HB1003

SECTION 1. The legislature finds and declares that Hawaii has struggled for thirty years to develop renewable sources of energy in order to reduce its dependence on imported fossil fuels and imported sources of energy. In 1974, the legislature passed a series of Acts that recognized the vulnerability of Hawaii's residents to the petroleum industry as a result of its reliance on imported oil for transportation fuels and power generation. Over the thirty years that followed, the legislature has continued to enact laws and appropriate funds to further develop alternative sources of energy.

In 2006, the legislature passed Act 240, groundbreaking legislation to promote energy self-sufficiency for the State. Act 240 promoted further development of renewable energy, including increased financial incentives, mechanisms for dedicated sources of funding, and development of hydrogen as a renewable energy source. While progress has been made, there is still much to be done.

In 2006, the legislature adopted House Concurrent Resolution No. 195, calling for a study of the feasibility of development of biofuels as a renewable energy, primarily for electricity generation. The legislature recognized that land-based development of crops for use in biofuels production for Hawaii would achieve the objective of energy self-sufficiency. The legislature also recognized that complex issues relating to land acquisition, water supply, and investment risk would need to be addressed before a viable and cost effective biofuels program could be developed. The legislature finds that an integrated approach must be undertaken to coordinate the various industries and federal and state agencies to ensure the success of any substantial investment into biofuels development.

The purpose of this Act is twofold. Part I statutorily establishes the Hawaii natural energy institute of the University of Hawaii at Manoa, defines its mission, and creates the energy development special fund for the development of renewable energy. One of the roles of this institute will be to manage the portfolio of renewable energy programs to ensure an integrated approach, use its technical expertise to advise state and federal agencies to maximize funding sources and encourage private industry investments, and evaluate Hawaii's efforts undertaken toward energy self-sufficiency.

Part II of this Act creates the biofuels development revolving loan fund, administered by the Hawaii strategic development corporation, with technical advice from the Hawaii natural energy institute. The purpose of the loan fund is to provide seed financing for commercially viable biofuel development projects, pending adoption of a comprehensive plan for Hawaii's energy self-sufficiency based, in part, on biofuels.

PART I.

SECTION 2. Chapter 304A, Hawaii Revised Statutes, is amended by adding a new subpart to part IV to be appropriately designated and to read as follows:

" . Hawaii Natural Energy Institute"

§304A-A Hawaii natural energy institute; structure; function. (a) There is established the Hawaii natural energy institute at the University of Hawaii. The institute shall be administered by a director to be appointed by the board of regents upon recommendation by the president. The director of the institute shall appoint the professional members of the staff and other employees. The president and board of regents shall have the same powers over the institute and its staff as over the university and its facilities.

(b) The director of the institute shall work collaboratively with the energy resources coordinator in carrying out duties pursuant to section 196-4 in the area of research and development of renewable energy sources.

(1) Develop renewable sources of energy for power generation and transportation fuels by coordinating the activities of state agencies and working with federal agencies and private entities;

(2) Conduct research and development of renewable sources of energy;

(3) Aggressively seek matching funding from federal agencies and private entities for its research and development activities;

(4) Provide technical assistance, advice, and recommendations relating to the use of funds administered by the Hawaii strategic development corporation relating to renewable energy programs; and

(5) Report annually to the legislature, no less than twenty days prior to the convening of each regular session, on its activities, expenditures, contracts developed, advances in technology, assessment and analyses of state agencies and programs, and recommendations for proposed legislation.

§304A-B Advisory council to Hawaii natural energy institute. (a) The institute shall establish an advisory council of seven members, appointed by the president from a list of nominees submitted by the Hawaii energy policy forum. The members of the advisory council shall be from the general public, organizations representing the utility industry, technology providers, and environmental groups. Members shall be selected on the basis of their proven expertise and interest in the field of renewable energy. The director of the institute and the energy resources coordinator shall serve as ex officio nonvoting members of the advisory council.

(b) The primary role of the advisory council shall be to make recommendations to the director on the award of contracts and grants funded through the institute.

(c) The advisory council may advise the director on matters of strategic planning, goals and objectives, significant initiatives of the institute, and other matters as determined by the director.

§304A-C Energy systems development special fund. (a) There is established the energy systems development special fund for the purpose of developing an integrated approach and portfolio management of renewable energy projects that will reduce Hawaii's dependence on fossil fuel and imported oil and other imported energy resources and move Hawaii toward energy self-sufficiency.

(b) The special fund shall be funded by appropriations from the legislature, investment earnings, gifts, donations, or other income received by the institute and fifty per cent of any public benefit fees that may be established by the public utilities commission pursuant to section 269-121.

(1) Obtaining matching funds from federal and private sources for research and development of renewable energy sources;

(2) Awarding contracts or grants to develop and deploy technologies that will reduce Hawaii's dependence on imported energy resources and imported oil. Projects may be commissioned that:

(A) Balance the risk, benefits, and time horizons of the investment to ensure tangible benefits to the Hawaii consumer, with priority given to short term technology development;

(B) Emphasize innovative and renewable energy supply and end use technologies focusing on environmental attributes, reliability, and affordability;

(D) Enhance reliability and storage capabilities of renewable energy;

(E) Ensure that research, deployment, and demonstration efforts build on existing programs and resources and are not duplicated;

(F) Address critical technical and scientific barriers to achieving energy self-sufficiency by reducing dependence on imported oil and imported energy resources;

(G) Ensure that technology used and developed for renewable energy production and distribution will be commercially viable; and

(H) Give priority to resources that are indigenous and unique to Hawaii.

(3) Managing the portfolio of projects commissioned under this subsection;

(4) Monitoring state agencies charged with implementing renewable energy projects and programs, including programs to develop biofuels, to ensure compliance with program objectives and progress on meeting objectives; and

(5) Conducting an evaluation of the success of the projects and activities funded by the special fund. An evaluation shall be conducted by a two-person panel of independent energy and environmental technical experts at the end of the third year after the effective date of this Act, and thereafter every three years. The panel shall report the results of its evaluation to the legislature no less than twenty days prior to the convening of the following regular session."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $10,000,000, for fiscal year 2007-2008, and the same sum, for fiscal year 2008-2009, to be deposited into the energy systems development special fund pursuant to section 304A-C.

SECTION 4. There is appropriated out of the energy systems development special fund the sum of $10,000,000, or so much thereof as may be necessary for fiscal year 2007-2008, and the same sum, or so much thereof as may be necessary for fiscal year 2008-2009, to be used for the purposes of the energy systems development special fund established pursuant to section 304A‑C.

The sums appropriated shall be expended by the University of Hawaii, Hawaii natural energy institute, for the purposes of section 304A-C.

PART II.

SECTION 5. Chapter 211F, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§211F-A Biofuels development revolving loan fund. (a) There shall be established the biofuels development revolving loan fund, into which shall be deposited:

(1) Appropriations made by the legislature to the fund;

(2) Any gifts, donations, or contributions from public or private sources;

(3) All interest earned on or accrued to moneys deposited in the fund; and

(4) Any other moneys made available to the fund from other sources.

(b) Moneys in the fund shall be used to provide low interest or no interest loans for seed capital for, or to match venture capital investments in, private sector and federal projects for research, development, testing, and implementation of the Hawaii biofuels program under section 196‑A.

(c) The fund shall be administered by the Hawaii strategic development corporation, and funding decisions shall be made based upon technical advice and recommendations provided by the Hawaii natural energy institute and its advisory council."

SECTION 6. Chapter 196, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§196-A Hawaii biofuels program. There is established, within the department of business, economic development, and tourism, a Hawaii renewable biofuels program to manage the State's transition to energy self-sufficency based in part on biofuels for power generation and transportation fuels. The program shall design, implement, and administer activities that include:

(1) Strategic partnerships for the research, development, testing, and deployment of renewable biofuels technologies and production of biomass crops;

(2) Evaluation of Hawaii's potential to rely on biofuels as a significant renewable energy resource;

(3) Biofuels demonstration projects, including infrastructure for production, storage, and transportation of biofuels;

(4) Promotion of Hawaii's renewable biofuels resources to potential partners and investors for development in Hawaii as well as for export purposes;

(5) A plan to implement commercially viable biofuels development from year 2007 to 2010; and

(6) A mechanism to evaluate the biofuels development plan."

SECTION 7. There is appropriated out of the general revenues of the State of Hawaii the sum of $10,000,000 for fiscal year 2007-2008, and the sum of $10,000,000 for fiscal year 2008-2009, to be deposited into the biofuels development revolving loan fund pursuant to section 211F-A, Hawaii Revised Statutes.

SECTION 8. There is appropriated out of the biofuels development revolving loan fund the sum of $10,000,000, or so much thereof as may be necessary for fiscal year 2007-2008, and the same sum, or so much thereof as may be necessary for fiscal year 2008-2009, to be used for the purposes of providing loans from the biofuels development revolving loan fund, established pursuant to section 211F-A, Hawaii Revised Statutes.

The sums appropriated shall be expended by the Hawaii strategic development corporation for the purposes of section 211F-A, Hawaii Revised Statutes.

SECTION 9. Act 235, Session Laws of Hawaii 1974, is repealed.

SECTION 10. In codifying the new sections added by sections 2, 5, and 6 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 11. New statutory material is underscored.

SECTION 12. This Act shall take effect on July 1, 2007, except that section 304A-C, Hawaii Revised Statutes, shall be repealed on June 30, 2012.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1003
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII