Isle ethanol producers still year away
An April 2 state-mandated deadline will likely be missed for the cleaner-burning fuel
Despite an April 2 deadline by which 85 percent of all gasoline sold in Hawaii must be blended with 10 percent ethanol, none of the six planned ethanol plants in the state will be online and able to produce the alternative fuel, officials say.
Ethanol producers are looking at another year before they expect to be fully operational, said Maria Tome, an alternative fuels engineer with the state Department of Business, Economic Development and Tourism.
Even when the ethanol producers were expecting that at least one plant would be online (by April), that would not have supplied the whole demand, Tome said. "But to expect that everything could come together at the exact same time is not really realistic."
Tome is scheduled to brief lawmakers tomorrow on progress being made in the state's ethanol mandate.
Ethanol, also known as ethyl alcohol, is derived from grain and corn and can be blended with gasoline to create a cleaner-burning fuel.
Forty-one states sell blended gasoline containing ethanol produced from facilities in 20 states. Minnesota is the only other state with an ethanol mandate.
Hawaii's ethanol blending requirements were passed in the 1990s, but administrative rules were not finalized and approved until September 2004, implementing a start date of April 1.
The lack of locally produced ethanol means oil facilities will have to import about 38 million gallons of ethanol a year to meet the blending requirements, Tome said.
Ethanol prices track fairly closely to those of gasoline, and in December averaged about $2.34 a gallon. That amounts to about $90 million of imported ethanol each year.
House Energy and Environmental Protection Chairwoman Hermina Morita acknowledged that some people might be "nervous" about importing ethanol, but producers are committed to meeting the blending requirements.
"We're going to have to import for a while, but I think everybody's on board -- the blending should be going through," said Morita (D, Hanalei-Kapaa). "I think we also have to realize that we gain some benefits from it, like cleaner fuel."
Blending also has the potential to lower fuel costs in Hawaii, Tome said.
Using December price averages, DBEDT estimated that the cost of 87 octane gasoline could be about 9 cents per gallon cheaper after accounting for a 51-cent-per-gallon tax credit available to ethanol blenders, Tome said.
Ethanol fuel also would be exempt from the state's general excise tax, which at current prices is about 8 cents per gallon.
Exactly how the ethanol blending requirements will affect prices at the pump is being studied.
The Public Utilities Commission has solicited information from members of the state's oil industry as to how their operations would be affected by the blending requirements. No timetable has been set on when any recommendations might be issued.
Chevron USA Inc., which owns one of the state's two oil refineries, previously had submitted information to lawmakers stating that blending would increase operational costs. The refiner also would take on added capital expenses needed to upgrade its terminals for blending.
Although consumers might also have concerns, Tome noted that all gasoline-powered cars sold in the United States are designed to use gasoline containing up to 10 percent ethanol, also known as E-10 Unleaded.
DBEDT is preparing informational brochures to distribute to motorists as the April deadline approaches. The information also is available online at www.new-fuel.com.