STAND. COM. REP. NO. 2037

Honolulu, Hawaii

RE:    S.B. No. 2744

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Madam:

     Your Committee on Energy and Environment, to which was referred S.B. No. 2744 entitled:

"A BILL FOR AN ACT RELATING TO HYDROGEN FUEL,"

begs leave to report as follows:

     The purpose of this measure is to provide an income tax credit and general excise tax exemption for the hydrogen fuel industry.

     Specifically, this measure authorizes:

     (1)  A hydrogen fuel tax credit applicable to all capital, operation, maintenance, or leasing costs, including the costs of constructing, installing, and equipping, related to investments in hydrogen-powered vehicles, hydrogen vehicle fueling stations, and commercial stationary hydrogen fuel cells in the State; and

     (2)  A general excise tax exemption on the value or gross income derived from the sale of hydrogen fuel and hydrogen powered vehicles and their materials or parts.

     Testimony in support of this measure was submitted by Ballard Power Systems; Plug Power Inc.; H2 Technologies, Inc.; Natural Energy Laboratory of Hawaii Authority; US Fuel Cell Council; National Hydrogen Association; Hawaii Solar Energy Association; and Ida Tech plc.  Testimony in opposition to this measure was submitted by the Department of Taxation; and the Hawaii Renewable Energy Alliance.  Comments were submitted by the Tax Foundation of Hawaii.

     Your Committee finds that hydrogen fuel is an important part of the greater portfolio of renewable energy technologies that can serve as both an energy storage device and a source of power generation.  Therefore, this measure provides incentives for the creation of infrastructure to replace polluting technologies such as combustion engines, lead-acid batteries, and diesel generators with ultra-clean, efficient hydrogen fuel.

     Accordingly, your Committee has amended this measure by:

     (1)  Clarifying that the tax credit only applies to the use of hydrogen fuel produced by a renewable energy source; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and style.

     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 S.B. No. 2744, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2744, S.D. 1, and be referred to the Committee on Economic Development and Taxation.

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

____________________________

RON MENOR, Chair