Hawaii Incentives and Laws for Ethanol

The list below contains summaries of all Hawaii incentives and laws related to Ethanol.

State Incentives

Ethanol Production Incentive

An income tax credit is available for qualifying ethanol production facilities equal to 30% of nameplate capacity between 500,000 and 15 million gallons per year. The facility must produce at least 75% of its nameplate capacity to be eligible to receive the tax credit each year, and the tax credit may be taken for up to eight years. The credit is only available to the first 40 million gallons of ethanol produced per year. Qualifying ethanol production facilities must be in operation before January 1, 2017. Once the total nameplate capacities of all qualifying ethanol production facilities built within the state reaches 40,000 gallons per year, credits are not allowed for new facilities. (Reference Hawaii Revised Statutes 235-110.3)

Laws and Regulations

State Biofuel Study

The Hawaii Department of Business, Economic Development and Tourism, led by the Energy Resources Coordinator, must conduct a study and issue a report on the conditions and policies needed to expand biofuel production in Hawaii with the goal of displacing a significant amount of petroleum-based fuel. The report must include recommendations related to the need for mandates and any changes to the existing ethanol fuel standard. A preliminary report is due at least 20 days prior to the start of the 2012 legislative session and the final report is due at least 20 days prior to the start of the 2013 legislative session. (Reference Senate Bill 146, 2011)

Ethanol Fuel Blend Standard

At least 85% of gasoline supplied to a retailer or sold in Hawaii must contain a minimum of 10% ethanol (E10). Gasoline blended with an ethanol-based product, such as ethyl tertiary butyl ether, will be considered to be in conformance with this requirement. Retail fuel distributors must meet this requirement and report to the state Energy, Resources, and Technology Division of the Department of Business, Economic Development, and Tourism on a monthly basis. (Reference Hawaii Revised Statutes 486J-10 and Hawaii Administrative Rules Title 15, Chapter 35)

Alternative Fuel Standard Development

The state of Hawaii is responsible for facilitating the development of alternative fuels and supporting the attainment of a statewide alternative fuels standard. The alternative fuels standard will be as follows: alternative fuels will provide 10% of highway fuel use by 2010, 15% by 2015, 20% by 2020, and 30% by 2030. For the purposes of the alternative fuels standard, ethanol produced from cellulosic materials is equivalent to 2.5 gallons of non-cellulosic ethanol. (Reference Hawaii Revised Statutes 196-42)

Alternative Fuel and Advanced Vehicle Acquisition Requirements

State and county agencies must purchase light-duty vehicles that reduce petroleum consumption and meet the needs of the agency. The priority to be used for purchasing such vehicles is as follows:

1. Electric or plug-in hybrid electric vehicles;
2. Hydrogen or fuel cell vehicles;
3. Other alternative fuel vehicles;
4. Hybrid electric vehicles; and
5. Vehicles identified as top performers for fuel economy in the U.S. Environmental Protection Agency's annual "Fuel Economy Leaders" report.

Exemptions may apply. State agencies must purchase alternative fuels and ethanol blended gasoline when available, evaluate a purchase preference for biodiesel blends, and promote the efficient operation of vehicles. For the purpose of this requirement, an alternative fuel is defined as an alcohol fuel, an alcohol fuel blend containing at least 85% alcohol, natural gas, liquefied petroleum gas (propane), hydrogen, biodiesel, a biodiesel blend containing at least 20% biodiesel, a fuel derived from biological materials, and electricity from off-board energy sources.

(Reference Hawaii Revised Statutes 103D-412 and 196-9)

Alternative Fuels Promotion

The state of Hawaii has signed a Memorandum of Understanding (MOU) with the U.S. Department of Energy to collaborate to produce 70% of the state's energy needs from energy-efficient and renewable sources by 2030. This effort is part of the Hawaii Clean Energy Initiative. The goals of the partnership include defining the structural transformation required to transition the state to a clean energy-dominated economy; demonstrating and fostering innovation in the use of clean energy, including alternative fuels; creating opportunities for the widespread distribution of clean energy benefits; establishing an open learning model for other states and entities to adopt; and building a workforce with cross-cutting skills to support a clean energy economy in the state.

Biofuels Production Land Use Allowance and Exemption

To reduce dependence on petroleum, achieve environmental sustainability, and create jobs, the state of Hawaii permits the use of lands originally zoned as agricultural land use districts to be used for renewable energy production, storage, and distribution, including the production of biofuels. Biofuels production or distribution facilities must be integrated with an agricultural activity and may not adversely impact agricultural land and other agricultural uses in the vicinity. Biofuels production or distribution facilities include those that produce or distribute liquid or gaseous fuels from organic sources such as biomass crops, agricultural residues, food wastes, animal residues and wastes, and oil crops including palm, canola, soybean, and waste cooking oils. Additionally, biofuels production or distribution facilities are exempt from subdivision requirements for leases and easements within agricultural land use districts. To qualify for the exemption, a biofuels facility must have the capacity to produce or distribute at least 100,000 gallons of fuel annually and be designated as a renewable energy facility. (Reference Senate Bill 1244, 2011, and Hawaii Revised Statutes 201N-14, 205-2, and 205-4.5)

Energy Feedstock Program

The Hawaii Department of Agriculture established the Energy Feedstock Program to promote and support the production of energy feedstock development in Hawaii and to establish milestones and objectives for energy feedstock to be grown in the state to meet its energy requirements. Energy feedstock includes feedstock used to produce biofuels. (Reference Hawaii Revised Statutes 141-9)

Biofuels Procurement Preference

State and county agency contracts for the purchase of diesel fuel are to be awarded with preference given to bids for biofuels or blends of biofuel and petroleum fuel. When purchasing fuel for use in diesel engines, the preference price is $0.05 per gallon of B100. For blends containing both biodiesel and petroleum-based diesel, the preference is applied only to the biodiesel portion of the blend. Biodiesel is a vegetable oil-based fuel that meets ASTM specification D6751. Biofuel is a fuel from non-petroleum plant or animal based sources that can be used for the generation of heat or power. (Reference Hawaii Revised Statutes 103D-1012)

Alternative Fuel Tax Rate

A distributor of any alternative fuel used to operate an internal combustion engine must pay a license tax of $0.0025 for each gallon of alternative fuel the distributor sells or uses. In addition, a distributor must pay a license tax for each gallon of fuel sold or used by the distributor for operating a motor vehicle on state public highways according to the following rates:

For other alternative fuels, the rate is based on the energy content of the fuels as compared to diesel fuel, using a lower heating value of 130,000 British thermal units per gallon as a standard for diesel, so that the tax rate, on an energy content basis, is equal to one-quarter the rate for diesel fuel. Counties may also impose additional taxes.

(Reference Hawaii Revised Statutes 243-4)

Printable Version