Energy Bills at the Capitol: Without Action, Costs Will Mount

posted in: January 1991 | 0

What can be done in Hawai`i to reduce consumption of fossil fuels? One of the first answers is to increase the sales tax paid at the pump. Several measures before the Legislature would do just this.

The logic is sound: if people have to pay more, they may be expected to consume less. Experience belies logic, however. Gasoline prices (independent of taxes) have steadily risen in the last decade. Far from this being followed by a downward trend in consumption, annual sales of gasoline in Hawai`i increased from 324 million gallons to 357 million gallons — roughly 10 percent — in one decade (1978 to 1988). (In the same period, aviation fuel consumption jumped 67 percent, from 473 million gallons a year to 701 million gallons.)

Governor Waihe`e proposes increasing the fuel tax not to discourage consumption, but to augment the highway fund. But a spiraling logic is at work here: More and better roads invite more drivers, who in turn increase the wear and tear on highways, requiring an increase in the fuel tax, which is used to improve roads and bridges, which encourages more people to use the roads…. Until sound and convenient alternatives to driving are made available, the state will never have enough money in its highway fund to pay for all the repairs it will need to make.

Another proposal for a cent-a-gallon tax hike has been introduced by Senator Richard Matsuura. The extra cent would go into a fund to support research on renewable energy at the University of Hawai`i. By our calculation, the fund would receive on the order of $11 million a year.

But can the state really afford this much for theory and pie-in-the-sky projects — over and above the support it already provides to university researchers and on top of the money (more than $5 million proposed in bills introduced by Matsuura) being sought to support the Pacific International Center for High Technology Research in its work on OTEC and other exotic, unproven energy sources?

(As an aside, Matsuura has introduced many bills besides this one to earmark funds for his pet projects. Peer-review processes, wherein panels of scientific experts determine research priorities and rank research proposals accordingly, are circumvented when the Legislature approves bills appropriating funds to certain laboratories or research centers for projects described in only the vaguest terms. The stage is set for boondoggles that enrich certain politically astute individuals but which, by their very nature, are not likely to buy the state anything in the way of energy self-reliance, efficiency, or technology.)

Low Tech, High Yield

If the Legislature is serious about encouraging the use of alternative energy resources, the way to go is to spur the use of off-the-shelf technologies of demonstrated effectiveness. Tax credits for people who install solar water heaters are an obvious incentive. Several bills would increase available credits from 35 percent to 40 percent.

A bill by Senator Russell Blair would require utilities in the state to develop energy conservation programs. Utilities would provide residential customers with free energy audits and then work with the customers, should they wish, on arranging installation and financing of energy-saving equipment. The bill seems to anticipate some of the results expected to emerge from the ongoing integrated rate planning docket undertaken by the Public Utilities Commission. Nonetheless, no harm would come from having the Legislature enshrine the goals of demand-side management of energy resources as part of the state’s law.

Two identical House bills (from Jim Shon and Kenneth Hiraki) would require housing built with state aid to employ solar water heating equipment. A similar measure bit the dust last year, after the state Housing Finance Development Corporation opposed it. Representative David Ige has gone a step further with a bill requiring all new single-family houses and apartment buildings to have solar water heating systems.

Swearing Off Gasoline

Of every barrel of oil brought into the state, about two thirds is used for transportation. In turn, two thirds of that goes for aviation. Increases in aviation efficiency are possible — primarily when older planes are replaced by newer models. Consumption of aviation fuel is probably more likely to occur as a result of decreased travel. In either case, the Legislature is rather helpless to effect change.

But the Legislature can affect consumption of fuel by automobiles in ways other than tax disincentives. It can, for example, encourage alternative fuels. Matsuura has introduced a slew of bills giving tax breaks for liquid propane gas. LPG, however, is still a fossil fuel, and while it may be derived from natural gas, it can also be refined from crude oil. Matsuura’s bills do nothing to reduce our reliance on automobiles as the principal mode of transportation. Moreover, these bills unfairly exempt LPG users from having to pay their share for highway maintenance.

A more modest but potentially far-reaching bill, sponsored in the House by Paul Oshiro, would exempt from taxation “employer-subsidized transportation benefits” such as bus passes and allowances for van-pooling or use of a private commuter bus. (Included also are parking spaces, up to a value of $1,200 a year, but only when this benefit does not discriminate in favor of “officers, shareholders, or other highly compensated employees.”)

Of course, public transportation or ride-sharing options have always been more economical than commuting by single-occupant car. This bill would make it more attractive yet and, one hopes, would draw a few people out of their cars and onto the buses. It would be substantially improved if it treated all parking benefits as taxable income, using as the basis for calculation the cost to the public of an equivalent parking space.

Senator Mike McCartney has sensibly proposed giving each county an appropriation (as yet unspecified) for purchasing buses so that peak-hour commuting routes can be increased. A bill introduced by Oshiro (by request) would provide $26 million for commuter ferries for O`ahu as well as an expanded bus system. Another Oshiro bill would establish a bicycle coordinator and set up a bicycle promotion program within the Department of Transportation. The coordinator would, among other things, study the potential for a “modal shift from vehicle to bicycle” and support employer programs encouraging commuter bicycle use.

A bill introduced by Levin would provide tax credits for the use of alcohol fuels or blends. This is not the place to launch into a full discussion of alcohol fuels’ advantages and drawbacks. A quote from “Rethinking the Role of the Automobile” (Worldwatch Paper 84, June 1988) should be sufficient to give an indication of some of the problems: “Numerous studies suggest that the total amount of energy inputs to obtain ethanol — including energy required to fuel farmers’ vehicles, to produce fertilizer and pesticides, and to ferment and purify the alcohol — may be close to or even surpass the eventual energy output.”

Commissions and Councils

The Department of Business, Economic Development and Tourism is proposing an Energy Resources Management Council (whose membership would notably not include consumer representatives or environmentalists). Representative Virginia Isbell is proposing to move DBED’s Energy Division to the Department of Land and Natural Resources. There it would be subject to the direction of a new nine-member Energy Commission, which would, among other things, take over the duties of the state energy resources coordinator (who at present is the director of DBED).

Regulating Radiation

Representative Jim Shon is again proposing to give the Department of Health powers to regulate electro-magnetic radiation. Senator Andrew Levin has introduced (by request) a bill authorizing the Health Department to study the effects of high voltage transmission lines on public health and the environment.

Nuke ‘Em

Finally, Senator Tony Chang has introduced a bill that is so bad we are almost afraid to mention it: one that, in the name of achieving energy self-sufficiency, would authorize construction of a nuclear power plant on O`ahu.

Volume 1, Number 7 January 1991

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