RELATING TO TRANSPORTATION.

SB1120

THE SENATE

S.B. NO.

1120

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO TRANSPORTATION
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
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The
legislature finds that transportation is the State's largest source of lifecycle
greenhouse gas emissions and that the tourism industry is the State's largest
economic driver and biggest transportation sector consumer.
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The legislature further finds that better
management of waste and resources is critical to environmental stewardship and
a clean fuel standard is central to reducing the State's lifecycle greenhouse
gas emissions while also protecting the State's economic competitiveness,
public health, and the environment.
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To
prompt the use of clean fuels and zero-emission vehicles, other states like
California, Oregon, and Washington have successfully implemented programs that
reduce the carbon intensity of their transportation fuels.
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The legislature also finds that without
policy specific to the transportation sector, emissions reductions will not be
achieved in a timeframe consistent with the State's goals.
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Therefore, a clean fuel standard that is
technology-neutral and market-based is an effective policy for reducing
emissions in the transportation sector while also achieving other co-benefits.

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The legislature additionally finds that by
creating a clean fuel standard that rewards environmental performance, the
State will incentivize the creation of jobs in various sectors, including
construction, agriculture, waste management, landscape restoration, forestry,
and transportation.
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A clean fuel
standard can create new markets for what is usually considered waste, including
but not limited to municipal solid waste; construction and demolition debris;
used cooking oil from food processing; agricultural and forestry residuals;
industrial emissions; invasive species biomass from landscape restoration
projects; and renewable electricity.
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Furthermore, the demand created for alternative fuels and cleaner forms
of mobility under a clean fuel standard will not only help reduce greenhouse
gas emissions but may also have a co-benefit of reducing air pollution,
improving the health of citizens of the State.

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It is the intent of the legislature to
support the deployment of c1ean transportation fuel technologies through a carefully
designed program that reduces the carbon intensity of fuel used in the State
to:

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(1)
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Reduce
lifecycle greenhouse gas emissions;

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(2)
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Stimulate
the local, state, and regional economies, thereby providing economic
development;

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(3)
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Promote
public and environmental health by increasing sustainability and encouraging a
circular economy and landscape restoration activities; and

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(4)
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Support
existing jobs in the clean fuel industry and create new jobs in new innovative
clean fuel technologies.

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Therefore, the purpose of this Act is to
require the department of transportation to adopt rules governing a clean fuel
standard for alternative fuels in the State.

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SECTION 2.
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(a)
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The department of
transportation shall adopt rules pursuant to chapter 91, Hawaii Revised
Statutes, governing a clean fuel standard for alternative fuels in the
State.
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The rules shall include:

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(1)
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A
schedule to phase-in the implementation of the clean fuel standard for alternative
fuels in a manner that reduces the average carbon intensity by at least ten per
cent below 2019 levels by 2035 and at least fifty per cent below 2019 levels by
2045, including the establishment of annual carbon intensity standards for alternative
fuels;

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(2)
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An
implementation date for the clean fuel standard for diesel and gasoline on or
before January 1, 2027;

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(3)
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Standards
for measuring lifecycle greenhouse gas emissions using Argonne National Lab's
GREET model attributable to the production and use of diesel, gasoline, and
other alternative fuels throughout their lifecycles, including feedstock
production or extraction, fuel production, and the transportation of raw
materials and finished fuels;

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(4)
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A
mechanism by which diesel and gasoline that have a carbon intensity below the
annual carbon intensity standard are used within the State to generate credits;

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(5)
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A
mechanism by which alternative fuel that has a carbon intensity below the
annual carbon intensity standard is used within the State to generate credits;

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(6)
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A
mechanism to adjust the carbon intensity of alternative fuel when the
alternative fuel is used in a powertrain that is not equal in efficiency to
that of the reference fuel and drivetrain combination;

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(7)
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A
mechanism by which diesel or gasoline that has a carbon intensity above the
annual carbon intensity standard would generate a deficit;

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(8)
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A
mechanism by which an alternative fuel that has a carbon intensity above the
annual carbon intensity standard would generate a deficit;

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(9)
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A
mechanism that requires diesel, gasoline, or other alternative fuel that is
exported from the State to retire any associated credit or debit;

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(10)
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Exemptions
for diesel, gasoline, or other fuels used by aircraft, railroad locomotives,
military vehicles, and interstate waterborne vessels;

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(11)
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Procedures
for verifying credits and deficits generated under the clean fuel standard; and

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(12)
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A
schedule by which the department of transportation shall review and update the
lifecycle greenhouse gas modeling every three years based on a review of the
best available scientific literature.

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(b)
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The
department of transportation may adopt rules that include:

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(1)
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A
cost containment mechanism designed to allow for sufficient compliance
flexibility and maximum greenhouse gas reductions;

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(2)
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Mechanisms
whereby an electric utility or an energy producer can generate credits for
electricity for gaseous fuels used in transportation; provided that the department
of transportation shall develop these mechanisms based on best practices in use
in other states and in consultation with industry stakeholders;

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(3)
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Mechanisms
whereby exempt end-uses, such as aviation, marine, rail, and military, can opt in
to the program to generate credits when using alternative fuel;

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(4)
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Mechanisms
whereby alternative fuel users can opt in to the clean fuel program to generate
credits when it displaces the combustion of gasoline or diesel in off�road,
heating, cooling, and temporary power generation;

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(5)
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A
schedule to phase in the implementation of the standards for alternative fuels
that have achieved a predominant market share and have an average carbon
intensity that exceeds the annual diesel or gasoline carbon intensity standard;

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(6)
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A
program to support the deployment of infrastructure for the distribution of
electricity as a vehicle fuel based on a mechanism by which not more than
per cent of the annual deficits can be allocated;

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(7)
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A
program to support the deployment of new technologies and infrastructure for
the distribution or production of liquid or gaseous alternative fuels based on
a mechanism by which not more than per cent of
the annual deficits can be allocated;

(8)
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Any standards, specifications, testing
requirements, and other measures as needed to ensure the quality of gasoline,
diesel, and alternative fuels used in accordance with the clean fuel standard;

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(9)
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Linking
the clean fuel standard to similar policies in other jurisdictions, including
but not limited to California, Washington, and Oregon;

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(10)
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A
method to utilize the carbon intensity pathways already approved in other
states like California, Oregon, and Washington to reduce the burden of
administering and certifying the carbon intensity of transportation fuels in
the clean fuel program;

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(11)
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Mechanisms
that allow credits to be traded and to be banked for future compliance periods;
and

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(12)
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Exemptions
for diesel, gasoline, and alternative fuels that are used in volumes below
thresholds established by the department of transportation.

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(c)
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As used in this section:

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"Alternative fuel" means any fuel
that is not gasoline or diesel and is used for transportation purposes,
including but not limited to ethanol, biomass-based diesel, renewable diesel,
sustainable aviation fuel, electricity, biomethane, biogasoline, renewable
natural gas, fuels from carbon capture and utilization, electrofuels, and
hydrogen.

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"Carbon intensity" means that
quantity of lifecycle greenhouse gas emissions per unit of fuel energy,
expressed in grams of carbon dioxide equivalent per megajoule.

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"Clean fuel standard" means
standards for the reduction of greenhouse gas emissions, on average, per unit
of fuel energy.

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"Greenhouse gas" means carbon
dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur
hexafluoride, and any other gas or gases designated by the department of
transportation or the Hawaii state energy office by rule.

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SECTION 3.
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This Act shall take effect on July 1, 2025.

INTRODUCED BY:

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Report Title:

DOT;
Clean Fuel Standard; Greenhouse Gases; Alternative Fuels; Rules

Description:

Requires
the Department of Transportation to adopt rules governing a clean fuel standard
for alternative fuels in the State.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.