STAND. COM. REP. NO. 1253

Honolulu, Hawaii

RE:    H.B. No. 1912

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Energy and Environment, to which was referred H.B. No. 1912 entitled:

"A BILL FOR AN ACT RELATING TO THE ISSUANCE OF SPECIAL PURPOSE REVENUE BONDS TO ASSIST BIODIESEL PROJECTS FOR ELECTRICAL GENERATION ON THE ISLAND OF MAUI,"

begs leave to report as follows:

     The purpose of this measure is to authorize the issuance of special purpose revenue bonds (SPRBs) to assist industrial enterprises, in this case BlueEarth Maui Biodiesel, LLC, a Hawaii Corporation.

     Your Committee received testimony in support of this measure from the Department of Business, Economic Development, and Tourism; Department of Budget and Finance; BlueEarth Maui Biodiesel Project (BlueEarth); Maui Electric Company (MECO), Ltd.; Hawaiian Electric Company (HECO); and Hawaii Electric Light Company.  Testimony in opposition was received from Life of the Land; Sierra Club Hawaii Chapter, Maui Group; Maui Tomorrow; Pacific Biodiesel; Sustainable Biodiesel Alliance; and twenty-six individuals.

     The SPRBs under this measure would be applied to finance the planning, design, and construction of a biodiesel refinery with primary take-off designated as fuel for electrical generation.

     Your Committee finds that Hawaii has a growing bioenergy industry to meet the goals of energy conservation.  BlueEarth would produce biofuels to be purchased in most part by MECO for use as a generation fuel at its Ma‘alaea power plant.  The project will have the ability to use a variety of vegetable oil feedstocks (including soybean, canola, peanut, cottonseed, and sunflower oil from the Americas and various tropical oils from the Pacific Rim and Central and South America) to produce biodiesel.

     According to testimony, HECO, through an unregulated subsidiary, will be an equity holder in the project.  HECO has agreed that all of its net profits from the project will be contributed to a public/private, nonprofit biofuels trust to be chartered to enhance and stimulate the viability of a local biofuels crop industry.

     Your Committee believes that biofuels are a key contributor to the portfolio of renewable energy resources needed to help the State decrease its dependence on imported oil.

     Your Committee notes the substantial objections to this measure, based mainly on its effects to the environment stemming from a reliance on imported oils which are responsible for the destruction of rainforests, thus contributing to global warming and the loss of natural habitat.  Your Committee finds that although these objections are well taken, this measure is a start in the right direction, considering the state of current technology.  It is the hope of your Committee that a future time will see no reliance on imported oils, when the State can stimulate a biofuels crop industry sufficient to meet it biofuel processing needs.

     Your Committee has amended this measure by changing the effective date to July 1, 2020.

     As affirmed by the record of votes of the members of your Committee on Energy and Environment that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1912, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1912, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Energy and Environment,

____________________________

RON MENOR, Chair