Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Energy and Environmental Protection, to which was referred S.B. No. 2996, S.D. 2, entitled:

begs leave to report as follows:

The purpose of this bill is to encourage the development and production of alternative fuels by reducing the fuel tax on alternative fuels by an unspecified amount for a five-year period.

The Department of Transportation and Department of Business, Economic Development, and Tourism supported this bill. The Gas Company and Pacific Biodiesel supported this measure with amendments. The Department of Taxation and Tax Foundation of Hawaii submitted comments.

Your Committee finds that the production and use of alternative fuels should be encouraged because of their social and economic benefits to the State, in part because Hawaii remains vulnerable to disruptions in the oil supply and a significant portion of motor fuel expenditures (an estimated $679 million in 1995) leaves the State. Moreover, locally produced alternative fuels contribute to the economic growth of Hawaii, since monies spent on alternative fuels would not leave the State. Diversification of its energy supply has long been an important part of Hawaii's energy policy. Furthermore, the use of alternative fuels also helps protect the environment and promote public health by lowering emissions produced by gasoline and diesel.

Upon further consideration, your Committee has amended this bill by:

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 S.B. No. 2996, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2996, S.D. 2, H.D. 1, and be referred to the Committee on Finance.