HB976 revises Hawaii’s renewable fuels production tax credit to make it more generous and more targeted toward fuels with lower lifecycle emissions. The bill increases the base credit from 20 cents to 35 cents per 76,000 BTUs of renewable fuel sold in the state, adds a $1 per diesel gallon equivalent bonus for low-lifecycle-emissions renewable fuels, and adds a $1 per gallon bonus for sustainable aviation fuel. It also expands the credit’s eligibility rules by defining lifecycle greenhouse gas emissions thresholds, product transportation emissions thresholds, and feedstock transportation emissions thresholds, and by broadening the list of qualifying renewable feedstocks and fuel types.
The measure also changes how the credit is administered. It requires taxpayers claiming the credit to submit a third-party certified statement with more detailed production, feedstock, employment, facility, and emissions information, including emissions reported to the U.S. Treasury if different. The Hawaii State Energy Office would continue to certify claims, but the bill revises the annual cap structure so that total credits cannot exceed $20 million statewide in a year, with allocation among taxpayers based on renewable fuel production and limits on how much any one taxpayer may receive. It also allows carryover of reduced credits into the next year under certain conditions and permits taxpayers who previously claimed the credit to claim again for taxable years beginning after December 31, 2024.
In state law terms, HB976 amends Hawaii Revised Statutes section 235-110.32, the renewable fuels production tax credit statute. It changes the definition of “credit period” to a maximum of ten consecutive years beginning on the act’s effective date, rather than from the first qualifying production year, and updates the statutory definitions of renewable fuels, renewable feedstocks, and sustainable aviation fuel. The bill is designed to align state tax policy with Hawaii’s climate and energy goals by encouraging in-state production of renewable fuels, especially sustainable aviation fuel, and by tying the credit to emissions performance standards.
The general sentiment reflected in the bill text and committee action is supportive of expanding renewable fuel incentives as part of Hawaii’s broader decarbonization strategy. The findings emphasize climate emergency response, energy security, local job creation, and reducing dependence on imported fossil fuels, suggesting a policy consensus around promoting cleaner fuels. The bill was reported out of committee and referred onward, indicating it advanced, though the vote was not unanimous.
The main points of contention appear to be fiscal cost, eligibility standards, and how the credit is allocated. The bill increases the credit rate and adds new bonus credits, which may raise concerns about state revenue exposure. It also introduces technical emissions thresholds and certification requirements that could be difficult to administer or verify. The recorded vote shows at least two members voting no and one voting aye with reservations, suggesting some concern about the size, structure, or implementation of the incentive, even among members generally willing to move the bill forward.
HB976 would amend Hawaii’s renewable fuels production tax credit statute to increase the credit amount, add new bonus credits for low-emissions renewable fuels and sustainable aviation fuel, and tighten/clarify eligibility based on lifecycle and transportation emissions standards. It would also revise reporting, certification, and allocation rules administered by the Hawaii State Energy Office, while keeping the statewide annual cap at $20 million and changing how unused amounts may carry forward. The bill would affect taxpayers producing qualifying renewable fuels, the Hawaii State Energy Office, and the Department of Taxation, and it would broaden the statutory definitions of qualifying feedstocks and fuels under chapter 235.
The overall sentiment appears favorable toward the bill’s climate and energy objectives. The bill’s findings frame it as a tool to reduce greenhouse gas emissions, support local production, improve energy security, and encourage sustainable aviation fuel development in an island state dependent on imported fuel. Committee action shows the measure advanced, but not without reservations, indicating broad support for the policy direction alongside some concern about the details.
The main areas of disagreement are likely the fiscal impact of a larger tax credit, the complexity of the emissions-based eligibility rules, and the fairness of the allocation system under the annual cap. Some members may be concerned that the increased credit rate and added bonuses could reduce state revenue or benefit a limited number of producers. Others may question whether the lifecycle emissions thresholds, third-party certification requirements, and federal-state emissions reporting comparisons are practical to administer or sufficiently clear. The vote record, including no votes and an aye with reservations, suggests these implementation and cost issues were the primary points of contention.