State
should hold off on bonds for biofuels
Honolulu Advertiser Opinion
Tuesday, April 17, 2007
There is such a thing as a reasonable idea whose time has not yet come.
That seems to be the case with Senate Bill 1718, which proposes special
purpose revenue bonds for the financing of a biofuels plant on Maui.
Agricultural fuels (also known by the terms "biofuels" or "biodiesel"
because they're produced from oil-bearing crops) have a role to play in
the diversification of Hawai'i's energy sources. Assuming a crop can be
found that can yield a good oil supply without tapping out our water
reserves, biofuels could become an agricultural product with a viable
market, given the costs of oil imports and taxation.
The state, reasonably, also wants to support a new industry that can
offer the dual benefits of less dependency on foreign imports and a
reason to preserve Hawai'i's agriculture and some open space.
That said, SB 1718 is being shepherded through the Legislature
prematurely. It would authorize revenue bonds up to a still unspecified
limit for a company called BlueEarth Maui Biodiesel LLC. The bonds
would not cost the state money and would give the company access to
lower interest rates, savings that executives say will pass on to the
ratepayers.
However, the company itself has not filed the articles of organization
as a limited liability company. Although its Nevada-based parent does
exist, the company has to finish its organization to qualify for the
bonds. Even if the effective date of the law is pushed back, having the
state sign on with a plan before an entity is organized sets an unwise
precedent.
The Maui plant is planned for a site at Pu'unene through a partnership
with Maui Electric Co., the Hawaiian Electric Co. subsidiary that will
use the fuel to run its power plant. There are details of the setup
still in the works to ensure that HECO profits are directed to a
community trust that promotes the new industry.
It would make more sense to authorize the bonds after BlueEarth has
been organized.
Meanwhile, lawmakers should focus on creating the incentives to support
general renewal of agriculture — for all Hawai'i's farmers.
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