HB1986 HD1

SECTION 1. The legislature finds that the State's natural environment and ecosystems are in a fragile state, due to the amount of greenhouse gases released through human activities and the resulting impact on global climate change. The legislature also finds that the State should support programs that incentivize state agencies, private entities, and individuals to adopt practices that are more environmentally friendly and that result in reduced carbon emissions into the environment. The legislature notes that one mechanism that has gained success in Europe after adoption of the Kyoto Protocol is the transferring and selling of carbon offset credits. California and numerous other states and private industries have established these types of credits for purchase by polluters to offset their carbon emissions. Billions of dollars have been raised by California alone, and many industries are seeking new places to invest these dollars to offset their carbon emissions.

The legislature further finds that it is necessary to invest state funds to improve the State's water infrastructure and ensure future water sustainability in the face of ongoing climate change. More specifically, the State must be prepared to provide more resources and support for those affected by disaster-scale flooding, coastal seawater inundation, and shortages of potable water and agricultural water. The legislature anticipates that the revenues raised by a state carbon offsets program will greatly enhance current water sustainability efforts.

Accordingly, the legislature finds that it is in the public interest to create a carbon offsets program in the State that would incentivize and reward the adoption, practice, and adherence to carbon emission reduction activities, consistent with the Hawaii 2050 sustainability plan.

The purpose of this Act is to establish a program under the department of business, economic development, and tourism that allows state agencies and other interested parties to acquire carbon offset credits to offset their respective carbon emissions, and uses the resulting proceeds to fund projects that improve the State's water infrastructure or mitigate threats to water sustainability efforts due to climate change.

SECTION 2. Chapter 201, Hawaii Revised Statutes, is amended by adding two new sections to part I to be appropriately designated and to read as follows:

"§201- Definitions. As used in this section:

"Carbon offset" means a compensatory measure made by an agency or individual to reduce carbon emissions, which may include the adoption of practices that increase the absorption of carbon dioxide.

"Carbon offset credit" means a tradable credit issued by the department under the program that represents a greenhouse gas reduction or greenhouse gas removal enhancement that is equivalent to one metric ton of carbon dioxide equivalent and meets the requirements of the program.

"Emissions" means the release of greenhouse gases into the atmosphere from sources and processes found in a specified industry, including from the combustion of transportation fuels such as natural gas, petroleum products, and natural gas liquids.

"Program" means the carbon offset program administered by the department.

"State agency" means a unit of state government, such as a department, division, branch, agency, program, or office, and includes the legislature, judiciary, and office of Hawaiian affairs.

§201- Carbon offset program. (a) The department shall establish a carbon offset program that:

(1) Establishes a process for use by state agencies and other interested parties to identify management actions that contribute to a reduction in carbon emissions;

(2) Establishes carbon offset credits that may be transferred or sold among public and private entities in the State; provided that carbon offset credits shall be applied within the State; provided further that a substantial portion of the proceeds generated from sales of carbon offset credits shall be invested in projects that improve the State's water infrastructure or mitigate threats to water sustainability due to climate change, including but not limited to:

(A) Flood prevention and preparedness;

(B) Mitigation of sea level rise;

(D) Increasing agricultural water supplies;

(3) Guarantees sustainable management of the State's natural resources by reducing carbon emissions, based on accepted principles, standards, and best management practices; and

(4) Is consistent with the Hawaii 2050 sustainability plan.

(b) The department shall adopt rules, pursuant to chapter 91, necessary to carry out the purposes of this section. At a minimum, rules adopted under this section shall address:

(1) Standards to assure program participants that carbon offsets to be transferred or sold under the program shall:

(A) Not result in harm to or deterioration of natural resources in the State; and

(B) Provide environmental, social, cultural, or economic benefits, including but not limited to the improvement of the State's water infrastructure or mitigation of threats to water sustainability due to climate change;

(2) Provisions for establishing the appropriate baseline for projects or practices undertaken to reduce carbon emissions;

(3) Ownership of any carbon emission debits and credits for carbon storage or sequestration that are made through a third party or accredited program;

(4) The manner in which specific industry practices shall monitor and verify carbon dioxide emission for carbon storage or sequestration;

(5) The use of reputable third-party verification of carbon offsets; and

(6) The manner in which the valuation of carbon offset credits shall be determined."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on January 28, 2045.

HOUSE OF REPRESENTATIVES	H.B. NO.	1986
TWENTY-NINTH LEGISLATURE, 2018		H.D. 1
STATE OF HAWAII