Hawaii Incentives and Laws

Last Updated June 2008

Hawaii is the home of the Honolulu Clean Cities Coalition (www.hawaii.gov/dbedt/ert/cc). Coordinator contact information is listed in the Points of Contact section.

State Incentives

Business Investment Tax Credit

Through December 31, 2010, taxpayers making a high technology business investment are eligible for a tax credit the year in which the investment is made and for the proceeding four years. A "qualified high technology business" is one in which more than 50% of the activities are qualified research (75% of which is conducted in Hawaii) and in which more than 75% of the income (i.e. income from products sold from, manufactured or produced in Hawaii or from services performed in Hawaii) is derived from qualified research. "Qualified research" includes research that is related to non-fossil fuel energy-related technology. The tax credit is equal to a percentage of the investment made, up to the following maximums:

If the tax credit exceeds the taxpayer's income tax liability for any of the five years that the credit is taken, the excess of the tax credit may be used as a credit in subsequent years until exhausted. A taxpayer may continue to claim the credits if the five-year period to claim the credits commences in taxable years beginning before January 1, 2010.

(Reference Hawaii Revised Statutes 235-7.3 and 235-110.9)

Point of Contact

Hawaii State Department of Taxation
Phone (800) 222-3229
http://www.state.hi.us/tax/tax.html

Ethanol Production Incentive

An income tax credit is available for qualifying ethanol production facilities equal to 30% of nameplate capacity between 500,000 and 15 million gallons per year. . The facility must produce at least 75% of its nameplate capacity to be eligible to receive the tax credit in that year, and the tax credit may be taken for up to eight years. The credit is only available to the first 40 million gallons of ethanol produced per year. Qualifying ethanol production facilities must be in operation prior to January 1, 2017. (Reference Hawaii Revised Statutes 235-110.3)

State Laws and Regulations

Alternative Fuels Promotion

The state of Hawaii has signed a Memorandum of Understanding (MOU) with the U.S. Department of Energy (DOE) Assistant Secretary for Energy Efficiency and Renewable Energy (EERE) to establish the Hawaii Clean Energy Initiative. DOE and the state pledge to collaborate to produce 70% of the state’s energy needs from renewable sources by 2030. The goals of the partnership include defining the structural transformation required to transition the state to a clean energy-dominated economy; demonstrate and foster innovation in the use of clean energy, including alternative fuels; create opportunities for the widespread distribution of clean energy benefits; establish an open learning model for other states and entities to adopt; and build a workforce with cross-cutting skills to support a clean energy economy in the state. For more information about Hawaii Clean Energy Initiative, see the full text of the MOU (PDF 108 KB). Download Adobe Reader

Biofuels Production Land Use Allowance

In order to reduce dependence on petroleum, achieve environmental sustainability, and create jobs, the state of Hawaii permits the use of lands originally zoned as agricultural land use districts to be used for renewable energy production, storage, and distribution, including the production of biofuels. Biofuels production facilities must be integrated with an agricultural activity and may not adversely impact agricultural land and other agricultural uses in the vicinity. Biofuels production facilities include facilities that produce liquid or gaseous fuels from organic sources such as biomass crops, agricultural residues, food wastes, and oil crops including palm, canola, soybean, and waste cooking oils. (Reference Senate Bill 2849, 2008)

Idle Reduction Regulation

No gasoline- or diesel-powered vehicle may idle at a loading zone, parking or service area, route terminal, or other off-street areas, except for the following situations: during adjustment or repair of the engine; during auxiliary vehicle operations such as cranes and certain bulk carriers, provided no visible smoke is emitted and the vehicle is being used for its intended purpose; during loading and unloading of passengers, not to exceed three minutes; and during engine start-up and cool-down, not to exceed three minutes. (Reference Hawaii Administrative Rules 11-60.1-34)

Alcohol Fuel Tax Exemption

Alcohol fuel sold for consumption or use by the purchaser is exempt from state excise tax. For the purpose of this exemption, alcohol fuel is defined as neat biomass-derived alcohol liquid fuel or a mixture of petroleum-derived fuel and alcohol fuel consisting of at least 10% denatured biomass-derived alcohol that is used to fuel a motor vehicle. A producer, wholesaler, or retailer of alcohol fuels must pass any savings from this exemption on to the consumer. This exemption expires June 30, 2009. (Reference Hawaii Revised Statutes 237-27.1)

Energy Feedstock Program

The Energy Feedstock Program was established within the Department of Agriculture to promote and support the production of energy feedstock in Hawaii and establish milestones and objectives for energy feedstock to be grown in the state to meet its energy requirements. Energy feedstock includes feedstock used to produce biofuels. (Reference Hawaii Revised Statutes 141-9)

Energy-Efficient Vehicle Acquisition Requirements

Once the state has met its federal and state vehicle purchase mandates, state agencies are required to purchase the most fuel-efficient vehicles that meet the needs of their programs, provided that a life-cycle cost benefit analysis of vehicle purchases includes projected fuel costs. All state agency light-duty vehicle (LDV) procurements must contain at least 40% energy-efficient vehicles as part of their annual vehicle acquisition plans. For each subsequent fiscal year, the percentage of energy-efficient vehicles must be five percent higher than the previous year, until at least 75% of each covered fleet's newly purchased LDVs are energy-efficient vehicles. Exclusions and exemptions may apply.

Agencies may offset the purchase requirements for energy-efficient vehicles by successfully demonstrating percentage improvements in their overall LDV fleet fuel economy. Additionally, agencies that use biodiesel fuel may offset the vehicle purchase requirements of this section at the rate of one vehicle per 450 gallons of neat biodiesel (B100) fuel used. State agencies are also required to purchase alternative fuels and ethanol blended gasoline when available, evaluate a purchase preference for biodiesel blends, and promote efficient operation of vehicles. (Reference Hawaii Revised Statutes 103D-412 and 196-9)

Biofuels Procurement Preference

State agency contracts for the purchase of diesel fuel are to be awarded with preference given to bids for biofuels or blends of biofuel and petroleum fuel. When purchasing fuel for use in diesel engines, the preference price is $0.05 per gallon of B100; for blends containing both biodiesel and petroleum-based diesel, the preference is applied only to the biodiesel portion of the blend. Biodiesel is defined as a vegetable oil-based fuel that meets ASTM specification D6751. Biofuel is defined as fuel from non-petroleum plant or animal based sources that can be used for the generation of heat or power. (Reference Hawaii Revised Statutes 103D-1012)

Alternative Fuel Development Support

The state is responsible for facilitating the development of alternative fuels and supporting the attainment of a statewide alternative fuels standard. The alternative fuels standard will be as follows: 10% of highway fuel use to be provided by alternative fuels by 2010, 15% by 2015, and 20% by 2020. For the purposes of the alternative fuels standard, ethanol produced from cellulosic materials is to be considered the equivalent of 2.5 gallons of non-cellulosic ethanol. (Reference Hawaii Revised Statutes 196-42)

Hydrogen Energy Plan and Fund

A Hawaii Renewable Hydrogen Program has been established within the state Department of Business, Economic Development, and Tourism to manage the state's transition to a renewable hydrogen economy. A Hydrogen Investment Capital Special Fund has been created to provide seed capital for, and venture capital investments in, private sector and federal projects for research, development, testing, and implementation of the Hawaii Renewable Hydrogen Program. The Hawaii Renewable Hydrogen Program is responsible for designing, implementing, and administering activities including:

1) Strategic partnerships for the research, development, testing, and deployment; engineering and economic evaluations;

2) Demonstration projects, including infrastructure for the production, storage, and refueling of hydrogen vehicles;

3) Statewide hydrogen economy public education and outreach plan promoting Hawaii's renewable hydrogen resources to potential partners and investors;

4) A plan, for implementation during 2007 to 2010, to deploy hydrogen technologies and infrastructure, including hydrogen production facilities, refueling stations, and vehicles;

5) A plan, for implementation during 2010 to 2020, to transition the island of Hawaii to a hydrogen-fueled economy and to extend the application of the plan throughout the state; and

6) Evaluation of policy recommendations to: encourage the adoption of hydrogen vehicles; continually fund the hydrogen investment capital special fund; and support investment in hydrogen infrastructure.

(Reference Hawaii Revised Statutes 196-10 and 211F-5.7)

Ethanol Fuel Blend Mandate

At least 85% of Hawaii's unleaded gasoline must be fuel blends containing at least 10% ethanol (E10). Gasoline blended with an ethanol-based product, such as ethyl tertiary butyl ether, will be considered to be in conformance with this requirement. Retail fuel distributors must meet this requirement and report to the state Petroleum Commissioner (the Administrator of the Energy, Resources, and Technology Division of the Department of Business, Economic Development, and Tourism) on a monthly basis. (Reference Hawaii Revised Statutes 486J-10 and Hawaii Administrative Rules Title 15, Department of Business, Economic Development and Tourism, Chapter 35)

Point of Contact

Hawaii Department of Business, Economic Development, and Tourism
Phone (808) 587-3814
http://www.hawaii.gov/dbedt/ert/new-fuel/

Neighborhood Electric Vehicle (NEV) Access to Roadways

An NEV may not operate at speeds of more than 25 miles per hour (mph) and is only permitted on roads with speed limits 35 mph or less. An NEV must have a notice of the operational restrictions pertaining to the vehicle permanently attached to, or painted on, the vehicle in a location that is in clear view of the driver. An NEV is a self-propelled electrically powered motor vehicle that is emission free, has four wheels in contact with the ground, has a gross vehicle weight rating of less than 2500 pounds, and conforms to the minimum safety equipment requirements contained in Title 49 of the Code of Federal Regulations, section 571.500. (Reference Hawaii Revised Statutes Sections 286-2, 286-41, and 291C-134)

Alternative Fuel Tax Rate

A distributor of any alternative fuel for operation in an internal combustion engine is required to pay a license tax of $0.025 for each gallon of alternative fuel sold or used by the distributor. In addition, a distributor is required to pay a license tax for each gallon of fuel sold or used by the distributor for operating a motor vehicle(s) on state public highways according to the following rates:

For other alternative fuels, the rate is based on the energy content of the fuels as compared to diesel fuel, using a lower heating value of 130,000 British thermal units per gallon as a standard for diesel, so that the tax rate, on an energy content basis, is equal to one-quarter the rate for diesel fuel. (Reference Hawaii Revised Statutes Section 243-4)

Utilities/Private Incentives

Propane Vehicle Technical Assistance

The Gas Company, LLC offers technical assistance to operators of liquefied petroleum gas vehicles.

Point of Contact

Hoku Keolanui
Account Executive
The Gas Company, LLC
Phone (808) 594-5585
Fax (808) 594-5528
tkeolanui@hawaiigas.com
http://www.hawaiigas.com

Points of Contact:

NAME/EMAIL	AGENCY	TITLE	PHONE/FAX
Robert Primiano rprimiano@honolulu.gov	Honolulu Clean Cities Coalition	Clean Cities Coordinator	Phone: (808) 768-3500 Fax: (808) 768-3506
Mike Bednarz michael.bednarz@netl.doe.gov	U.S. Department of Energy, National Energy Technology Laboratory	Project Manager	Phone: (412) 386-4862 Fax:
Maria Tome mtome@dbedt.hawaii.gov	Hawaii Department of Business, Economic Development, and Tourism, Strategic Industries Division	Alternate Energy Engineer	Phone: (808) 587-3809 Fax: (808) 587-3820
	Hawaii Department of Business, Economic Development, and Tourism		Phone: (808) 587-3814 Fax:
Hoku Keolanui tkeolanui@hawaiigas.com	The Gas Company, LLC	Account Executive	Phone: (808) 594-5585 Fax: (808) 594-5528
	Hawaii State Department of Taxation		Phone: (800) 222-3229 Fax:
Collette Craig collette.craig@gsa.gov	U.S. General Services Administration	AFV Contact, Region 9	Phone: (928) 524-3975 Fax: (928) 524-2324