STAND. COM. REP. NO. 93-26

Honolulu, Hawaii

, 2026

RE: H.B. No. 1694

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

Your Committee on Transportation, to which was referred H.B. No. 1694 entitled:

"A BILL FOR AN ACT RELATING TO SUSTAINABLE AVIATION FUEL TAX CREDIT,"

begs leave to report as follows:

The purpose of this measure is to establish a temporary sustainable aviation fuel income tax credit to reduce greenhouse gas emissions, including annual reporting requirements regarding the distribution of sustainable aviation fuel in the State.

Your Committee received testimony in support of this measure from Alaska Airlines and Hawaiian Airlines; Imua Alliance; Pono Pacific; Kohala Coast Resort Association; Hawaii Food Industry Association; Hawaiʻi Farm Bureau; Par Hawaii; Kapolei Chamber of Commerce; Hawaiʻi Renewable Fuels Coalition; Airlines Committee of Hawaii; Airlines for America; and Simonpietri Enterprises LLC. Your Committee received testimony in opposition to this measure from the Energy Justice Network and one individual. Your Committee received comments on this measure from the Department of Taxation; Life of the Land; Tax Foundation of Hawaii; and Island Energy Services.

Your Committee finds that the aviation sector is a major contributor to the State's greenhouse gas emissions and that reducing carbon output in this sector is critical to achieving Hawaii's climate goals. Sustainable aviation fuel offers a lower-emissions alternative to conventional jet fuel, but adoption has been hindered by limited distribution and high costs. This measure addresses those barriers by establishing a tax credit for the sale and distribution of sustainable aviation fuel that meets lifecycle greenhouse gas emissions reduction thresholds, which supports economic development and advances Hawaii's transition to a more sustainable energy future.

Your Committee has amended this measure by:

(1) Increasing the deadline that a taxpayer may claim the income tax credit from thirty to forty-five days following the close of the calendar year;

(2) Increasing the deadline that the Department of Transportation has to issue a certificate to the taxpayer from thirty to forty-five days;

(3) Applying the tax credit to taxable years beginning after December 31, 2026, rather than December 31, 2025; and

(4) Changing the effective date to July 1, 3000, to encourage further discussion.

As affirmed by the record of votes of the members of your Committee on Transportation that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1694, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1694, H.D. 1, and be referred to your Committee on Energy & Environmental Protection.

Respectfully submitted on behalf of the members of the Committee on Transportation,

____________________________

DARIUS KILA, Chair