Hawaii

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Hawaii has the most expensive energy in the country. The state’s high prices are primarily due to its isolated location, separated from the U.S. mainland. Owing to the cost of transporting energy supplies to Hawaii, the state generates three-quarters of its electricity from petroleum, by far the largest proportion of petroleum-fueled electricity in the nation. Hawaii utilizes a variety of other energy sources for its remaining electricity.  Hawaii is one of eight States with geothermal power generation and ranks third among them.[i]

Because of its isolated location, Hawaii imports most of its energy supplies. The state’s two refineries process crude oil shipped from Alaska and foreign countries and supply petroleum products to the state. Hawaii does not have any pipelines, so its ports are critically important for transporting oil. Though it doesn’t use much natural gas, Hawaii is one of just a few states that produce synthetic natural gas.

Regulatory Impediments to Affordable Energy

Although affordable energy is a vital component of a healthy economy, regulations frequently increase energy costs. Regulations imposed in the name of reducing carbon dioxide and greenhouse gas emissions are especially costly. Carbon dioxide is a natural byproduct of the combustion of all carbon-containing fuels, such as natural gas, petroleum, coal, wood, and other organic materials. Today, there is no cost-effective way to capture the carbon dioxide output of the combustion of these fuels, so any regulations that limit carbon dioxide emissions will either limit the use of natural gas, petroleum, and coal, or dramatically increase their prices.

Below are some facts about Hawaii’s regulatory environment that are likely to affect the cost of energy or the cost of using energy. Hawaii’s mandates for expensive and inefficient renewable sources will make it more difficult for the citizens of Hawaii to gain access to more affordable energy.

• Hawaii caps greenhouse gas emissions. Act 234, the Global Warming Solutions Act of 2007, mandates that statewide greenhouse gas emissions be reduced to 1990 levels by 2020.[ii]
• Hawaii is not a member of a regional agreement to cap greenhouse gas emissions.
• Hawaii requires utilities to sell a certain percentage of electricity from renewable sources. House Bill 1464 requires public utilities to provide 25 percent of net electricity sales from renewable sources by December 31, 2020 and 40 percent of net electricity sales from renewables by December 31, 2030. [iii]
  • Hawaii allows utilities to meet a portion of electricity demand with energy efficiency, with a goal of reducing electricity use statewide by 4,300 gigawatt-hours (GWh) by 2030.
• Hawaii requires at least 85 percent of gasoline to contain 10 percent ethanol.[iv]
• Hawaii does not impose automobile fuel economy standards similar to California’s, which include attempts to regulate greenhouse gas emissions from new vehicles.
• Hawaii requires new residential and commercial buildings to meet energy efficiency standards. The Hawaii Model Energy Code exceeds the efficiency requirements of the 1995 Model Energy Code (MEC), superseded by the International Energy Conservation Code (IECC). The MEC and IEEC, both developed by the International Code Council, are model codes that mandate certain energy efficiency standards. House Bill 2175, passed in 2006, mandates efficiency standards for new state buildings, and requires state buildings to be designed and constructed to meet the silver LEED standard.[v] The silver LEED standard is one level of the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system. House Bill 1464, enacted in 2009, imposes energy efficiency standards and requires retrofitting for existing state buildings.[vi]
• Hawaii requires state agencies to purchase energy-efficient appliances. House Bill 2175 requires state agencies to use Energy Star or other efficiency standards in purchasing.[vii]
• Hawaii does not allow utilities to “decouple” revenue from the sale of electricity and natural gas. Some states decouple revenue from actual sales, allowing utilities to increase their revenue by selling less electricity and natural gas.

[i] Energy Information Administration, Hawaii, Apr. 1, 2010,http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=HI

^† Data Sources: Real GDP per capita 2008: Bureau of Economic Analysis, News Release: GDP by State (June 2, 2009), http://www.bea.gov/newsreleases/regional/gdp_ state/gsp_newsrelease.htm; Unemployment: Bureau of Labor Statistics, Regional and State Employment and Unemployment–February 2010 (Mar. 10, 2010); Gasoline Prices: American Automobile Association, AAA Daily Fuel Gauge Report (Mar. 30, 2010); Electricity Prices: Energy Information Administration, Electric Power Monthly, Table 5.6.B., Average Retail Price of Electricity,  (March 15, 2010), http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_b.html; Electricity Generation Data: Energy Information Administration, Electricity Generation 2009, http://www.eia.doe.gov/cneaf/electricity/epa/generation_state_mon.xls.

[ii] H.B. 226 (Haw. 2007), http://www.capitol.hawaii.gov/session2007/bills/HB226_CD1_.htm.

[iii] H.B. 1464 (Haw. 2009), http://www.capitol.hawaii.gov/session2009/bills/HB1464_CD1_.HTM.

[iv] Hawaii Department of Business, Economic Development & Tourism – High Technology Development Corporation, New-Fuel.com, http://hawaii.gov/dbedt/ert/new-fuel/.

[v] H.B. 2175 (Haw. 2006), http://hawaii.gov/dbedt/info/energy/efficiency/state/Act96_reprint.pdf.

[vi] H.B. 1464 (Haw. 2009), http://www.capitol.hawaii.gov/session2009/bills/HB1464_CD1_.htm.

[vii] H.B. 2175 (Haw. 2006), http://www.capitol.hawaii.gov/session2006/Bills/HB2175_CD1_.htm.