Requires the Hawaii energy policy forum to review the feasibility of the State joining Chicago climate exchange and appropriates $          therefor. Also appropriates $200,000 to the forum to develop action plan, timeline, and benchmarks to implement the forum's visions, concepts, and recommendations for Hawaii's preferred energy future. Report to legislature. (SB3162 HD1)

A BILL FOR AN ACT

Part I

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 the 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 Kyoto Protocol, even though the United States 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 Protocol-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 the 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 investigate whether the State should participate in the Chicago climate exchange and to determine whether such participation can improve the State's ability to increase its use of renewable energy resources.

Accordingly, the purpose of this part is to:

SECTION 2. (a) The Hawaii energy policy forum shall determine the feasibility of the State becoming a member of the Chicago climate exchange. The forum shall establish an advisory committee to carry out the purposes of this part.

(b) The advisory committee shall:

(c) In implementing this part, the Hawaii energy policy forum, through its broad energy stakeholder membership, shall ensure that representation on the advisory committee includes:

(d) The Hawaii energy policy forum shall submit a progress report, 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. Copies of the report shall also be transmitted to the public utilities commission and the department of business, economic development, and tourism.

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $       , or so much thereof as may be necessary for fiscal year 2006-2007, for the Hawaii energy policy forum to carry out the purposes of this part.

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this part.

Part II

SECTION 4. In May 2002, the University of Hawaii gathered major energy and policy stakeholders in Hawaii to convene as the Hawaii energy policy forum. The purpose of the policy forum was to develop an energy vision for Hawaii through the year 2030 and to formulate strategies consistent with implementing that vision. Accordingly, facilitated discussions were conducted on Hawaii's preferred energy future and the issues and constraints that would be encountered in achieving that preferred future. Incorporating a science- and fact-based approach, policy studies were conducted to provide baseline information and review of various environmental, regulatory, economic, social, and cultural issues relating to Hawaii's energy future.

In December 2003, the policy forum convened a policy summit to provide a community-based forum for review of its work and recommendations. The final report of the policy forum, "Hawaii at the Crossroads: A Long Term Energy Strategy," sets forth recommended guiding principles and policy options to meet Hawaii's long term energy needs.

The purpose of this part is to appropriate funds to reconvene the policy forum for the purpose of implementing the vision, concepts, and recommendations of the policy forum's final report, and the resulting "Ten Point Plan" to meet Hawaii's energy goals. This will provide a unique opportunity for stakeholders to continue their work from planning to implementation and for further engagement of policy and decision-makers and consumers on issues relevant to creating Hawaii's preferred energy future.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $200,000, or so much thereof as may be necessary for fiscal year 2006-2007, to reconvene the Hawaii energy policy forum for the purpose of:

The sum appropriated shall be expended by the department of business, economic development, and tourism for the purposes of this part.

Part III

SECTION 6. This Act shall take effect on July 1, 2006.