Ethanol bill heads
to committeeA separate tax-credit measure
will be voted on by the Legislature
LIHUE >> A bill setting a Jan. 1, 2006, deadline for blending ethanol with gasoline in Hawaii is scheduled to be heard by a conference committee tomorrow.
A companion measure, which amends an existing law providing tax credits to ethanol manufacturers so that it conforms to federal laws, was passed out of a conference committee Wednesday and is headed for a final vote in both chambers.
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State Legislature: Bills
& Hawaii Revised StatutesThe blending of ethanol with gasoline is being advocated as a way to ease the state's dependence on fossil fuels.
Not surprisingly, both bills are opposed by the petroleum industry and are being promoted by ethanol companies.
Four companies are poised to begin manufacturing ethanol if the legislation is passed.
The greatest impact would be on Kauai, where Gay & Robinson is prepared to turn the syrup from its entire 65,000-ton annual sugar crop into ethanol. The switch from producing sugar to making ethanol would remove Gay & Robinson from the highly volatile world sugar market and give the plantation a more reliable revenue flow.
At the same time, a separate company, World Wide Energy Group, is prepared to set up shop at Gay & Robinson's plant on Kauai's west side to turn the sugar mill's bagasse -- the sawdust left over after sugar cane is crushed -- into ethanol.
The two new Kauai ethanol plants would ensure employment for Gay & Robinson's approximately 280 workers and create about 28 new jobs on the island, backers said.
Bob Shleser, World Wide Energy chief technical officer, said the state Legislature expressed its endorsement of ethanol production on Wednesday when it renewed bonding authority to help build its plant.
In 2000, the Legislature agreed to issue $50 million in special-purpose revenue bonds to provide money for World Wide's ethanol plant. The bonds are tax-free for investors but would not be backed by the state .
The bonds had not yet been sold and on Wednesday, lawmakers extended the sale deadline from 2004 to 2008.
On the Valley Isle, Maui Ethanol LLC is prepared to build an ethanol plant on Maui to convert molasses and sugar syrup from Alexander & Baldwin's Hawaiian Commercial and Sugar plantation into ethanol.
William Maloney, managing partner of Maui Ethanol and the chief lobbyist for the two ethanol bills, and A&B, which has an interest in his company, have not decided yet whether to follow Gay & Robinson's lead and convert its entire cane crop from sugar to ethanol.
"They're just sitting on the sidelines for now," Maloney said of A&B.
The fourth company, Oahu Ethanol, is planning to build a plant on Oahu that would convert molasses into ethanol. Since molasses, a byproduct of sugar milling, is no longer produced on Oahu, all of it would have to be imported.
In the House, the chief drum-beater for ethanol has been Rep. Mina Morita (D, North Kauai). Morita said her primary interest is keeping Gay & Robinson, a major employer on Kauai, in business . Morita also is the Legislature's chief crusader for developing alternate energy.
The International Longshore and Warehouse Union also supports the ethanol bills.
The state Department of Business, Economic Development and Tourism testified that the Lingle administration supports the two bills, although the governor herself has not publicly embraced them.
And Kauai County's economic development director, Beth Tokioka, said the county has submitted testimony strongly supporting both bills.
Petroleum lobbyists point to a study done by Stillwater Associates for the state Department of Business, Economic Development and Tourism that said the added costs to refineries of preparing gasoline for blending with ethanol would mean economic losses for the Chevron and Tesoro refineries.
In a letter sent to legislators Wednesday, Melissa Pavlicek, lobbyist for the Western States Petroleum Association, painted a gloomy portrait of what would happen if the ethanol bills pass.
"The petroleum industry in Hawaii, according to Stillwater, employs more than 1,400 people. Are we really going to support ethanol production, with the prospect of a few dozen jobs, at the risk of those good-paying petroleum industry jobs and their multiplier effect throughout the economy?" she asked.
Ethanol advocates point out Stillwater forgot to figure in large federal tax credits the refineries would receive if they blend ethanol.
