STAND. COM. REP. NO. 2117

Honolulu, Hawaii

RE:    S.B. No. 2197

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committee on Energy and Environment, to which was referred S.B. No. 2197 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Establish a renewable fuels production income tax credit; and

     (2)  Repeal the ethanol facility tax credit.

     Your Committee received testimony in support of this measure from the Ulupono Initiative; Renewable Energy Action Coalition of Hawaii; Blue Planet Foundation; Hawaii Renewable Energy Alliance; Hawaii BioEnergy, LLC; Pacific Biodiesel Technologies; Extended Horizons; and thirty individuals.  Your Committee received comments on this measure from the Department of Business, Economic Development, and Tourism; Department of Taxation; Department of the Attorney General; and Tax Foundation of Hawaii.

     Your Committee finds that in recent years, Hawaii has seen significant growth in renewable energy adoption moving the State toward its renewable energy goals.  However, while Hawaii locally produces about fourteen percent renewable electricity, far less than one percent of the renewable fuels are used.

     Your Committee further finds that Hawaii is far behind in achieving its renewable goals for transportation, as transportation fuels account for about two-thirds of all the energy consumed in Hawaii and nearly all of Hawaii's energy for transportation comes from imported fuels.  Without renewable fuel production from sources indigenous to Hawaii, the State will have virtually no fuel available for critical transportation needs if and when imported fuels stop flowing to Hawaii.

     Your Committee has amended this measure by:

     (1)  Adding a severability clause in light of commerce clause issues raised by the Attorney General; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2197, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2197, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Energy and Environment,

____________________________

MIKE GABBARD, Chair