STAND. COM. REP. NO. 2713

Honolulu, Hawaii

RE: S.B. No. 1431

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2020

State of Hawaii

Sir:

Your Committee on Energy, Economic Development, and Tourism, to which was referred S.B. No. 1431 entitled:

"A BILL FOR AN ACT RELATING TO RENEWABLE ENERGY TECHNOLOGIES TAX CREDITS,"

begs leave to report as follows:

The purpose and intent of this measure is to include commercial air conditioning systems that are connected to seawater as an authorized system to collect the renewable energy technologies tax credit.

Your Committee received testimony in support of this measure from Our Revolution Hawaii; We Are One, Inc; Seawater Air Conditioning; 350Hawaii; Ulupono Initiative; and twelve individuals. Your Committee received testimony in opposition to this measure from one individual. Your Committee received comments on this measure from the Department of Taxation, Hawaii State Energy Office, and Tax Foundation of Hawaii.

Your Committee finds that the State must continue to support established renewable energy resources and those emerging from new technological advancements to meet its expansive renewable energy goals. As a means to achieve Hawaii's renewable energy goals, the State established a renewable energy technologies income tax credit that incentivized the installation of solar and wind energy systems throughout the State. Your Committee notes that since the establishment of the renewable energy technologies tax credit, technological advancements have created multiple ways to tap into the natural environment to produce power. Seawater is an untapped and abundant renewable source of energy that can be used to offset certain electricity costs, such as costs incurred from air conditioning. This measure will apply the renewable energy technologies income tax credit to commercial seawater air conditioning systems, thereby bringing the State closer to its renewable energy goals.

Your Committee has amended this measure by:

(1) Clarifying that the cap amount of tax credit allowed for a commercial air conditioning system connecting to a seawater air conditioning district cooling system is $250,000, instead of $500,000, and inserting language that sets an aggregate cap amount of $5,000,000 for any taxable year;

(2) Clarifying the definition of "commercial air conditioning system";

(3) Specifying that cold deep seawater is a source of renewable energy for purposes of defining a renewable energy technology system;

(4) Changing the effective date to July 1, 2020, and making this measure apply to taxable years beginning after December 31, 2020; and

(5) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Energy, Economic Development, and Tourism that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1431, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1431, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Energy, Economic Development, and Tourism,

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GLENN WAKAI, Chair