Energy bill would reduce Hawaii's oil dependence

The State of Hawaii is launching a comprehensive and integrated approach to reducing oil dependence, Republican Governor Linda Lingle’s “Energy for Tomorrow” bill. Energy is not a partisan issue; majority Democrats offered their own energy package containing similar themes. In the absence of federal leadership, however, states will be the laboratories for change and policy innovation on energy, with Hawaii poised to be in the forefront of state leadership.

The Rocky Mountain Institute‘s (RMI) 2004 study, Winning the Oil Endgame, detailed a comprehensive list of policy actions that would accelerate society’s adoption of efficient technologies and biofuels and move America into a post-oil era. The Governor’s “Energy for Tomorrow” bill is a comprehensive energy policy package that incorporates many of RMI’s policy recommendations and has the potential to transform Hawaii—the most oil-dependent state in the nation and the one with the highest energy costs—into a state that will lead the nation with a low-cost, sustainable, locally produced, and secure energy system.

“This bill embraces Winning the Oil Endgame’s strategy to reduce oil dependence through efficiency, renewables, and biofuels while strengthening the economy through agricultural revitalization,” said Kyle Datta, RMI senior director of research & consulting, who coauthored the report. “We knew that energy leadership had to come from the state level, but Hawaii, with the highest energy prices, a 90% dependence on oil for energy, and few traditional energy options, could become a test lab for redesigning our entire nation’s energy architecture on a state-by-state basis.”

According to Datta, who has worked on dozens of energy policy initiatives and efficiency projects in Hawaii, the state has never seen such a broad-ranging and comprehensive suite of policies aimed at ending the state’s addiction to oil. The increase in oil prices since 2002, has, he said, cost the state over $1 billion and increased energy expenses by approximately $1,850 per household.

While Hawaii has no fossil fuel resources, it has the full portfolio of renewable energy resources. RMI will be working with the State of Hawaii to provide the energy strategy and implementation plan to wean the state off its oil addiction.

Innovative Policies
The “Energy for Tomorrow” bill establishes a bold and strategic energy policy framework of measures to encourage and support market-based development of reliable, cost-effective, and self-reliant energy systems. The bill’s five major components include:
o “Savings through Efficiency,”
o “Independence through Renewable Energy,”
o “Fuels through Farming,”
o “Security through Technology,” and
o “Empowering Hawaii’s Consumers.”

Four of the bill’s elements stand out as important innovations of national significance.

First, “Savings through Efficiency” calls for the creation of a Public Benefits Charge that will be used directly to fund efficiency and distributed renewable energy through an independent third party. The approach is based on the State of Vermont’s efficiency utility, Efficiency Vermont, which was created to implement energy efficiency services and programs in an unbiased, independent, rigorously accountable, and evenly applied manner. Today, Efficiency Vermont has achieved twice the national average in energy savings of other states’ efficiency programs, while Hawaii currently achieves roughly half the national average.

Second, “Independence through Renewable Energy” contains provisions that strengthen Hawaii’s renewable portfolio standard, setting it at 20% and explicitly tasking the Public Utilities’ Commission with defining a methodology for valuing the long run benefits of renewable power in reducing fossil fuel risk. The bill also calls for sharing the fossil fuel risk between the utility and its ratepayers.

Third, the centerpiece of “Fuels through Farmings” is a 20% Renewable Fuels Standard backed with exemptions from the state fuels excise tax and state preferences for biofuels procurement.

Finally, this energy bill, Datta noted, could lead the 50th state to become a world leader in hydrogen energy technology. It calls for the immediate establishment of a world-class renewable hydrogen program.

The Democratic majority package mirrors the call for state leadership in energy efficiency by requiring LEED (Leadership in Energy and Environmental Design) silver certification and providing significant funding for energy efficiency in state buildings and photovoltaics in schools. The critical innovation is the Pay As You Save (PAYS) pilot program that provides a revolving fund to finance solar water heating for low-income residents that is paid back through energy savings.

This bill, Datta noted, would be good for Hawaiians, good the environment, and good for business. Implementation of all the conservation, renewable energy, and alternative transportation fuels components of this package, he said, are expected by the year 2020 to displace 110.5 million barrels of imported crude oil, saving Hawaii’s consumers $6.32 billion and avoiding 48.9 million tons of carbon dioxide emissions.

The Energy for Tomorrow bill also points the way to the development of the Hawaiian biofuels industry and robust agricultural sector. A 2003 study by Stillwater Associates projected that Hawaii has a ethanol industry capable of producing 90 million gallons a year, which “could add as much as $300 million to Hawaii’s economy in direct and indirect value.” RMI’s Winning the Oil Endgame estimated that moving the United States off oil could stimulate a 750,000-job biofuels industry worth tens of billions of dollars.

“This really represents sweeping change for Hawaii, and it’s an affirmation of the hard work we put into Winning the Oil Endgame,” said Datta. “Our energy future is choice, not fate. This bill means Hawaii will define its energy destiny. RMI is committed to working with the State of Hawaii to develop and implement a forward looking energy strategy.”