HB2688

SECTION 1. The legislature finds that the human-induced global climate crisis requires thoughtful but bold responses on multiple fronts to make Hawaii's communities resilient to the impacts of storms, floods, fire, and sea-level rise that threaten the very survivability of these fragile islands.

Hawaii has historically played a critical leadership role in protecting the environment. The legislature passed the nation's first one hundred per cent renewable electricity requirement and adopted a statewide carbon neutrality goal. Hawaii was also the first state to commit to the goals of the 2015 Paris Climate Agreement and enact laws to protect its coral reefs from dangerous chemicals commonly found in sunscreen lotions.

Hawaii's one hundred per cent renewable electricity mandate has been emulated by other states and territories, demonstrating that Hawaii's actions on climate change can in turn influence actions beyond the islands' shores. The legislature has embraced the concept of "aloha ʻāina" by seeking to decarbonize Hawaii's food, energy, and transportation systems and to sequester carbon through agricultural, waste management, and ecosystem restoration systems.

The legislature also finds that Hawaii is nearly completely dependent on imported petroleum for its ground transportation needs. Hawaii drivers spend nearly $2,000,000,000 annually on gasoline and diesel for their cars and trucks, and the combustion of that fuel releases approximately eleven billion pounds of climate-changing carbon dioxide into the atmosphere each year. While carbon emissions from Hawaii's electricity sector have decreased over the past decade, carbon emissions from Hawaii's ground transportation sector have increased by ten per cent. Drivers in Hawaii are increasingly choosing larger, heavier vehicles, which are often less fuel efficient. According to the Hawaii Auto Dealers Association, pickup trucks and sport utility vehicles accounted for 67.9 per cent of Hawaii vehicle sales in 2018, a sharp increase from 48.7 per cent in 2012. Existing laws have not been effective in substantially reducing carbon emissions from Hawaii's ground transportation sector.

The legislature further finds that:

(1) Financial incentives can encourage automobile buyers to purchase cleaner vehicles and encourage manufacturers to offer Hawaii consumers more choices in clean electric vehicles;

(2) The creation of a clean vehicle incentive program is a market-based mechanism to reduce carbon emissions from motor vehicles that does not require any new vehicle emissions regulatory standards;

(3) One-time rebates on the purchase of new electric vehicles, which contribute far less carbon pollution than traditional fossil fuel powered vehicles, are a reasonable and appropriate method to incentivize the purchase of electric vehicles; and

(4) One-time taxes on the purchase of new motor vehicles that emit high amounts of carbon are a reasonable and appropriate method to disincentivize the purchase of these vehicles.

This Act therefore proposes a program that would impose an additional tax on vehicles powered solely by gasoline with low fuel economy and provide a rebate on certain eligible electric vehicles. The program is intended to be self-financing and to neither increase expenditures from nor reduce revenues into the general fund.

The purpose of this Act is to establish a market-based clean vehicle incentive program consisting of one-time rebates and one-time taxes on the purchase of new motor vehicles to mitigate vehicle carbon emissions.

SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§196- Clean vehicle special fund. (a) There is established a clean vehicle special fund, into which shall be deposited:

(1) The gasoline-powered vehicle tax collected under section 237- ;

(2) Moneys appropriated to the fund by the legislature; and

(3) Interest earnings on all amounts in the clean vehicle special fund.

The clean vehicle special fund shall not be subject to section 37-53.

(b) Moneys in the clean vehicle special fund shall be used by the department of business, economic development, and tourism to provide rebates on new electric vehicles that have a published manufacturer's suggested retail price at the time of sale, as set by a vehicle's manufacturer, of $40,000 or less."

SECTION 3. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Gasoline-powered vehicle tax. (a) In addition to the tax levied in section 237-13(2)(A), there shall be an additional tax levied on the gross proceeds of the sale of a passenger car or pickup truck that is powered solely by gasoline and that has a published manufacturer's suggested retail price of $50,000 or more, as follows:

(1) Three per cent if the vehicle obtains less than twenty miles per gallon based on federal Environmental Protection Agency combined ratings;

(2) Two per cent if the vehicle obtains at least twenty but not more than twenty-four miles per gallon based on federal Environmental Protection Agency combined ratings; and

(3) One per cent if the vehicle obtains more than twenty-four but not more than twenty-nine miles per gallon based on federal Environmental Protection Agency combined ratings;

provided that this section shall not apply to a passenger car or pickup truck that is used solely for commercial or agricultural purposes.

(b) The tax shall be collected and deposited into the clean vehicle special fund established under section 196‑ .

(c) The department of business, economic development, and tourism shall adopt rules pursuant to chapter 91 to effectuate the purposes of this section. The rules shall include criteria to determine whether a vehicle is used solely for commercial or agricultural purposes and is therefore exempt from this section pursuant to subsection (a).

(d) For purposes of this section:

"Electric vehicle" has the same meaning as in section 196‑2.

"Manufacturer's suggested retail price" means the published manufacturer's suggested retail price, as set by a vehicle's manufacturer, at the time of sale.

"Passenger car" has the same meaning as in section 286‑2.

"Pickup truck" has the same meaning as in section 291‑14(e)."

SECTION 4. The chief energy officer of the Hawaii state energy office shall develop and implement a plan by December 31, 2024, to distribute the proceeds from the clean vehicle special fund to support the purchase of electric vehicles pursuant to section 196- , Hawaii Revised Statutes.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2024.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2688
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII