New law removes ethanol mandate for isle gasoline

Gov. David Ige without fanfare signed a bill last week officially repealing the state mandate requiring the blending of gasoline with ethanol for transportation fuel, although federal regulations may require that ethanol continue to be part of the energy mix here.

The state Legislature 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 has had to 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.

Those projects never materialized, and by 2009 the state was importing 45 million gallons of ethanol a year.

Lawmakers said consumers critical of the ethanol mandate, including car enthusiasts, boat owners and people in the environmental community, would call to complain about it. This year the Legislature voted to repeal it.

Ige signed Senate Bill 717 on Friday without holding a public ceremony to memorialize or celebrate the event.

The repeal of the mandate takes effect at the end of this year, but a spokesman for Hawaii Independent Energy said blending gasoline with ethanol in Hawaii may continue after that date because of federal renewable-energy mandates. HIE is a subsidiary of Par Petroleum Corp., and operates the state’s largest refinery in Kapolei.

“While the Hawaii mandate will end on Dec. 31, 2015, producers are still required to blend renewable fuel into gasoline and diesel under the federal Renewable Fuel Standard program,” said Lance Tanaka, director of government and public affairs for HIE. “We will continue to comply with the federal requirements by blending ethanol or purchasing renewable credits, whichever makes the most sense based on appropriate business decisions.”

When asked whether the company is more likely to buy credits or continue blending ethanol, Tanaka would say only that both alternatives “present challenges.”

Michael Antal, Coral Industries distinguished professor of renewable energy resources at the Hawaii Natural Energy Institute, said the governor and lawmakers made the right decision this time.

There is “a whole variety of problems with ethanol,” he said.

Ethanol in the United States is made almost entirely from corn, “and so we’re taking food and turning it into an automotive fuel, which doesn’t make a lot of sense, although we all know it’s good for the corn growers,” Antal said.