Lawmakers work to add
ethanol to isle fuel

Measures would offer tax credits
for new production plants

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By Bruce Dunford
Associated Press

State lawmakers are finalizing measures that could soon result in ethanol-blended gasoline being used in most Hawaii vehicles, ethanol production plants on three islands and an expansion of the dwindling sugar industry.

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There is a national move toward alternative fuel sources, being driven now as much by economics as by environmental concerns.

In Hawaii "it's a combination of work, a combination of environment, a combination of keeping ag land in ag," said Sen. J. Kalani English (D, East Maui-Lanai-Molokai), chairman of the Energy and Environment Committee.

Ethanol is a form of alcohol made in Hawaii from sugar and sugar cane wastes and other biomass such as municipal waste. Corn is the primary source of ethanol on the mainland.

Blending it with gasoline produces a cleaner-burning fuel at an increased octane, which could mean cheaper pump prices.

There is even more promise down the road with the recent announcement by University of Minnesota researchers about development of a prototype reactor that uses ethanol to generate hydrogen, which could be used to heat homes and power cars.

House and Senate conferees have agreed on bills to provide an investment tax credit for the building and operation of ethanol production plants and a renewed authorization for $50 million in tax-exempt special-purpose revenue bonds for a Kauai plant.

English and Rep. Hermina Morita (D, Hanalei-Kapaa), chairwoman of the Energy and Environmental Protection Committee, said Gov. Linda Lingle's earlier concerns about potential abuse of the tax credit have been resolved.

Still pending is a bill to require that 85 percent of all gasoline sold for use in motor vehicles contain 10 percent ethanol by Jan. 1, 2006, carrying out a 10-year-old state mandate.

One opponent to the ethanol bills is Senate Minority Leader Fred Hemmings (R, Lanikai-Waimanalo), who said it is "foolhardy planning" and a shortsighted solution to long-term environmental concerns.

"What ethanol does is it actually sustains the longevity of depending on fossil fuel, in this case oil, as our major fuel source," he said. "Ethanol is actually aiding a product we want to wean ourself from."