Ethanol running out of gas

A Senate panel OKs a bill that would end the mandate dictating that the biofuel be mixed in with Hawaii's petrol
Honolulu Star Advertiser - February 26, 2015
Kevin Dayton

Mandating the use of ethanol as a transportation fuel in Hawaii was supposed to revive the local sugar industry and make the state more energy self-sufficient, but those plans never panned out.
Instead, motorists here have been burning imported ethanol for almost a decade, and some state lawmakers want to abandon the ethanol requirement.

"I just think it's time to say this was an interesting experiment, it really didn't do much for Hawaii drivers, it really didn't do anything necessarily for the environment," said Senate Commerce and Consumer Protection Committee Chairwoman Rosalyn Baker (D, West Maui-South Maui). "It's really clear that it hasn't added any value."

On Tuesday, the Senate Consumer Protection Committee unanimously approved Senate Bill 717, which would repeal the requirement that ethanol be blended with gasoline sold in Hawaii. The measure must now win approval from the full Senate before advancing to the House for consideration.

"The truth is, it doesn't make any sense to keep it in place on a number of fronts," Senate Energy and Environment Committee Chairman Mike Gabbard (D, Kapolei-Makakilo) said of the ethanol mandate. "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."

Under a state mandate imposed on April 1, 2006, almost all gasoline sold in Hawaii must be composed of 10 percent ethanol, an alcohol-based fuel that can be made from sugar or corn. The state also offered generous tax credits to encourage development of an ethanol production facility in Hawaii that was supposed to be supplied with local feedstock.

The hope was that Hawaii ethanol production would attract more than $100 million in investment in ethanol production plants, and generate 700 jobs.

As the price of ethanol increased, a half-dozen companies announced plans to develop ethanol facilities in Hawaii, but most shelved those projects when the world price of ethanol later declined.
None of the proposed ethanol producing facilities was ever built, and by 2009 the state was importing 45 million gallons of ethanol a year.

Baker said she regularly gets calls from constituents complaining that Hawaii's ethanol-gasoline mix gets lower gas mileage than straight gasoline, and the callers ask why the state requires them to use the mix.

If the state plans to encourage the use of more hydrogen-fueled cars or electric cars, then "we ought to get rid of this additive that really doesn't serve Hawaii's people well," she said. Baker maintains that the ethanol mandate does not have broad support in Hawaii today.

Mark Glick, energy program administrator for the state Department of Business, Economic Development and Tourism, said the department is not taking a position for or against the bill to abolish the ethanol mandate.

The department submitted written comments to lawmakers saying that "ethanol has played a mixed role in Hawaii's renewable energy mix for transportation. Although ethanol has reduced the consumption of petroleum products in the transportation sector, it has been imported, and has not been produced locally despite the availability of production tax credits."

Lance Tanaka, director of government and public affairs for Hawaii Independent Energy, also declined to take a position for or against the bill. HIE is a subsidiary of Par Petroleum Corp., and operates the state's largest refinery in Kapolei.

Tanaka said in written comments to lawmakers that HIE has consistently opposed blending decrees because of "the unintended consequences that can arise as we have experienced with Hawaii's 10-percent ethanol blending mandate."

The existing federal Renewable Fuel Standard mandate will require fuel producers to blend 36 billion gallons of renewable fuel into gasoline and diesel fuels by the year 2022, Tanaka said, which suggests the state's ethanol requirement is "duplicative."

House Energy and Environmental Protection Committee Chairman Chris Lee said he will hold a hearing on Senate Bill 717 if it wins approval in the Senate.

"I think it's time to take a strong look at alternatives, looking at other biofuels, other sorts of crops that might be viable here," he said. "Ethanol never came to be, but that doesn't mean that there isn't going to be the need for a locally grown fuel supply in the future."

Lee (D, Kailua-Lanikai-Waimanalo) said he wants to take money set aside to develop ethanol and use it to develop some other sort of renewable fuel supply.