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Monday, October 20, 2014         

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Well-intended law requiring ethanol for isle cars backfired

By Richard Borreca

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It may be that our truly renewable resource is the Legislature's misplaced hope that there is a quick fix to our many problems.

This week both the House and Senate moved to rid the state of the requirement to add ethanol to the gasoline sold in Hawaii.

If adopted as law, the change would mean that gasoline would be just gas. There is no corresponding requirement that lawmakers and former Gov. Linda Lingle take back their reams of press releases on the new future of renewable resources, such as growing our own ethanol-based additives.

Back in 2006, Lingle flew to Kauai to sign new administrative rules to a then 10-year-old law that ethanol be added to our gasoline. Executives from Kauai's "ethanol and sugar industries" attended the photo op as the glow of self-satisfaction, if not self-sufficiency, emanated from the gathering.

Today there is no sugar and ethanol industry in the state. Ethanol turned out to be a short-lived, semi-good idea to prop up Hawaii's battered sugar plantations, principally the Gay & Robinson company on Kauai.

In 1998, the company said it was on the verge of building a new sugar refinery. By 2007 the plans had changed to making ethanol from sugar. And then in 2009, the company announced it was laying off most workers and preparing its final cane harvest.

After decades of Hawaii counting its sugar plantation closings, the end of sugar on Kauai was more of a museum footnote, than a business story.

The price of ethanol started falling in 2008; Hawaii's legendary high land prices and regulatory hurdles scared off investors. Still, the Legislature tried to shore up the plantation jobs by promising a 100 percent tax credit for ethanol plant construction costs.

Nada.

Instead, Hawaii added ethanol to the list of our mainland dependencies. Last year we imported 45 million gallons of ethanol into Hawaii to satisfy the state law requiring the 10 percent ethanol requirement.

The Abercrombie administration's business and economic development department testified against the law's repeal, saying it would put projects in jeopardy.

"The potential for local biofuel production remains, and the potential benefits from local fuel production are still recognized as desirable," said Richard Lim, interim director.

Two Senate committees, Commerce and Energy, still decided to kill the ethanol law, noting that the administration wants "to maintain the appearance of enthusiasm for biofuel development.

"Ethanol remains an import-only commodity with the state and the 10 percent ethanol requirement for gasoline does nothing to impact Hawaii's energy independence," the committees said.

Meanwhile, the House amended the 100 percent tax credit for ethanol plant construction, delaying anyone from claiming the credit until 2014.

The upside of this is that the credit, worth $12 million a year, can't be claimed.

"This bill is estimated to result in a potential revenue gain of up to $12 million per year," the tax department said.

And that is how doing nothing but repealing and delaying laws helps balance the state budget.

Richard Borreca writes on politics every Tuesday, Friday and Sunday. Reach him at rborreca@staradvertiser.com.

 





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