Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Energy and Environmental Protection, to which was referred H.B. No. 2513 entitled:

begs leave to report as follows:

The purpose of this bill is to establish a Carbon Dioxide (CO₂) Emissions Reduction Program (Program) applicable to "affected companies," Hawaii's large electric utilities who own or operate stationary fossil fuel-fired generators that provide 60 percent or more of the power generated to the public utility grid.

Starting January 1, 2005, the Program authorizes the Director of Health (Director) to assess a fee of 25 cents per ton of the affected company's yearly CO₂ emissions for the previous year. Beginning January 1, 2010, the Director can assess a fee of $1 for each ton of CO₂ emissions greater than 1,500 pounds per megawatt-hour. Revenues from these fees and from penalties assessed for affected company noncompliance will be used to fund the Program.

Your Committee received testimony in support of this measure from the Department of Business, Economic Development, and Tourism, Department of Land and Natural Resources, Department of Health, and Sierra Club, Hawaii Chapter. Comments were provided by Hawaii Agriculture Research Center, University of Hawaii Environmental Center, and Life of the Land. Testimony in opposition was submitted by Kauai Electric, Hawaiian Electric Company, Maui Electric Company, and Hawaii Electric Light Company.

Your Committee finds that this bill will internalize environmental costs of CO₂ emissions, which would otherwise not be reflected in an electricity generator's costs. This internalization will provide large producers of CO₂ with an incentive to reduce their emissions through the use of renewable energy, demand-side management, cogeneration practices, sequestration, and other CO₂ reduction strategies.

As affirmed by the record of votes of the members of your Committee on Energy and Environmental Protection that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2513, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2513, H.D. 1, and be referred to the Committee on Judiciary and Hawaiian Affairs.