro- grams as well as a map of existing demonstrator programs (DOE 2011b). The final rules for implementing the August 2011 three-agency initiative should be consulted. These rules are expected to specify how co-investments in projects by other public- and private-sector entities will be evaluated, making these rules particularly important. • Possible price supports for growers and price collars for buyers and sellers, similar to those available for food crops (USDA 2010a). • Department of Defense (DOD) policies involving alternative fuel commitments such as the plan to have 50% of continental U.S. military jet fuel consumption sourced from synthetic fuels 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). Energy policy: How can the energy policy elements of an alternative jet fuel project be evaluated? “Worksheet 3: Energy Policy Considerations” in Section 5.2.3 can be used to evaluate energy policy elements and corresponding sources of support. After checking the appropriate boxes in the worksheet, the following evaluation guide is recommended for grading the different options: • Green: All or most policies are applicable. (Most or all boxes checked are in the “Applicable” column.) • Yellow: Some policies are applicable and most may be applicable. (Some boxes checked are in the “Applicable” column, most boxes checked are in “May Be Applicable” column, and some boxes checked are in “Not Applicable” column.) • Red: No policies are applicable. (Most boxes checked are in “Not Applicable” column.) After completing the grading, fill in the appropriate circle in the “Green,” “Yellow,” or “Red” column in the “Energy policy” row of “Worksheet 6: Evaluation Summary” in Section 5.2.6. Note: This evaluation is intended to reflect the possible strength of support from a number of entities and their policies on alternative jet fuels for individual project options. A grading of red does not mean that a project is not viable. Such a grading would only indicate that the project does not appear to benefit from the potential support of the entities listed in the worksheet. This may put a given project at a disadvantage compared to other projects that may get a higher grade in energy policy considerations. 3.5.2 Environmental As discussed in Section 2.4, alternative jet fuels have two principal potential environmental benefits. First, the overall life-cycle GHG footprint may be lower than for conventional fuel. Sec- ond, particulate emissions such as PM2.5 may be lower. Reductions in NOx have been docu- mented for alternative ground fuels (relative to diesel fuel), but there is no current evidence to suggest that the same benefit extends to alternative jet fuels. Information on how to evaluate the GHG and particulate matter benefits of alternative jet fuel options is presented in the following. How should the life-cycle GHG footprint of alternative jet fuels be determined? As discussed in Sections 2.4 and E.1, the life-cycle GHG footprint of alternative jet fuels should be determined with a suitable LCA methodology. To date, there is no one methodology that is universally accepted; however, materials produced by the Department of Defense (Allen et al. 2009) and PARTNER (Stratton, Wong, and Hileman 2010) offer sufficient guidance and are How Can Alternative Jet Fuels Be Integrated into the Airport Setting? 37

recommended for a first-order analysis. Consultation with outside experts is recommended for a more in-depth study. In terms of targets for desired life-cycle GHG footprints of alternative jet fuels, the airport should be aware of the needs of potential users and set reasonable expectations. The development of alternative jet fuel will be incremental. As technologies develop and feedstocks mature, it is expected that the life-cycle GHG footprint of these fuels will improve. Thus, supporting produc- tion of alternative jet fuels that achieve even only modest reductions in the near term is important to spur development of fuels achieving larger reductions in the future. What questions should be considered in this part of the evaluation? Questions that should be considered in this part of the evaluation are as follows: 1. What is the estimated life-cycle GHG footprint of the alternative jet fuels being considered in the option? 2. What is the overall net footprint of the blend of alternative jet fuel and conventional fuel, given that alternative jet fuels have only been certified as blends? 3. What is the range of uncertainty in the answers to (1) and (2)? These questions should be answered with the latest available official estimates of life-cycle GHG footprints. As mentioned previously, it is recommended that outside experts be engaged to conduct this analysis since there is still no one methodology that is universally accepted. A sample calculation is as follows: Alternative fuel: Coal and switchgrass to FT fuel, with CCS Estimated life-cycle GHG footprint: 53.0–56.9 g CO2e/MJ, relative to 87.5 g CO2e/MJ for con- ventional petroleum-based jet fuel (data from Table 4 in Section 5.1). (Where g CO2e is grams CO2 equivalent; MJ is megajoules.) Estimated mix of alternative and conventional fuels: 50/50 Resulting overall footprint of fuel mix, relative to 100% conventional case: relative footprint (low) = [(0.5 × 53.0) + (0.5 × 87.5)] / (1.0 × 87.5) = 70.25 / 87.5 = 0.80 relative footprint (high) = [(0.5 × 56.9) + (0.5 × 87.5)] / (1.0 × 87.5) = 72.20 / 87.5 = 0.83 Thus, the proposed alternative fuel at the proposed level of mixture with conventional jet fuel is estimated to reduce the overall life-cycle GHG footprint of the fuel being used by between 17% and 20%. How can the life-cycle GHG footprint of alternative jet fuels be evaluated? The net environmental evaluation of the relative life-cycle GHG effects may be done using the following rating: • Green—Use this rating if the alternative jet fuel is likely to achieve life-cycle GHG reductions. • Yellow—Use this rating if the alternative jet fuel may achieve life-cycle GHG reductions. • Red—Use this rating if the alternative jet fuel is not likely to achieve life-cycle GHG reductions. After completing the grading, fill in the appropriate circle in the “Green,” “Yellow,” or “Red” column in the “Life-cycle GHG” row of “Worksheet 6: Evaluation Summary” in Section 5.2.6. How should the local air quality benefits of alternative jet fuels be determined? As with life-cycle GHG, outside experts should be consulted to perform a detailed calculation of PM2.5 benefits. A simple methodology is presented in the following to perform a first-order approximation estimate. 38 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

In terms of targets for PM2.5 emission reductions, the focus should be that any reduction because of the introduction of alternative jet fuels is beneficial. This is especially true if the air- port is in a NAAQS non-attainment zone, although the benefits are important even if the airport is not in a non-attainment zone. What questions should be considered in this part of the evaluation? Questions to be considered in this part of the evaluation are: 1. What is the estimated reduction in PM2.5 emissions of the alternative jet fuels being considered in the option? 2. What is the overall PM2.5 intensity of the resulting mix of fuels at the airport, considering the expected percentage of total fuel that will be provided by the alternative fuel? 3. What is the range of uncertainty in the answer to (2)? These questions should be answered with the latest available official estimates of PM2.5 intensity. A sample calculation is as follows: Alternative fuel: coal and switchgrass to FT fuel, with GHG capture Estimated PM2.5 intensity: 0.25–0.5, relative to 1.0 conventional petroleum-based jet fuel (data from Figure 7 in section 5.1). Estimated mix of alternative and conventional fuels: 50/50 Resulting overall PM2.5 intensity of fuel mix, relative to 100% conventional case: relative footprint (low) = [(0.5 × 0.25) + (0.5 × 1.0)] / (1.0 × 1.0) = 0.63 relative footprint (high) = [(0.5 × 0.5) + (0.5 × 1.0)] / (1.0 × 1.0) = 0.75 Thus, the proposed alternative fuel at the proposed level of mixture with conventional jet fuel is estimated to reduce the overall PM2.5 intensity of the fuel being used by between 25% and 37%. How can local air quality benefits of alternative jet fuels be evaluated? Net environmental evaluation of the relative PM2.5 intensity effects may be done as follows: • Green—Use this rating if the alternative jet fuel is likely to achieve PM2.5 emissions reductions. • Yellow—Use this rating if the alternative jet fuel may achieve PM2.5 emissions reductions. • Red—Use this rating if the alternative jet fuel is not likely to achieve PM2.5 emissions reductions. After completing the grading, fill in the appropriate circle in the “Green,” “Yellow,” or “Red” column of “Worksheet 6: Evaluation Summary” in Section 5.2.6. 3.5.3 Logistical This section provides guidance regarding the evaluation of the main logistical elements for an alternative jet fuel project. What are the main logistical elements that should be considered in the evaluation of an alternative jet fuel project? There are two main logistical elements that should be considered in the evaluation of alterna- tive jet fuel projects: (1) the transportation and storage of feedstocks and (2) the transportation and storage of the alternative jet fuel. A simplified diagram of the supply chain of alternative jet fuels from feedstock extraction to the airport is shown in Figure 6. How Can Alternative Jet Fuels Be Integrated into the Airport Setting? 39

What are the options for transporting feedstocks to the processing plant? The options for transporting feedstocks to the processing plant depend to a large extent on the type of feedstock. The main options are: • Coal and natural gas: Coal is typically transported by rail, and natural gas is normally shipped by pipeline. Both transportation modes are well developed in the United States and offer the most cost-efficient ways for bulk transportation. However, given that building new rail lines or pipelines is very expensive, alternative jet fuel projects should be located close to existing infrastructure. More information on existing rail and pipeline infrastructure is available at 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. • Plant oils: For traditional plant oils such as soybean and canola, existing transportation and logistics infrastructure can be used; however, similar to the case of coal and natural gas, the processing facility would have to be located within reach of the existing infrastructure to enjoy full benefits. For new types of plant oils, such as Camelina, it is possible that the existing trans- portation and logistics infrastructure may be used. If this is the case, the transportation of these plant oils would be much more economical than if new infrastructure were built. • Dedicated energy crops and other biomass: These materials are typically transported by truck; however, since they are bulky and not very dense, economics limit their transportation to a distance of about 50 miles from the processing facilities. For these feedstocks, intermediate storage may be required depending on the particular orga- nization of the supply chain. For example, the harvest of energy crops is seasonal and the timing of the harvest may vary depending on crop and region of the country; however, processing facil- ities need feedstock year round to maximize utilization. Therefore, if biomass were used as a feed- stock, storage at an intermediate location or at the processing facility should be considered. What are other logistical elements associated with agricultural feedstocks that need to be considered? In the case of agricultural feedstocks, an important element in the supply chain is a supply contract. Since the most common situation will be of one buyer and many suppliers, a single entity may be required to contract with many producers for a biomass. What are the options for transporting alternative jet fuel to the airport? The main options for transporting alternative jet fuel to the airport are: • 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- 40 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting Intermediate storage Processing plant Intermediate storage AirportFeedstock extraction Feedstock handling Alternative jet fuel handling Figure 6. Schematic of the alternative jet fuel supply chain.

sive infrastructure such as pipelines or railways. Thus, in the absence of pipelines or railways, truck transportation may be the most practical option. What are the logistical implications of the blending requirement of alternative jet fuels? 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 the fuel reaching the wing of the aircraft, where alternative and petroleum-based jet fuels are blended. This is not expected to be a considerable barrier for an alternative jet fuel project, but it needs to be considered. Can alternative jet fuels use the same infrastructure as conventional jet fuel? As long as the alternative jet fuel is certified as a drop-in fuel, it can use the same infrastructure as conventional jet fuel. If the alternative jet fuel is certified as a blend (e.g., 50/50 blend), only the infrastructure downstream of the blending facility could be shared with conventional jet fuel. It is important to point out that infrastructure is a shared resource serving many customers. Therefore, all users who use that infrastructure must agree to the alternative jet fuel being present. How can the logistical characteristics of an alternative jet fuel project be evaluated? To evaluate the logistical aspects of an alternative jet fuel project, “Worksheet 4: Logistical Considerations” is provided in Section 5.2.4. Fill out the information for the current way in which the airport gets its conventional jet fuel and for as many options as are being considered. The following evaluation guide is recommended for grading the different options: • Green: All or most transportation occurs by pipeline or rail/barge with minimal or no truck transportation; all transportation and storage infrastructure is in place. • Yellow: Some truck transportation is required. Some minor transportation and storage infra- structure needs to be built. • Red: Truck transportation over long distances is required. Major transportation and storage infrastructure elements need to be built. After completing the grading, fill in the appropriate circle in the “Green,” “Yellow,” or “Red” column in the “Logistical” row of “Worksheet 6: Evaluation Summary” in Section 5.2.6. Note: It is important to compare the proposed options to the existing way of bringing jet fuel to the airport. For example, a yellow rating is appropriate if truck transportation is the only possibility for both the alternative jet fuel and the petroleum-based jet fuel. 3.5.4 Financial Financial resources are another critical element for a successful alternative jet fuel project. This section discusses the main financial considerations that should be taken into account. What are the main financial considerations related to alternative jet fuel projects? Commercial-scale alternative jet fuel plants are large, capital-intensive projects that are very likely to require external financing. Alternative jet fuel facilities frequently involve more finan- cial risks than the average airport project because the technologies are new and frequently untested on a commercial scale. As a result, alternative jet fuel projects may have more difficulty in attracting financing than most airport projects. Thus, in order to attract financing, project developers must be able to demonstrate a high probability of the operation being profitable. This usually means that the technology has been proven on a commercial scale and that an indepen- dent feasibility study analyzing the likelihood of success of the project is available. Such a feasibil- ity study will ultimately require hiring an outside expert and is outside of the scope of this hand- book; however, there are some initial considerations, discussed in the following, that airports can analyze prior to deciding on a full-scale feasibility study. How Can Alternative Jet Fuels Be Integrated into the Airport Setting? 41

The success of an alternative jet fuel project depends heavily on one external factor: the price of conventional jet fuel. Airlines and other end users may be willing to pay a premium for alternative jet fuel during a short start-up period, but eventually they will expect the alternative jet fuel to compete with conventional jet fuel in terms of price. At the moment, many indications are that the price of alternative jet fuel will be initially higher than that of conventional jet fuel. As the industry grows and matures, the price of alternative jet fuel is expected to decrease. When and how fast this happens, and how quickly profitable business models emerge, will be important for the financial success of alternative jet fuel projects. What financial elements should be evaluated as part of a comparative evaluation of options? “Worksheet 5: Financial Considerations” in Section 5.2.5 and the text following this para- graph offer a road map for airports to perform a comparative financial evaluation of alterna- tive jet fuel projects. For each option under consideration, start with the first step and follow the decision tree providing answers to the questions. A guide to rate each option based on these answers is provided. This worksheet represents an iterative process. If a rating of red or yellow is obtained, repeat the exercise taking into account new or expanded information that may be obtained through consultation with CAAFI and other experts such as those listed in Section 1.6. 1. Does the project have a financing structure in place? If the project already has a firm financing commitment, the project is likely to be financially feasible because the financial institution will have completed its own feasibility review. If so, the project gets a green rating. If firm financing commitments are not available, continue with Step 2. For each of the follow- ing questions, answer “Yes” or “No” in Worksheet 5. 2. Has the proposed technology and feedstock been used before? The use of an untested technology or feedstock for producing alternative jet fuels increases the risk of the project. To get a better idea of the risk factors, financial institutions would want to investigate the following: a. Has the proposed alternative jet fuel been certified for use in aircraft? b. Has the production technology been proven at the same scale as this project? c. Have the feedstock and alternative jet fuel logistics been solved? d. Are the feedstocks available in adequate supplies and at prices that make the alternative jet fuel competitive over the life of the project? e. Does the alternative jet fuel project have a long-term supply agreement with sufficient dis- ruption and quality protections? f. Does the alternative jet fuel project have long-term purchase agreements from creditwor- thy buyers? CAAFI and the resources listed in Section 1.6 can be consulted to help find the answers to these questions. 3. Are there indications that the production process can be profitable? Airports should determine if similar ventures to the one being evaluated are profitable (note that a nondisclosure agreement may have to be signed to obtain this information). 4. Does the project sponsor have a successful track record? Financing sources need to be confident that management of the fuel production facility is competent and will be capable of carrying out the business plan. Management with a successful track record is more likely to attract financing than untested management. 42 Guidelines for Integrating Alternative Jet Fuel into the Airport Setting

5. Does the business plan show a profit under most scenarios? The business plan should demonstrate the effect that changes in feedstock costs or conven- tional jet fuel costs will have on the profitability of the operation. Airports should question what types of alternative jet fuel purchase agreements the operation has in place and ask whether the operation will be profitable if a major customer does not honor its agreement and the alterna- tive jet fuel must be sold on the spot market. 6. Is there a creditworthy entity that will guarantee financing? For projects that might not otherwise meet all the requirements needed to obtain private- sector financing, the government may be able to step in to bridge the gap between the project’s actual and required equity and debt returns. Lenders are generally more risk averse than equity providers and need to be confident that the loan will be repaid under the most adverse circum- stances. With new industries, this may involve obtaining a loan guarantee that ensures debt repayment if the alternative jet fuel venture fails. Developers will likely seek debt guarantees from a range of federal, state, and municipal agencies. Airport management should have a plan for how it will respond if such a request is made. After completing the grading, fill in the appropriate circle in the “Green,” “Yellow,” or “Red” column in the “Financial” row of “Worksheet 6: Evaluation Summary.” 3.5.5 Overall Evaluation and Selection of Options for Further Study After the regulatory, environmental, logistical, and financial considerations for a particular option have been evaluated, “Worksheet 6: Evaluation Summary” in Section 5.2.6 should have the consolidated results from the individual worksheets. Once all alternative jet fuel options under consideration have been evaluated, they can be compared against each other to select the ones that should undergo a more detailed analysis. Ideally, there will be options with ratings of just green or green/yellow. These are candidates for further study. Options with a red rating should be redrawn and modified until their evaluation results in only green or yellow ratings. 3.6 Suggested Next Steps Those options that ranked green or yellow as described in Section 3.5.5 advance to the next step of a more detailed evaluation. Such an evaluation should entail some or all of the following steps: • Thorough analysis of the regulatory aspects, including detailed descriptions of how the option complies with each applicable regulation and policy. • Thorough analysis of the environmental aspects, including assessment of life-cycle GHG intensity as provided by the responsible external agency (e.g., EPA), or as developed following procedures provided by that agency. Similar analysis applies to environmental benefits asso- ciated with particulate matter. • Thorough analysis of the logistical aspects, including an end-to-end engineering plan quan- titatively addressing each stage in the processing, movement, and storage of the alternative jet fuel. • Thorough analysis of the financial aspects, including an investment-quality business plan that specifies capitalization, revenue, costs, and risks at appropriate intervals over the lifetime of the enterprise. How Can Alternative Jet Fuels Be Integrated into the Airport Setting? 43

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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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