Time to end mandate for ethanol fuel

Honolulu Star Advertiser - February 28, 2015

By: Editorial Staff

Hawaii's grand ethanol experiment has come to naught. It is time to pull the plug.

Mandating the use of ethanol as a transportation fuel, as the state has done since April 1, 2006, was supposed to revive the local sugar industry — ethanol is an alcohol-based fuel that can be made from sugar or corn — and reduce energy imports.

Optimists predicted the creation of 700 jobs and the investment of more than $100 million to build ethanol-production plants in the state, spurred on by generous tax credits.

Nearly 10 years out, it's clear that has not and will not occur.

Instead, Hawaii is importing 45 million gallons of ethanol a year, to meet the requirement that 10 percent ethanol be blended with almost all the gasoline sold in the islands; none of the proposed ethanol facilities have been built; and Hawaii motorists forced to buy the blended fuel complain about getting lower gas mileage — in other words, less value for their money — than they would if they could power their cars with straight gasoline.

Companion measures were introduced in the Legislature this session to repeal the ethanol requirement. The House bill died, but the Senate measure is moving forward and deserves full support.

No governmental policy, no matter how well intended, should be allowed to languish long past the point that progress should be obvious. This environmental and business initiative has not come close to meeting either of its main goals and should be rescinded. More time is not going to change the outcome.

Moreover, the state's narrow focus on ethanol as a renewable fuel is misguided, given the broader federal Renewable Fuel Standard mandate, which will require fuel producers to blend more renewable fuel into gasoline and diesel fuels by 2022. Other emerging renewable options get less attention than they deserve in Hawaii because of the ethanol-specific mandate.

"The truth is, it doesn't make any sense to keep it in place on a number of fronts," state Senate Energy and Environment Committee Chairman Mike Gabbard (D, Kapolei-Makakilo) told Honolulu Star-Advertiser Capitol Bureau Chief Kevin Dayton. "It is highly unlikely that we're ever going to see any locally produced ethanol, and it's not good from a sustainability perspective to keep importing it."

The state Department of Business, Economic Development and Tourism is not taking a position for or against Senate Bill 717, the measure that would repeal the ethanol mandate, but it did submit comments noting ethanol's "mixed role" in Hawaii.

Although ethanol use has reduced consumption of petroleum products in the transportation sector, the renewable fuel itself has been imported and the availability of tax credits has not spurred local production as envisioned.

House Energy and Environmental Protection Committee Chairman Chris Lee (D, Kailua-Lanikai-Waimanalo) pledged to hold a hearing on Senate Bill 717 if the measure makes it out of the Senate over to the House, which is laudable. But if the ethanol mandate is repealed, Lee's inclination is to redirect money now set aside to develop ethanol toward the development of some other renewable fuel supply. Lee and other lawmakers should resist this impulse and instead return any available money to the general fund.

As the ethanol experiment proves, it takes more than government intervention to craft sound economic and environmental policies.