Strong support for HB 1271 HD1 Clean Energy Investment Fund

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Testimony

TESTIMONY IN STRONG SUPPORT OF HB 1271 HD1, SUGGESTED AMENDMENT 
 
Chair Tsuji and members of the committee: 
 
The Blue Planet Foundation strongly supports House Bill 1271 HD1, providing for funding of food and energy security through a surcharge on each barrel of oil imported into Hawaii. We believe, however, that the best use of the proposed “environmental response and energy and food security” surcharge on oil should be used to accelerate Hawaii‟s transition to energy independence. Blue Planet proposes the following amendments to HB 1271 HD1: 
 
- Increase the oil surcharge to $5 per barrel (approximately $250 million annually); and

- Apply the majority of the funding raised through the surcharge to a Clean Energy Investment Fund that is used to: 
1. Vastly increase the capacity of the energy efficiency public benefit funds administrator, including increasing and adding efficiency incentives such as appliance buy-back programs, free home energy audits, solar water heater and compact fluorescent / LED rebates, and other efficiency programs ($40 million); 
2. Provide funding to monetize the existing state renewable energy tax credits (i.e. allow investors to tax certain tax credits as direct refunds) ($50 million); 
3. Significantly invest in smart grid infrastructure and energy storage (cost share with electric utilities) ($80 million); 
4. Fund the work of the public utilities commission to expedite the resolution of the many energy dockets that they are currently investigating and deciding ($5 million); 
5. Offer incentives for electric vehicle purchasers and for those installing public charge spots ($10 million); 
6. Fund the activities of the energy office and greenhouse gas emissions reduction task force ($2 million); 
7. Provide research and development prize money for breakthroughs in commercializing clean, safe, indigenous, and renewable transportation fuels, particularly for jet fuel purposes ($20 million); and 
8. Provide funding for other critical projects to create Hawaii‟s preferred energy future ($10 million). 
 
If we truly want to rapidly transition Hawaii to energy independence, we have to be prepared to invest in that preferred future today. We cannot afford to wait until the economy recovers and the price of oil returns to triple-digits as it did last summer. The low oil price today presents a perfect opportunity to tap the source of our energy problem to fund our solutions.  
 
Hawaii is the most dependent state in the nation on imported oil. Some 50 million barrels are imported annually, nearly 80% of which originate from foreign sources. In addition, over 805,000 tons of coal are imported into our state. These sources provide power for over 92% of Hawaii‟s electricity generation. The combustion of these resources also contributes over 23 
million tons of climate changing greenhouse gas into our atmosphere annually. Hawaii‟s economic, environmental, and energy security demand that we reduce the amount of fossil fuel imported and consumed in Hawaii. To that end, new policies and sources of funding are critically needed that will dramatically increase energy efficiency, build our smart energy infrastructure with storage, and develop clean, renewable, and indigenous energy sources.
 
Blue Planet generally supports the establishment of an “energy and food security task force” to be tasked with examining areas of energy security planning and implementation. We have no position at this time on coupling those duties with food security issues, although we understand and appreciate the motivation behind joining those issues. Blue Planet does, however, strongly 
support levying an additional surcharge on each barrel of oil imported to Hawaii and applying those funds to energy efficiency and clean energy investments. We believe a $5 surcharge should be levied on each barrel of oil imported into Hawaii for these purposes. 
 
Expanding the per-barrel surcharge, as HB 1271 HD1 does, is smart tax-shifting policy to foster greater energy independence by tapping into the source of our problem to fund our preferred future. The concept behind the measure is to help “internalize” the external costs of certain activities; in this case, charge a fee for products that are damaging to the environment and use that money to help mitigate the damage. The link is quite clear between the use of petroleum products and corresponding impacts on our fragile island environments—not only in oil spills, which was the original impetus for the environmental response tax, but also in runoff from the roads our cars drive on, in degraded air quality, and in greenhouse gas emissions and climate 
change.  
 
A $10.35 “carbon fee” is average. Many European countries have carbon taxes that exceed $10.00 per ton. Last year, the Canadian province of British Columbia 
enacted a carbon fee that started at approximately $8.00 per ton (English) in July, 2008, and increases to $24 per ton by 2012.  
 
The impact of CO2 emissions alone from one barrel oil is much greater than the proposed tax. The Gas Company, in their Integrated Resource Plan, attempted to quantify the externalities (impacts not reflected in the market costs of an activity) per ton of pollutant. They examined 
environmental, energy security, macroeconomic and employment, and social and cultural externalities. Their results are shocking: the low estimate was $10/ton CO2, the mid-range was $27/ton CO2, and the high was $77/ton CO25. Again, the approximate carbon tax equivalent of this measure is $10.35. 
 
While we all likely agree that we need to aggressively increase our clean energy use in Hawaii and decrease our reliance on imported crude, we cannot do it with funding for planning, implementation, development, and funding. House Bill 1271 HB1 wisely taps the source of our 
problem—imported oil—to fund clean energy programs.  
 
House Bill 1271 HD1 can be a smart tax-shifting policy that encourages energy conservation while providing critical funding for a diversity of clean energy and energy efficiency investments statewide. It works by making the “polluter pay.” As we dramatically expand our clean energy capacity in Hawai„i, the real economic benefits of this carbon surcharge will far outweigh the additional burden it may present. This common sense policy will foster greater energy independence by tapping into the source of our problem to fund our preferred future. 
 
We ask that the Committee on Agriculture forward an amended HB 1271 HD1 that contains a $5 per barrel surcharge with funding being allocated to the clean energy and energy efficiency programs as described on page 1 of this testimony. Blue Planet is happy to work with the Committee to develop appropriate language to accomplish that outcome. 
 
Thank you for the opportunity to testify.

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Strong support for

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HB 1271 HD1 Clean Energy Investment Fund

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