Renewable Energy Credits Trading; Chicago Climate Exchange
Requires the public utilities commission to establish a renewable energy credits trading program to ensure compliance with the State's renewable portfolio standards. Requires DBEDT to review the feasibility of the State becoming a member of the Chicago climate exchange. Establishes an advisory committee to assist the PUC and DBEDT establishing a renewable energy credits trading program. (SD1)
TWENTY-SECOND LEGISLATURE, 2003
STATE OF HAWAII
A BILL FOR AN ACT
relating to renewable energy.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that there is evidence that the planet's climate is becoming warmer, with potentially catastrophic effects on coastal areas and global weather patterns. Many scientists suspect that a significant cause is a man-made increase in emissions of greenhouse gases, which trap heat inside the Earth's atmosphere. The legislature further finds that the United States has refused to support the United Nations' Kyoto Protocol, which calls for international emissions reductions, even though the United States produces more greenhouse gases than any other country.
The legislature further finds that the Chicago climate exchange is the first major attempt in the United States at establishing a market for reducing greenhouse gas emissions. Also known as "carbon trading", it offers energy companies, manufacturers, and governments that reduce their emissions of carbon dioxide and other greenhouse gases the opportunity to make money while protecting the environment.
The Chicago climate exchange, also known as "CCX", is a voluntary attempt to create market incentives for participants to cut emissions by reducing and trading greenhouse gas emissions. Funded by grants from the Chicago-based Joyce Foundation and administered by Northwestern University’s Kellogg Graduate School of Management, the goal of the exchange is to implement a voluntary pilot program for trading greenhouse gases in North America, to be later expanded to include international sources. Founding members of the exchange include American Electric Power, the City of Chicago, DuPont, the Ford Motor Company, International Paper, and Motorola, Inc.
The Chicago climate exchange also marks the first time major companies in multiple industries have made a voluntary binding commitment to use a rules-based market for reducing their greenhouse gas emissions. The exchange will enable them to receive credit for these reductions and to buy and sell credits to find the most cost-effective way of achieving reductions. Trading is targeted to begin in the spring of 2003.
Exchange participants agree to voluntary limits on their emissions of greenhouse gases. Participants that drastically reduced their emissions would receive credits, which they could sell to others who missed their targets. Traders could also generate "offset" credits by planting trees, which sequester carbon dioxide. The market would then create a tradable commodity that could be bought and sold quickly like shares on a stock exchange.
A number of companies have already participated in bilateral trades of greenhouse-gas emissions. Carbon-trading transactions have already surpassed $100,000,000, according to the exchange. Economists believe that annual trading volume could eventually run into the tens of billions. The goal of the exchange is to develop standardized commodities and trustworthy market institutions for such trading. The National Association of Securities Dealers, which regulates the Nasdaq, has agreed to provide regulatory services to the exchange.
The legislature finds that benefits of participation in the exchange include reducing the long-term costs of controlling greenhouse gases; receiving financial benefits from environmentally sustainable practices, including reduced energy costs and raised productivity; and enhancing environmental leadership reputation among stockholders, customers, and employees.
The legislature further finds that there is a need to establish a renewable energy credits trading program in Hawaii, both to enable the State to participate in the Chicago climate exchange and to ensure compliance with the State's renewable portfolio standards, which require a certain proportion of electricity sold by each supplier in Hawaii to come from renewable sources.
Accordingly, the purposes of this Act are to:
(1) Require the public utilities commission to establish a renewable energy credits trading program in Hawaii to ensure compliance with the State's renewable portfolio standards; and
(2) Require the department of business, economic development, and tourism to investigate the feasibility of Hawaii becoming a member of the Chicago climate exchange to generate needed revenue for the State while helping to improve the environment.
SECTION 2. Chapter 269, Hawaii Revised Statutes, is amended by adding a new section to part V to be appropriately designated and to read as follows:
"§269- Renewable energy credits trading program. (a) The commission shall establish a renewable energy credits trading program pursuant to this section. Any electric utility company that does not satisfy the renewable portfolio standard requirements of section 269-92 by directly owning or purchasing capacity using renewable energy technologies shall purchase sufficient renewable energy credits to satisfy the requirements by holding renewable energy credits in lieu of capacity from renewable energy technologies.
(b) The commission shall adopt rules pursuant to chapter 91 as may be necessary to administer and enforce this section. At a minimum, the rules shall:
(1) Establish the minimum annual renewable energy requirement for each electric utility company operating in this State in a manner reasonably calculated by the commission to produce, on a statewide basis, compliance with the requirement prescribed by subsection (a); and
(2) Specify reasonable performance standards that all renewable capacity additions must meet to count against the requirement prescribed by subsection (a) and that:
(A) Are designed and operated so as to maximize the energy output from the capacity additions in accordance with then-current industry standards; and
(B) Encourage the development, construction, and operation of new renewable energy projects at those sites in this State that have the greatest economic potential for capture and development of this State's environmentally beneficial renewable resources.
(c) As used in this section, "renewable energy technology" means any technology that exclusively relies on an energy source that is naturally regenerated over a short time and derived directly from the sun, indirectly from the sun, or from moving water or other natural movements and mechanisms of the environment. Renewable energy technologies include those that rely on energy derived directly from the sun, on wind, geothermal, hydroelectric, wave, or tidal energy, or on biomass or biomass-based waste products, including landfill gas. A renewable energy technology does not rely on energy resources derived from fossil fuels, waste products from fossil fuels, or waste products from inorganic sources."
SECTION 3. (a) The department of business, economic development, and tourism shall review the feasibility of the State becoming a member of the Chicago climate exchange.
(b) There is created the renewable energy credits trading program advisory committee to facilitate the development of a renewable energy credits trading program in Hawaii. The advisory committee shall:
(1) Assist the department of business, economic development, and tourism in investigating the feasibility of Hawaii becoming a member of the Chicago climate exchange to generate needed revenue for the State;
(2) Assist the public utilities commission in developing rules that establish the minimum annual renewable energy requirements for each electric utility company operating the State and specify reasonable performance standards that all renewable capacity additions must meet to satisfy the renewable portfolio standard requirements of section 269-92, Hawaii Revised Statutes; and
(3) Periodically report findings and recommendations to the senate committee on energy and environment and the house committee on energy and environmental protection.
(b) The advisory committee members shall be appointed by the chair of the senate committee on energy and environment and the chair of the house committee on energy and environmental protection, not later than sixty days from the effective date of this Act. The advisory committee shall be composed of seven members, of whom there shall be:
(1) A representative from the department of business, economic development, and tourism;
(2) A representative from the public utilities commission;
(3) A representative from the department of commerce and consumer affairs;
(4) A representative from an electric utility company in Hawaii;
(5) A representative that is an expert in the field of "carbon trading"; and
(6) Two representatives from the environmental community.
(c) The advisory committee shall elect a chairperson and vice-chairperson from among its members. A majority of the members shall constitute a quorum. The advisory committee shall be placed with in the department of business, economic development, and tourism for administrative purposes. Members of the advisory committee shall serve without compensation, but shall be reimbursed for per diem and inter-island travel expenses. The advisory committee shall meet not later than sixty days after appointment.
(d) The advisory committee shall submit a report on the progress made to develop the renewable energy credits trading program, including any recommendations for administrative or statutory changes, to the legislature not less than twenty days prior to the convening of the 2004 regular session of the legislature.
SECTION 5. New statutory material is underscored.
SECTION 6. This Act shall take effect upon approval provided that section 2 shall take effect July 1, 2005.