Committee advances renewable-fuels production tax credit after detailed debate over rollovers, imports and environmental risks

The House Economic Development Committee recommended passage of SB2376 SD2 HD1 on March 25 after prolonged debate over how the proposed renewable‑fuels production tax credit would be structured and how it would affect local feedstock production, greenhouse‑gas goals and state finances.

Proponents including the Hawaii Renewable Fuels Coalition and industry representatives said incentives are needed now to jumpstart local production and build a market that could mature over 5–10 years. Nalani Parsons, a coalition executive director, told the committee that tax credits would help scale producers and recommended expanding eligible feedstocks and adding an additional SAF (sustainable aviation fuel) credit to encourage SAF production.

Opponents and critics — including witnesses from Par Hawaii, Pacific Biodiesel (represented in testimony), and independent commenters — warned the state lacks sufficient land to supply large-scale feedstock and argued much of the raw material would be imported initially. One testifier estimated domestic feedstock would supply a small fraction of projected demand and cautioned the credit could disproportionately benefit out‑of‑state producers if imports are allowed under the bill’s language.

Environmental concerns: Mike Ewell of the Energy Justice Network said the bill relies on the GRIT model, which leading scientists have criticized for undercounting indirect land‑use change; he urged limiting eligibility for high‑risk feedstocks such as construction and demolition waste and recommended confining support to in‑state production unless resource impacts are demonstrated to be minimal.

Key policy questions raised at the hearing included the bill’s rollover mechanism (how unused credits carry forward and whether a cap should be set), whether credits should be refundable, and whether tax credits should be awarded on a project basis rather than on a single taxpayer basis (to avoid one taxpayer capturing multiple project credits). Proponents said the rollover helps maximize use of available credit and creates market security for farmers; the State Energy Office noted it would defer to finance committees on budget caps and called for follow-up with the Department of Taxation.

Committee action and next steps: the committee acknowledged the fiscal and logistical questions and signaled plans to work with the EEP chair and finance committees to refine caps and implementation details. The recommendation to pass SB2376 SD2 HD1 was adopted; staff will follow up on the rollover cap, refundable‑credit status, and whether credits should be structured on a project basis.