SB3013.DOC

SECTION 1. The legislature finds that the State's natural environment and ecosystem is in a fragile position when considering the amount of carbon emissions released into the environment each day and the lack of a significant program or remedy in place to reduce those carbon emissions.

As the most geographically isolated state in the country, Hawaii at a crossroads. The harsh reality of global warming has put Hawaii in a dangerous position that has grown dependent on fossil fuels. Our dependence on fossil fuels has exposed residents and businesses alike to the likelihood of a volatile cost of living as oil prices fluctuate in the future.

In addition, the State's mass consumption of fossil fuels, driven by our dependence on fossil fuels, has contributed to climate change and the deterioration of the environment, and anticipated conditions such as more severe storm events, overall less rainfall, warmer temperatures that may favor invasive species, sea level rise, and ocean acidification that hampers coral growth. These climate changes will likely impose major, but not fully understood costs, and other impacts on Hawaii's people and the natural environment we depend upon to support our lives in the middle of the Pacific. Nowhere is it more obvious than in remote islands like Hawaii that our lives and economy are intertwined with the health and function of the natural world around us.

Although Hawaii is home to renewable energy resources like solar, wind, ocean, and geothermal, we as a community have not taken full advantage of those alternative energy systems and solutions to make our natural environment better and our State more energy independent. As an example, despite year-round sunshine, only thirty per cent of Hawaii's residents have solar water heaters. Similarly, many acres of highly productive agricultural lands are not being farmed.

Now is the time for our State to take bold action to squarely address Hawaii's climate crisis and plan for and address the inevitable effects of climate change. It will require long-term commitment and dedication from Hawaii's people to dramatically shift our present course toward a more energy independent and sustainable society.

The legislature finds that the State needs to develop a program that would incentivize businesses to adopt and practice environmentally friendly measures that would result in reducing carbon emissions that businesses release into our environment. One such mechanism that has gained success in Europe after the Kyoto Protocol has been the certification and selling of carbon credits.

The purpose of this Act is to create a carbon credits program in Hawaii that would incentivize and reward businesses or individuals for keeping land designated as conservation or that adopt, practice, and adhere to clean energy initiatives, consistent with the Hawaii 2050 Sustainability Plan, over the long-term.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to title 12, subtitle 6, to be appropriately designated and to read as follows:

"Chapter

CARBON CREDITS PROGRAM

§ -1 Carbon credits program. (a) The department shall establish a carbon credits program that will establish a process for creation, transfer, and sale of carbon credits among public and private agencies in the State to ensure land conservation and reduced carbon emission standards.

(b) For the purposes of this section:

"Carbon credit" means a financial benefit that is registered and certified by the department that allows the holder of the carbon credit to a financial benefit determined by the department for keeping land designated as conservation or reducing the emission of carbon or greenhouses gases on the land.

"Carbon emissions" means the emission of a greenhouse gas that consists of a single carbon atom and two oxygen atoms on a molecular level.

"Emissions" means the release of greenhouse gases into the atmosphere from sources and processes in a facility, including from the combustion of transportation fuels such as natural gas, petroleum products, and natural gas liquids. In the context of offsets, "emissions" means the release of greenhouse gases into the atmosphere from sources and processes within an offset project boundary.

"Other greenhouse Gases" means methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons, or perfluorocarbons.

"Registered and certified" means a business or individual that has completed the process for registration and certification as prescribed and adopted by the department.

(c) The department shall adopt rules pursuant to chapter 91 necessary to carry out the purposes of this section. The rules shall include but not be limited to:

(1) Establishing an objective mechanism that determines a financial benefit for a business or individual landowner under this chapter and a method to determine the fair market value of each carbon credit for transactions involving state agencies;

(2) Setting time limits by which the taxpayer may apply carbon credits;

(3) Determining any limits on the total number of carbon credits each taxpayer may sell or purchase in a calendar year and in the aggregate over a lifetime;

(4) Developing a system of registration and certification of carbon credits issued or transferred pursuant to this section;

(5) Establishing trading rules and standards for measurement and verification of carbon credits; and

(6) Reporting and tracking requirements of conservation efforts.

(d) Each business or individual that is registered and certified under this chapter shall provide an annual report to the department no later than March 1 of each year that includes the following at a minimum:

(1) The amount of carbon emissions and other greenhouse gases in metric tons that were emitted in the past calendar year;

(2) Copies of all data and reports pursuant to being registered and certified under this chapter;

(3) Records used to calculate the compliance obligation under this chapter; and

(4) Emissions data and product data verification."

SECTION 3. This Act shall take effect on July 1, 2012.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3013
TWENTY-SIXTH LEGISLATURE, 2012
STATE OF HAWAII