Hawaii Energy Strategy Meeting (October 24, 2006)

Hawaii Department of Business, Economic Development & Tourism (DBEDT) and their subcontractor Rocky Mountain Institute (RMI) is in the process of updating DBEDT's Hawaii Energy Strategy (HES).  The HES covers all aspects of energy: efficiency, gasoline, diesel, coal, renewables, electricity, air/ground/sea transportation, etc.

Business-As-Usual. On October 24, 2006, in the second of four scheduled public meetings in the HES update process, RMI explained what would happen in Hawai`i absent of any legislative reform. RMI believes that, depending on the price of oil, in 2026 Hawai`i's reliance on oil will be between 81 and 91 percent, that greenhouse gas emissions will not change significantly (-1 to +5 percent) and that the winners (that is the new power plants built in Hawai`i in the next 20 years) will be garbage-to-energy, geothermal, solar thermal energy, and, if the price of oil stays low, coal.

Biofuels. RMI summarized the conclusions reached at the secret government/business biofuels summit: (1) Streamline state/county permitting process & secure county cooperation; (2) bolster R&D; (3) clarify the water access issue; (4) support infrastructure development; (5) provide incentives for in-state production (a lot of works needed around the ports); and (6) coordinate across the value chain (ethanol growers, producers, mixers, sellers should all receive financial benefits)

RMI stated the major risk for ethanol investors was the uncertainty of when tax credits would run out, the uncertainty surrounding the oil-ethanol price spread, the uncertainty about which crops would be best, the lag between R&D and investment recovery, investment cycles, and whether the government would switch energy policies, although as RMI noted, the national republican party supports ethanol. RMI noted that only ethanol plants receive tax subsidies and that other aspects of the ethanol process needed tax relief also. RMI stated that some Midwest states were experimenting with detaxation (offering subsidies and tax-breaks for in-state producers while charging ''non-tariff'' fees for importers).  That is, additional taxpayer subsidies could decrease the financial risk to the ethanol industry.

RMI believes that with Hawai`i's taxpayer subsidies, at least 40 M gallons of ethanol will be produced each year, and if the price of oil remains high, this number could increase to 190 M gallons (although some would be imported).

RMI believes that Kauai and Maui could be used for ethanol in the short run, but in the long run production will be shifted to large plantations on the Big Island. Biodiesel can be grown on 20-40 acre lots on each island.

Senator English asked Kyle Datta a question about the Interstate Commerce Clause and proposed state legislation. Kyle Datta said the next meeting would focus on policy alternatives and the fourth meeting would focus on recommendations for the 2007 State Legislature. Just as this second public meeting incorporated the ideas generated in the secret biofuels summit, the third public meeting will incorporate the secret DBEDT / DLNR Catalogue of Potential Sites for Renewable Energy Projects in Hawai`i.

RMI believes that the major stumbling block to ethanol production is ''clarifying the water access issue''. Another issue is ''harbor expansion'' necessary to handle ethanol shipments.

Regarding ocean wave energy, RMI believes that ''wave viability depends on fossil fuel prices''. RMI's analysis did not include hydrogen, plug-in-electric vehicles, fuel cells, ocean thermal energy conversion (OTEC) or many other feasible and viable renewable energy ideas. RMI stated that the wildcards to their analysis were Sea Water Air Conditioning (SWAC) and Wave Energy. RMI ''dropped in wave technology in the last year'' (2025) in order to include it in their 20 year analysis (2006-2026).

Finally, RMI stated that it could take decades to shift energy policy in the absence of policy decisions.

Life of the Land Analysis: HECO, DBEDT and the Consumer Advocate fear Sea Water Air Conditioning  (SWAC) which could reduce existing commercial/hotel loads by 40 percent. They also fear ocean wave energy  which could displace most or all existing and proposed fossil fuel generators. RMI calls these technologies "Wild Cards'' because their inclusion could shake up business as usual.

The Commerce Clause of the US Constitution establishes that the nation and not the states may regulate interstate commerce. Detaxation is an attempt by a state to get around the Commerce Clause and to impose different taxes for in-state and out-of-state companies selling the same product.
Hawai`i ethanol companies receive the most generous taxpayer subsidies in the nation. According to RMI, this may not be sufficient subsidies to make them cost competitive. So ethanol proponents argues that additional support such as tax credits for future years, or additional subsidies may be needed make them competitive. This will ensure that Hawai`i residents pay more for ethanol  than anyone else (although most of the costs will be hidden in multiple subsidies).

RMI stated that Sea Water Air Conditioning (SWAC) was not evaluated because it ''is not commercial'' and there are no Hawai`i cost figures available even though (1) SWAC systems have been installed by Hawai`i based companies; (2) there are over a dozen SWAC units installed worldwide including Cornell, Toronto, Sweden, and the People's Republic of China; and (3) Hawai`i-based SWAC experts offered their services to RMI. On the other hand, RMI included cellulosic ethanol because their are two R&D plants located somewhere over there.

The Hawai`i Public Utilities Commission (PUC) already has the authority to authorize SWAC and wave energy systems, to impose a carbon tax on greenhouse gas emissions, and to require that energy efficiency programs are handled by a non-electric third-party utility concerned only with decrease electrical demand. The PUC was controlled by HECO and Hawaiian Tel from 1913 - 2003, but is now independent. This independence will lead to far reaching changes, greater than the state legislature is willing or able to pursue.  We believe meaningful energy reform will come from the people and/or the PUC.

Collaborations: To help cement a strong government-industry collaboration, DBEDT is consulting with William Parks, a bureaucrat with President Bush's Department of Energy. Mr. Parks may be best remembered for publicly stating in 2002 that: "We have a clear idea of how to get hydrogen today, from natural gas and coal, and in the future, from nuclear and renewable energy."

Energy adviser joins state initiative By B.J. Reyes. Honolulu Star Bulletin

Life of the Land is a  Hawaii-based, Hawaii-focused environmental and community action group. Founded in 1970, the mission of Life of the Land is to preserve and protect the life of the land through sustainable land use and energy policies and to promote open government through research, education, advocacy and, when necessary, litigation. We believe that people are part of the environment. We are known for research, research, research. We cover complex issues such as genetic engineering, climate change, and quality of life issues. LOL is a 501(c)3 charitable organization. We do not attend fundraisers, testify for/against political and/or administrative candidates, nor do we rank candidates. We work on issues not people.

Contact: Life of the Land, 76 North King Street, Suite 203, Honolulu, Hawaii  96817, Email: lifeoftheland@hotmail.com Executive Director: Henry Curtis, henry.lifeoftheland@gmail.com * Assistant Executive Director: Kat Brady, katbrady@hotmail.com

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