Bill Text: HI HB789 | 2012 | Regular Session | Introduced


Bill Title: Biofuel Production Facility Loan Guarantee Program

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2011-12-01 - Carried over to 2012 Regular Session. [HB789 Detail]

Download: Hawaii-2012-HB789-Introduced.html

HOUSE OF REPRESENTATIVES

H.B. NO.

789

TWENTY-SIXTH LEGISLATURE, 2011

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO BIOFUEL PRODUCTION FACILITIES.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  The legislature finds that currently Hawaii depends upon imported fuel to meet over eighty-five per cent of its electricity generation needs and one hundred per cent of its transportation fuel requirements.  Yet, in the 1970s two islands in Hawaii were producing up to thirty-five per cent of their electricity from direct combustion of biomass in the form of sugarcane bagasse, the primary co‑product of commercial sugar producers.  In subsequent years, the sugarcane industry has been affected by lower-cost competition from foreign sugar producers and the acreage used for sugarcane production in Hawaii has declined dramatically.  This, in turn, has hurt Hawaii's ability to generate electricity from renewable sources.

     In the early 1950s, the Hawaii sugarcane industry employed over twenty-two thousand workers statewide.  Two decades later, that number had dropped to ten thousand workers, with only one thousand, six hundred workers remaining on the island of Oahu.  Building agriculturally-based biofuel facilities in Hawaii has the potential to reinvigorate Hawaii's struggling agriculture industry while also helping to meet the renewable energy goals of Hawaii's clean energy initiative.  This initiative aims to help reduce Hawaii's reliance on petroleum by forty per cent by the year 2030.

     The legislature further finds that a relatively small investment by the State in biofuel production projects will result in larger private sector investments in those biofuel projects.

     The legislature also finds that the construction of biofuel production facilities is an investment in Hawaii's workforce that will pay dividends with the training, employment, and development of skilled local workers.  According to federal estimates, every $1,000,000 that is spent on construction generates between a dozen and three dozen direct or indirect jobs.  Based on this data, development of biofuel production facilities will create numerous jobs in biofeedstock agriculture and related industries, as well as jobs for the workers who will operate and maintain the biofuel production facilities.

     The legislature further finds that biofuel production facilities are difficult to finance because most technologies are in their infancy with regard to commercialization.  To encourage this industry, it is desirable to provide incentives and financing support to encourage the development and construction of biofuel production facilities because these facilities will:

     (1)  Attract investments in Hawaii's economy that will be spread across many communities and businesses;

     (2)  Create jobs in agriculture, construction, and biofuel refinery operations; and

     (3)  Assist the State to become energy self-sufficient, reduce imports of foreign oil, and improve energy security.

     The purpose of this Act is to support the development and construction of biofuel production facilities in Hawaii by creating a loan guarantee program for investments in the construction and development of biofuel production facilities in the State.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

BIOFUEL PRODUCTION FACILITY LOAN GUARANTEE PROGRAM

     §   -1  Definitions.  As used in this chapter:

     "Biofuel" means liquid or gaseous fuel produced from organic sources such as biomass crops, agricultural residues and oil crops, such as palm oil, canola oil, soybean oil, waste cooking oil, grease, and food wastes, animal residues and wastes, and sewage and landfill wastes.

     "Department" means the department of business, economic development, and tourism.

     "Director" means the director of business, economic development, and tourism.

     "Offtake agreement" means an agreement between a producer of a resource and a buyer of a resource to purchase or sell portions of the producer's future production.

     "Qualified buyer" means an entity with a minimum of a grade    rating, as determined by the Better Business Bureau of Hawaii.

     §   -2  Biofuel production facility loan guarantee program; established.  (a)  There is established a biofuel production facility loan guarantee program that shall be administered by the department in accordance with the spirit and intent of this chapter.

     (b)  The department shall adopt rules pursuant to chapter 91 to:

     (1)  Prescribe the qualifications for eligibility of applicants for loan guarantees;

     (2)  Establish preferences and priorities in determining eligibility for loan guarantees;

     (3)  Establish the conditions, consistent with the purposes of this chapter, for the granting or for the continuance of a grant of a loan guarantee; and

     (4)  Provide for inspection, at reasonable hours, of the facility, books, and records of an enterprise that has applied for or has been granted a loan guarantee, and to require the submission of progress and final reports.

     §   -3  Loan guarantees, terms, and restrictions.  (a)  The department may make loan guarantees to business concerns engaged in biofuel production facility construction, conversion, expansion, acquisition of land for expansion, and acquisition of equipment, machinery, supplies, or materials.

     (b)  The biofuel production facility loan guarantee program shall not exceed an aggregate total of $1,000,000,000 in loan guarantees.

     (c)  The terms of the biofuel production facility loan guarantee program shall be subject to the following:

     (1)  There shall be an unconditional offtake agreement for the period of the loan guarantee from a qualified buyer;

     (2)  The earnings before interest, taxes, depreciation, and amortization for the biofuel refinery shall cover a minimum of 1.5 times the interest and amortization of the loan guarantee;

     (3)  An annual payment of one per cent of the value of the loan guarantee shall be required for the term of the guarantee;

     (4)  Insurance coverage shall be required for revenue losses in the event of a force majeure event or if the facility is not capable of producing revenue; and

     (5)  The default of the loan guarantee shall result in the transfer of the facility to the State.

     §   -4  Reports.  The department shall report as of December 31 of each year of operations under this chapter to the governor, the president of the senate, and the speaker of the house of representatives, on the progress made under this chapter.  The reports shall be submitted no later than the first day in February that immediately follows the period covered by the report."

     SECTION 3.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

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Report Title:

Biofuel Production Facility Loan Guarantee Program

 

Description:

Establishes a biofuel production facility loan guarantee program administered by the department of business, economic development, and tourism; requires adoption of rules; establishes terms and restrictions; requires annual report.

 

 

 

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

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