RELATING TO A CLEAN FUEL STANDARD.

SB2999

THE SENATE

S.B. NO.

2999

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to a clean fuel standard
.

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 by creating a clean fuel standard that rewards
environmental performance, the State will incentivize investment and job
creation in various sectors, including agriculture, construction, energy, forestry,
landscape restoration, transportation, and waste management.
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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, thereby improving the health of citizens
of the State
.

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The
legislature further 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 additionally finds that better management of waste and resources is
critical to environmental stewardship, and a clean fuel standard is central to
reducing 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 policies specific to the transportation
sector, emissions will not be reduced 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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It is the
intent of the legislature to support the deployment of clean 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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In 2025,
the department of transportation began an independent analysis of the best
estimated range of probable costs or cost savings attributable to the clean
fuels program per gallon of gasoline, per gallon of diesel, and per kilowatt of
electricity, based on existing programs, covering each year of the program
projected through 2040.
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The analysis is
to be informed by input from regulated industries and experience in
jurisdictions that have adopted similar clean fuels policies.

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Accordingly,
the purpose of this Act is to require the department of transportation to adopt
rules by January 1, 2028, establishing 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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No later than January 1, 2028, 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 at a rate to enable the State to achieve the targets
in sections 225P-5, 225P-7, and 225P-8, Hawaii Revised Statutes, as quickly as
possible, but beginning with targets no less than ten per cent below 2019
levels by 2035 and no less than 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 beginning January 1, 2029;

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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 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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(5)
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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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(6)
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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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(7)
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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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(8)
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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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(9)
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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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(10)
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Procedures for
verifying credits and deficits generated under the clean fuel standard; and

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(11)
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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 pursuant to chapter 91, Hawaii Revised Statutes, 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 clean fuel standard to
generate credits when using alternative fuel;

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(4)
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Mechanisms whereby alternative fuel users can
opt into the clean fuel standard 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 mechanism through which electric utilities
and public agencies direct at least fifty per cent of their overall credit
value to electrified transportation programs, projects, or investments to
directly benefit overburdened or underserved populations;

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(7)
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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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(8)
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Linking the clean fuel standard to similar
policies in other jurisdictions, including but not limited to California,
Oregon, and Washington;

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(9)
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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 standard;

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(10)
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Mechanisms that allow credits to be traded and
to be banked for future compliance periods; and

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(11)
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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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For the purposes of this section:

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"Alternative
fuel" means any fuel that is not fossil fuel-based and is used for
transportation purposes.

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"Carbon
intensity" means the 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 other 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 upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Clean
Fuel Standard; Alternative Fuels; Rules; Department of Transportation

Description:

Requires the
Department of Transportation to adopt rules by 1/1/2028 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.