Relating To Renewable Fuel.
SB995 would expand Hawaii’s tax incentives for renewable fuels in two main ways. First, it creates a new sustainable aviation fuel (SAF) import tax credit of $1 per gallon for qualifying SAF sold for distribution in the state, subject to lifecycle greenhouse gas emissions reduction requirements and annual statewide credit caps that rise from $5 million in 2025 to $50 million annually from 2029 through 2036. Second, it increases the existing renewable fuels production tax credit from 20 cents to 35 cents per 76,000 BTUs of qualifying fuel sold in Hawaii, and adds a $1-per-gallon bonus for sustainable aviation fuel and a $1-per-diesel-gallon-equivalent bonus for low-lifecycle-emissions renewable fuels.
The bill also revises the eligibility and administration rules for the production credit. It removes the prior $3.5 million per-taxpayer cap and the requirement that the Hawaii State Energy Office determine whether a fuel’s lifecycle emissions are lower than fossil fuels, while replacing those provisions with more detailed emissions thresholds and expanded reporting requirements. Taxpayers would need to submit third-party certified statements with information on fuel type, feedstock, emissions, employees, and facility locations, and the state energy office would issue certificates based on that information. The bill also allows taxpayers who previously claimed the production credit to claim it again for taxable years beginning after December 31, 2024.
More broadly, SB995 amends Hawaii Revised Statutes chapter 235 to broaden the definition of renewable fuels, expressly including sustainable aviation fuel, renewable naphtha, and other fuel types derived from renewable feedstocks. It also updates the statutory definitions for lifecycle greenhouse gas emissions, emissions reduction thresholds, and related transportation emissions thresholds, and it sets aggregate annual credit limits for the production credit that increase from $40 million in 2025 to $80 million in 2029 and thereafter. The new SAF import credit is scheduled to apply to taxable years beginning after December 31, 2024, and section 2 of the bill would be repealed on January 1, 2036.
The overall sentiment reflected in the bill text is strongly supportive of renewable fuel development, climate policy, and energy security. The findings emphasize Hawaii’s climate emergency declaration, decarbonization goals, and the need to reduce dependence on imported fossil fuels while supporting local jobs and investment. No committee transcripts or recorded votes were provided, so there is no additional evidence of opposition or support from legislative debate or roll-call history.
The main points of contention suggested by the bill itself are fiscal cost, eligibility standards, and transparency. The bill substantially increases state tax expenditures and creates refundable or carryover credits, which could raise concerns about revenue impacts and program size. It also shifts from a prior emissions-comparison framework to threshold-based eligibility, which may be viewed as either a simplification or a loosening of standards depending on perspective. The extensive public disclosure requirements for taxpayer and facility information may also be controversial for affected businesses, especially importers and producers of sustainable aviation fuel and other renewable fuels.
SB995 would amend Hawaii’s tax code, primarily chapter 235 of the Hawaii Revised Statutes, by creating a new sustainable aviation fuel import tax credit and revising the existing renewable fuels production tax credit. It increases credit amounts, expands eligible fuel categories, changes emissions and reporting requirements, removes certain prior limitations, and sets new statewide annual credit caps and carryover rules. The bill would directly affect taxpayers engaged in renewable fuel production or importation, the Hawaii State Energy Office, and the Department of Taxation, while also making certain taxpayer and facility information publicly available under chapter 92F.
The bill’s stated purpose and structure reflect a generally favorable, pro-renewable-energy sentiment. It is framed as a climate and energy-security measure intended to reduce greenhouse gas emissions, support local fuel production, and encourage sustainable aviation fuel use in Hawaii’s transportation sector. Because no committee discussion transcripts or vote history were provided, there is no documented legislative debate to indicate mixed sentiment, but the text itself suggests strong policy support for decarbonization and renewable fuel incentives.
The most likely areas of contention are the bill’s fiscal impact, the size and structure of the tax credits, and the balance between environmental standards and industry support. Opponents may question the increased state revenue exposure from higher credit amounts, refundable features, and larger annual caps. Others may focus on whether the bill’s emissions thresholds are sufficiently strict, especially since it repeals the prior requirement that fuels be shown to have lifecycle emissions below fossil fuels and replaces it with new threshold-based criteria. Businesses may also object to the expanded disclosure and certification requirements, including public release of facility, employee, and importation data.