Hawaii Propane Laws and Incentives

State Incentives

Business Investment Tax Credit

Through December 31, 2010, taxpayers making a high technology business investment are eligible for a tax credit the year in which the investment is made and may be carried over for up to four additional years. A qualified high technology business is defined as one in which more than 50% of the activities are qualified research (75% of which is conducted in Hawaii) and in which more than 75% of the income (i.e. income from products sold from, manufactured or produced in Hawaii or from services performed in Hawaii) is derived from qualified research. Qualified research includes research that is related to non-fossil fuel energy-related technology. The tax credit is equal to a percentage of the investment made, up to the following maximums:

Tax credits cannot exceed the amount of the investment or exceed 80% of the taxpayer's income tax liability in the year in which the credit is claimed.

(Reference Senate Bill 199, 2009, and Hawaii Revised Statutes 235-7.3 and 235-110.9)

State Laws and Regulations

Alternative Fuel and Advanced Vehicle Acquisition Requirements

Once the state has met its federal and state vehicle acquisition mandates, state and county agencies, beginning January 1, 2010, must move toward purchasing light-duty vehicles that meet the needs of the agency while reducing petroleum consumption. The priority to be used for purchasing such vehicles is as follows:

1) electric vehicles (EVs) 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 are also required to purchase alternative fuels and ethanol blended gasoline when available, evaluate a purchase preference for biodiesel blends, and promote 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, hydrogen, biodiesel, a biodiesel blend containing at least 20% biodiesel, a fuel derived from biological materials, and electricity provided by off-board energy sources.

(Reference Senate Bill 1202, 2009, and Hawaii Revised Statutes 103D-412 and 196-9)

Alternative Fuels Promotion

The state of Hawaii has signed a Memorandum of Understanding (MOU) (PDF 108 KB) 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. Download Adobe Reader. 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; demonstrate and foster innovation in the use of clean energy, including alternative fuels; create opportunities for the widespread distribution of clean energy benefits; establish an open learning model for other states and entities to adopt; and build a workforce with cross-cutting skills to support a clean energy economy in the state.

Alternative Fuel Development Support

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: 10% of highway fuel use to be provided by alternative fuels by 2010, 15% by 2015, and 20% by 2020. For the purposes of the alternative fuels standard, ethanol produced from cellulosic materials is to be considered the equivalent of 2.5 gallons of non-cellulosic ethanol. (Reference Hawaii Revised Statutes 196-42)

Alternative Fuel Tax Rate

A distributor of any alternative fuel for operation in an internal combustion engine is required to pay a license tax of $0.025 for each gallon of alternative fuel sold or used by the distributor. In addition, a distributor is required to pay a license tax for each gallon of fuel sold or used by the distributor for operating a motor vehicle(s) 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. (Reference Hawaii Revised Statutes Section 243-4)