Requires the public utilities commission to establish a renewable energy credits trading program. Requires DBEDT to review the feasibility of the State becoming a member of the Chicago climate exchange. Establishes an advisory committee to assist the PUC and DBEDT to establish a renewable energy credits trading program.

A BILL FOR AN ACT

SECTION 1. The legislature finds that 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 of such warming is a man-made increase in emissions of greenhouse gases, which trap heat inside the Earth's atmosphere.

In response to this situation, the United Nation's Kyoto Protocol calls for international emission reductions of carbon dioxide and five other greenhouse gases and emissions trading to establish a market for reducing greenhouse gas emissions. The United States has refused to support the Protocol, even though it produces more greenhouse gases than any other country. However, several states, including New York, New Jersey, Delaware, Connecticut, Maine, New Hampshire, and Vermont, have gone ahead and signed a plan setting Kyoto-style legal limits on greenhouse gases from power stations.

The legislature further finds that 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", the climate exchange 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. 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.

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.

Today, the exchange is also active in the European Energy Trading Scheme through the European climate exchange. The European climate exchange offered the first quoted and cleared product for European carbon and began trading futures on the International Petroleum Exchange in April 2005. Within four months, European carbon has established itself as the leading exchange-traded product in the field, with a volume of more than twenty-four million metric tons of carbon dioxide. European climate exchange futures have become the premier product for trading carbon in Europe.

The legislature finds that benefits of participation in the Chicago climate 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.

The legislature further finds that there is a need to establish a renewable energy credits trading program in Hawaii, both to enable the State to participate in the Chicago climate exchange and 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.

Accordingly, the purposes of this Act are to:

SECTION 2. Chapter 269, Hawaii Revised Statutes, is amended by adding a new section to part V to be appropriately designated and to read as follows:

"§269- Renewable energy credits trading program. (a) The commission shall establish a renewable energy credits trading program pursuant to this section. Any electric utility company that does not satisfy the renewable portfolio standard requirements of section 269-92 by directly owning or purchasing capacity using renewable energy technologies shall purchase sufficient renewable energy credits to satisfy the requirements by holding renewable energy credits in lieu of capacity from renewable energy technologies.

(b) The commission shall adopt rules pursuant to chapter 91 as may be necessary to administer and enforce this section. At a minimum, the rules shall:

(c) As used in this section, "renewable energy technology" means 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. Renewable energy technologies includes solar, wind, geothermal, hydroelectric, wave, or tidal energy, and technologies deriving energy from biomass or biomass-based waste products, including 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."

SECTION 3. (a) The department of business, economic development, and tourism shall review the feasibility of the State becoming a member of the Chicago climate exchange.

(b) There is created the renewable energy credits trading program advisory committee to facilitate the development of a renewable energy credits trading program in Hawaii. The advisory committee shall:

(b) The advisory committee members shall be appointed by the chair of the senate committee on energy, environment, and international affairs, and the chair of the house committee on energy and environmental protection, not later than sixty days from the effective date of this Act. The advisory committee shall be composed of eight members, of whom there shall be:

(c) The advisory committee shall elect a chairperson and vice-chairperson from among its members. A majority of the members shall constitute a quorum. The advisory committee shall be placed with in the department of business, economic development, and tourism for administrative purposes. Members of the advisory committee shall serve without compensation, but shall be reimbursed for per diem and interisland travel expenses. The advisory committee shall meet not later than sixty days after appointment.

(d) The advisory committee shall submit a report on the progress made to develop the renewable energy credits trading program, including any recommendations for administrative or statutory changes, to the legislature not less than twenty days prior to the convening of the 2007 regular session of the legislature. The advisory committee shall cease to exist on July 1, 2007.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval, provided that section 2 shall take effect July 1, 2006.