RESOLUTION

WHEREAS, there is evidence that the planet's climate is becoming warmer, with potentially catastrophic effects on coastal areas and global weather patterns. Many scientists suspect that a significant cause is a man-made increase in emissions of greenhouse gases, which trap heat inside the Earth's atmosphere; and

WHEREAS, the United States has refused to support the United Nations' Kyoto Protocol, which calls for international emissions reductions, even though the United States produces more greenhouse gases than any other country; and

WHEREAS, the Chicago climate exchange is the first major attempt in the United States at establishing a market for reducing greenhouse gas emissions. Also known as "carbon trading", it offers energy companies, manufacturers, and governments that reduce their emissions of carbon dioxide and other greenhouse gases the opportunity to make money while protecting the environment; and

WHEREAS, the Chicago climate exchange, also known as "CCX", is a voluntary attempt to create market incentives for participants to cut emissions by reducing and trading greenhouse gas emissions; and

WHEREAS, funded by grants from the Chicago-based Joyce Foundation and administered by Northwestern University's Kellogg Graduate School of Management, the goal of the exchange is to implement a voluntary pilot program for trading greenhouse gases in North America, to be later expanded to include international sources. Founding members of the exchange include American Electric Power, the City of Chicago, DuPont, the Ford Motor Company, International Paper, and Motorola, Inc.; and

WHEREAS, the Chicago climate exchange also marks the first time major companies in multiple industries have made a voluntary binding commitment to use a rules-based market for reducing their greenhouse gas emissions. The exchange will enable them to receive credit for these reductions and to buy and sell credits to find the most cost-effective way of achieving reductions. Trading is targeted to begin in the spring of 2003; and

WHEREAS, exchange participants agree to place voluntary limits on their emissions of greenhouse gases. Participants that drastically reduced their emissions would receive credits, which they could sell to others who missed their targets. Traders could also generate "offset" credits by planting trees, which sequester carbon dioxide. The market would then create a tradable commodity that could be bought and sold quickly like shares on a stock exchange; and

WHEREAS, a number of companies have already participated in bilateral trades of greenhouse-gas emissions. Carbon-trading transactions have already surpassed $100,000,000, according to the exchange. Economists believe that annual trading volume could eventually run into the tens of billions; and

WHEREAS, the goal of the exchange is to develop standardized commodities and trustworthy market institutions for such trading. The National Association of Securities Dealers, which regulates the Nasdaq, has agreed to provide regulatory services to the exchange; and

WHEREAS, benefits of participation in the exchange include reducing the long-term costs of controlling greenhouse gases; receiving financial benefits from environmentally sustainable practices, including reduced energy costs and raised productivity; and enhancing environmental leadership reputation among stockholders, customers, and employees; and

WHEREAS, once the abundant renewable sources of energy in Hawaii are more developed, Hawaii could develop a valuable export by selling greenhouse gas credits to participants in other states; and

WHEREAS, the State must develop its own renewable credit trading program in order to participate in the Chicago climate exchange and become an exporter of greenhouse gas credits; and

WHEREAS, there is a need to establish a renewable energy credits trading program in Hawaii, in order to ensure compliance with the State's renewable portfolio standards, which require a certain proportion of electricity sold by each supplier in Hawaii to come from renewable sources; and

WHEREAS, there is a need for the Department of Business, Economic Development, and Tourism to review the feasibility of the State becoming a member of the Chicago climate exchange and the feasibility of requiring the Public Utilities Commission to establish a renewable energy credits trading program to ensure compliance with the State's renewable portfolio standards and to promote the sale of excess Hawaii renewable energy credits beyond the State of Hawaii as an export commodity; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-second Legislature of the State of Hawaii, Regular Session of 2003, the Senate concurring, that the Department of Business, Economic Development, and Tourism is requested to review the feasibility of Hawaii becoming a member of the Chicago climate exchange to generate needed revenue for the State by selling renewable energy credits as an export commodity while helping to improve the environment; and

BE IT FURTHER RESOLVED that the Department of Business, Economic Development, and Tourism is further requested to review the feasibility of requiring the Public Utilities Commission to establish a renewable energy credits trading program in Hawaii to ensure compliance with the State's renewable portfolio standards and to open new energy market opportunities; and

BE IT FURTHER RESOLVED that the Department's review on the establishment of a renewable energy credits trading program is requested to include the following elements:

1. A provision that any electric utility company that does not satisfy the renewable portfolio standard requirements of section 269-92, Hawaii Revised Statutes, by directly owning or purchasing capacity using renewable energy technologies, shall purchase within the State of Hawaii sufficient renewable energy credits to satisfy the requirements by holding renewable energy credits in lieu of capacity from renewable energy technologies;
2. Establishment of minimum annual renewable energy requirements for each electric utility company operating in this State in a manner reasonably calculated by the Commission to produce, on a statewide basis, compliance with renewable portfolio standard requirements;
3. Specification of reasonable performance standards that all renewable capacity additions must meet to count against the renewable portfolio standard requirements, and that:

1. Are designed and operated so as to maximize the energy output from the capacity additions in accordance with then-current industry standards; and
2. Encourage the development, construction, and operation of new renewable energy projects at those sites in this State that have the greatest economic potential for capture and development of this State's environmentally beneficial renewable resources; and

1. Define "renewable energy technology" to mean any technology that exclusively relies on an energy source that is naturally regenerated over a short time and derived directly from the sun, indirectly from the sun, or from moving water or other natural movements and mechanisms of the environment, including wind, geothermal, hydroelectric, wave, or tidal energy, or biomass or biomass-based waste products, and landfill gas. A renewable energy technology does not rely on energy resources derived from fossil fuels, waste products from fossil fuels, or waste products from inorganic sources;

and

BE IT FURTHER RESOLVED that the Department of Business, Economic Development, and Tourism is requested to report findings and recommendations, including any proposed implementing legislation, to the Legislature no later than twenty days before the convening of the Regular Session of 2004; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of Business, Economic Development, and Tourism and the Chairperson and Administrative Director of the Public Utilities Commission.

Report Title:

DBEDT; Chicago Climate Exchange; Renewable Energy Credits