A carbon pollution pricing bill in Hawaii passed the Senate for the second year in a row. The bill (SB 3150) passed last week by a 23–2 vote, with four Senators voting in favor but with reservations.
SB 3150 reconfigures the state’s existing barrel tax to levy fees on each fossil fuel, based on the relative amount of carbon emissions that result from its combustion. It sets a fee rate of $40 per carbon ton emissions, beginning in 2021, and gradually raises the rate until reaching $80 per ton in 2030.
The bill also establishes a refundable tax credit for people earning 60% or less of the area’s median income. Individuals making less than $20,000 annually will receive a $250 credit, with each increasing income level receiving a slightly lower credit.
How the Bill Passed The Senate
In order to receive a floor vote, the carbon pollution pricing bill had to pass three Senate committees:
- Agriculture and Environment, which it passed with a 4-1 vote
- Energy, Economic Development, and Tourism, which it passed with a 5-1 vote
- Ways and Means, which it passed with an 11-0 vote
The first two committees jointly heard the bill on February 12th, and amended it to establish a refundable tax credit that will help alleviate the impact of the fee on low and middle-income communities. At that hearing, Senator Mike Gabbard, Chair of Agriculture and Environment, reiterated the importance of reducing the economic impact of the carbon fee on low-income individuals in society.
At the subsequent Senate Ways and Means hearing, dozens of agencies and organizations — including the Department of Land Natural Resources, Hawaii State Energy Office, Hawaii Natural Energy Institute, Hawaii Climate Change Mitigation and Adaptation Commission, 350 Hawaii, Citizens Climate Lobby, Healthy Climate Communities, and Young Progressive Demanding Action — submitted testimony in favor of the legislation.
This is the second year in a row that carbon pricing has passed the Senate in Hawaii; last year, it passed unanimously but never received a hearing in the House.
The University of Hawaii Study is Currently Studying Carbon Pricing
In 2019, a carbon pricing study bill championed by Representative Nicole Lowen, the Chair of the House Committee of Energy and Environmental Protection, was signed into law. That bill appropriated funding for the University of Hawaii to conduct a comprehensive study on statewide carbon pricing.
The study will do the following:
- Examine different carbon pricing policy options
- Determine what level a price would need to be in order to reduce emissions and change consumer behavior
- Project how much revenue a fee would raise
- Discuss whether the tax should gradually increase
- Recommend how to implement the tax in an equitable manner
“Part of the study is assessing whether we need carbon pricing, or whether we can look at existing taxes and achieve the desired results of greenhouse gas reductions,” Lowen told Climate XChange in an interview last year. “I believe that at some point, we will have to tax based on carbon intensity.”
In an interview with Climate XChange last week, Lowen said after a slow-moving administrative process, funding has been released and the contract has been signed off with the university.
“It will be a few more months before we have any preliminary results,” Lowen said. “There are definitely still a lot of questions that we can’t pull out answers to out of thin air.”
While the bill ultimately passed the Senate, Senators Lorraine Inouye and Sharon Moriwaki expressed that they would prefer to wait for the University study to be complete prior to the passage of the legislation. Senator Karl Rhoads (D), the chief sponsor of the bill, notes that as the bill now heads to the House, the specific fee rates its lays out could be determined in conference committee. The rates could also be amended after the study completes.
What Happens Next
In the wake of the University’s ongoing study, it’s unclear if the bill will gain any traction in the House. But Representative Lowen said she plans to schedule a hearing for the bill and move it forward if it gains enough support. Her main concern is that insufficient research has gone into assessing the effects on the current proposed fee.
“The conversation to date has been really ideological and not substantive,” Lowen said. “There haven’t been a lot of real considerations for what the impacts will be in Hawaii. We need to make sure that the outcome of the legislation has the intended effect of reducing emissions and not just being claimed as a victory because someone deemed this the solution without vetting the details.”
Lowen expressed particular concern regarding the impact of the fee on airline industries, such as Hawaii Airlines, which operates much more heavily in the state than anywhere else. But she believes the fee will have a positive impact in reducing emissions in other sectors, such as from cars.
“As it applies to gasoline, I think the fee could be really impactful,” Lowen said. “We do see that when gas prices go high, people buy more electric vehicles or take public transportation more.”
More work will go into fine-tuning the bill in the coming weeks, but the fact it advanced through the Senate is undeniable progress and a sign the state is moving in the right direction. If the bill does pass the House, Hawaii will become the first US state to put a direct fee on carbon emissions. (Several jurisdictions are regulated by cap-and-invest programs, however).
In the wake of the climate crisis and federal inaction, it’s increasingly important that states continue to move ahead.
We’ll be tracking SB 3150 and keeping our eye out for the results of its upcoming house hearing. If you want to stay plugged in, join the State Carbon Pricing Network here for updates.