STAND. COM. REP. NO. 2036

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2221
                                        




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Economic Development, to which was
referred S.B. No. 2221 entitled: 

     "A BILL FOR AN ACT RELATING TO ETHANOL,"

begs leave to report as follows:

     The purpose of this measure is to create an ethanol
producers income tax credit of forty cents per gallon to
encourage investment in Hawaii based ethanol production
facilities.

     Testimony in favor of this measure was submitted by the
Department of Business, Economic Development, and Tourism, Hawaii
Farm Bureau, Hawaiian Commercial & Sugar Company, Gay & Robinson,
Inc., E D & F Man Alcohol Inc., Hawaii Renewable Energy Alliance,
The `Aina Institute, and Worldwide Energy Group.  The Department
of Taxation submitted testimony in opposition.  The Tax
Foundation of Hawaii submitted comments. 

     Your Committee finds that ethanol production is both
appropriate and timely, considering recent advances in production
technology, substantial federal tax credits, and the economic
opportunities it would provide in Hawaii's rural areas.
Currently, the State provides a GET exemption for ethanol blended
fuels, and encourages the use of alternative fuels.  Despite this
support, no facilities have been developed and no local blending
has taken place.  Your Committee has also heard that over thirty
states provide incentives of one kind or another for ethanol.
While many were originally ethanol blending incentives, over time

 
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several states have introduced producer incentives such as
provided in this measure.

     Your Committee finds that ethanol is a growth industry, and
that Hawaii has an opportunity to take advantage of national and
international trends supporting increased use of ethanol fuel.

     As affirmed by the record of votes of the members of your
Committee on Economic Development that is attached to this
report, your Committee is in accord with the intent and purpose
of S.B. No. 2221 and recommends that it pass Second Reading and
be referred to the Committee on Ways and Means.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Economic
                                   Development,



                                   ______________________________
                                   LORRAINE R. INOUYE, Chair

 
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