House committee backs amended tax credit to spur local renewable fuels production

The House Committee on Economic Development passed House Bill 976, HD1, on Feb. 12, 2025, approving an amended tax credit intended to encourage production of renewable diesel and sustainable aviation fuel (SAF) in Hawaii.

The committee adopted the amendments recommended by the Hawaii Renewable Fuels Coalition to remove the proposed import tax credit and to retain the statutory aggregate cap for the production credit at $20,000,000. The chair also moved technical clarifications, updated feedstock and fuel definitions, and a change making the tax credits effective for taxable years beginning after Dec. 31, 2025, to allow time for forms and system updates. The recommendation passed on the committee voice/roll call with Chair Ligon, Vice Chair Hussey, Representative Holt, Representative Tim and Representative Templo recorded as voting aye; Representatives Todd and Matsumoto were excused.

Supporters told the committee the tax credit would lower the price gap between renewable fuels and petroleum fuels and help launch local production. Ramsey Brown, vice president of diversified agriculture at Pono Pacific Land Management, said local feedstock trials have been promising and could create jobs along a new supply chain: “Growing feedstocks locally have a positive impact on our economy,” Brown said, describing trials with camelina sativa and partnerships with local producers.

Eric Wright, president of Par Hawaii, said Par is investing in refinery modifications and expects to produce renewable fuels later this year. Wright said those fuels could reduce greenhouse gas emissions in island grids and decarbonize customers including Hawaiian Electric, Hawaii Gas and the State Department of Transportation. “These fuels do cost more to produce,” Wright said, estimating production costs about $2 to $4 a gallon higher than petroleum diesel and noting federal incentives currently worth about $1 to $2 a gallon.

Opponents urged limits or narrower language. Mike Ewal, founder and executive director of Energy Justice Network, said state Department of Agriculture officials told him there is insufficient land and water to develop a meaningful domestic biofuel supply and warned the bill could subsidize refinery operations or imports instead of building local supply. “There is not sufficient land or water in the state to develop a meaningful amount of biofuel production in the state,” Ewal said, urging removal of certain feedstocks and imported fuels from the credit.

Other witnesses raised health and environmental concerns related to proposed feedstocks. Ted Metros, an independent testifier and former Par Hawaii environmental manager, urged caution because of ongoing investigations and questioned the scale of local production, saying studies show only a small fraction of aviation fuel demand could realistically be met from Hawaiian-grown crops.

The Hawaii Renewable Fuels Coalition’s executive director, Nahaalani Parsons, described negotiated changes meant to address earlier legal and fiscal concerns: “Our amendments actually propose to remove the import tax credit section from the bill as it goes forward,” Parsons said, and the coalition removed the proposed aggregate cap increase so the bill would not request additional funding beyond existing statute.

Committee staff and agency witnesses framed HB 976 as a tool toward the state’s climate goals. Laura Ka‘akua for the Hawaii Department of Transportation said SAF will be an “important strategy” in DOT’s greenhouse gas reduction plan and that reaching the state’s targets appears unlikely without significant increases in SAF. Nicholas Paisley, director of fuels at Hawaiian Electric, said state-level incentives have helped other jurisdictions scale renewable diesel and that a similar mechanism in Hawaii could “level the playing field.”

The committee’s adopted amendments keep the bill’s fiscal exposure at the existing statutory level of $20 million and remove the import credit language, while updating definitions and setting the effective date to taxable years beginning after Dec. 31, 2025. The chair noted additional technical cleanups and a defective effective-date provision that staff will resolve before final drafting.

The measure will move to the next stage of the legislative process with the committee’s adopted amendments and should the bill advance to floor committees the updated language will reflect the changes described in committee.