State lawmakers are poised to scrap the long-standing mandate that gasoline sold in Hawaii must be mixed with ethanol, with House and Senate negotiators agreeing Thursday to a bill that would abandon the ethanol requirement at the end of this year.
The agreement on the ethanol bill came as House and Senate leaders met in a long series of conference committee meetings Thursday but delayed making final decisions on most of the major bills for the session.
Measures that were deferred Thursday until Friday included proposals to extend the general excise surcharge to pay for Honolulu’s rail project, a bill to establish a network of dispensaries to distribute medical marijuana and a bill to move forward with a possible state purchase of the downtown Alii Place office building.
Lawmakers imposed the ethanol mandate in 2006 as part of an ambitious plan to launch a major new local biofuels industry. Since then almost all gasoline sold in Hawaii must be composed of 10 percent ethanol, an alcohol-based fuel that can be made from sugar or corn.
The state also offered generous tax credits to encourage development of an ethanol production facility in Hawaii that was supposed to be supplied with local feedstock.
The hope was that Hawaii ethanol production would attract more than $100 million in investment in ethanol production plants and would generate 700 jobs. But those projects never materialized, and by 2009 the state was importing 45 million gallons of ethanol a year.
"It never took off, it never penciled out, and nothing has happened," said House Consumer Protection Chairman Angus McKelvey (D, Lahaina-Kaanapali-Honokohau).
Meanwhile, lawmakers said they have been hearing from unhappy motorists who complain that the ethanol-mix fuel gets poorer mileage than unmixed gasoline, which in part prompted legislators to approve Senate Bill 717.
"Ethanol has been a big experiment here in Hawaii, and we’ve had many years with this, but at the end of the day there are other alternatives," such as vehicles powered by hydrogen or electricity, said House Energy and Environmental Protection Chairman Chris Lee.
"We want to protect the best interests of our consumers out there and reduce costs as much as possible, and this is one way of achieving both those goals," Lee (D, Kailua-Lanikai-Waimanalo) said.
McKelvey said critics of the ethanol mandate include car enthusiasts, boat owners and people in the environmental community. Representatives in the transportation fuel industry also have quietly opposed the mandate, he said.
Lance Tanaka, director of government and public affairs for Hawaii Independent Energy, has testified Hawaii Independent Energy has consistently opposed blending mandates because they can result in "unintended consequences." HIE is a subsidiary of Par Petroleum Corp. and operates the state’s largest refinery in Kapolei.
McKelvey and Lee said they hope dropping the ethanol requirement will result in a modest decline in gas prices for consumers, but McKelvey said the impact on prices from the change may be lost in the larger impact from the current decline in the world price of oil.
In other business, lawmakers also approved Senate Bill 1291, which prohibits schools and landlords from rejecting students or tenants solely because of their status as licensed users of medical marijuana or because they are caregivers for a medical marijuana patient.
That would include properly registered patients or caregivers who are growing marijuana, and patients who smoke it or ingest it in other ways. However, landlords would be able to prohibit smoking of marijuana in condominiums or buildings where tobacco smoking is also prohibited.
The bill provides for exceptions for schools or landlords who stand to lose licenses or funding for accepting medical marijuana patients or caregivers.
The bill also prohibits courts from denying people custody or visitation rights with their children because of their status as medical marijuana patients or caregivers.
