HB760 proposes a major restructuring of Hawaii’s existing environmental response, energy, and food security tax into a carbon emissions-based tax system. The bill would rename the tax to the environmental response, energy, carbon emissions, and food security tax and sharply increase the rates on petroleum products and other fossil fuels over a multi-year schedule beginning in 2026. The stated purpose is to reduce greenhouse gas emissions, support the State’s zero-emissions clean economy target, and generate revenue for climate-related and food security purposes.
The bill also creates two new special funds. One is the agricultural development and food security special fund, which would be financed in part by tax revenues and used for grants, land acquisition, irrigation and transportation improvements, equipment, research, inspections, and marketing to strengthen local agriculture and reduce food imports. The other is the carbon emissions tax and dividend special fund, which would pay for administration of the tax and a new refundable carbon cashback tax credit. The credit is structured to return money to qualifying taxpayers, with amounts varying by filing status and dependents and increasing over time through 2045, and it is refundable so taxpayers can receive a payment even if they owe no income tax.
In addition to the new funds and credit, HB760 amends existing statutes governing the environmental response revolving fund, the energy security special fund, and the energy systems development special fund to reflect the renamed tax and new revenue allocations. It also directs portions of the tax revenue to the agricultural fund, the carbon dividend fund, and, in the bill text, to airport and boating-related funds for carbon reduction purposes. The bill requires annual reporting by the Department of Taxation and a later evaluation by the Office of Planning and Sustainable Development to assess the program and recommend changes.
The overall sentiment reflected in the bill text is strongly supportive of carbon pricing and revenue recycling. The findings cite economist endorsements, a UHERO study, and the idea that most households would come out ahead financially, especially lower-income households. There is no committee transcript or vote history provided, so there is no recorded floor or committee debate to indicate opposition or amendments beyond the bill’s own framing.
The main points of contention implied by the structure of the bill are the higher fuel costs that would be imposed on distributors and, indirectly, consumers, versus the promised rebates and targeted spending. The bill attempts to address affordability concerns by phasing in the tax gradually and pairing it with refundable credits, but the size and pace of the tax increases, the distribution of revenues, and the long-term administrative burden would likely be the central policy issues for affected fuel distributors, utilities, taxpayers, farmers, and state agencies.
HB760 would substantially amend Hawaii’s tax code by converting the existing environmental response, energy, and food security tax into a carbon emissions tax applied to petroleum products and other fossil fuels on an escalating schedule. It would also create new statutory special funds, redirect portions of tax revenue to those funds, and establish a refundable income tax credit program to offset the tax’s effect on residents. The bill would affect fuel distributors, utilities, taxpayers, the Department of Taxation, the Department of Agriculture, and state planning agencies, while also changing the revenue flow into existing environmental and energy funds.
The bill is framed in strongly favorable terms toward carbon pricing, climate mitigation, and household rebates. Its findings emphasize economic support for carbon taxes, cite a state study predicting net benefits for most households, and present the measure as both environmentally and fiscally progressive. Because no committee transcripts or votes are provided, there is no documented external opposition or support in the materials beyond the bill’s own pro-environment, pro-rebate rationale.
The likely contention centers on the bill’s significant increases in fuel taxes and the resulting cost impacts on consumers, businesses, utilities, and transportation-related sectors. Supporters would likely emphasize emissions reductions, local agriculture funding, and refundable credits that return revenue to residents, while critics would likely focus on higher energy prices, administrative complexity, and whether the rebate structure fully offsets the tax burden. The bill also contains detailed revenue earmarks and long-term credit schedules, which could draw scrutiny over fiscal design, equity, and implementation timing.