State of Green Business
Why Hawaii's carbon neutrality pledge matters
Depending on where you sit, Hawaii’s latest climate aspirational declaration that as of yet has no clear path forward — to become carbon neutral by 2045 — may seem either preposterous or prescient.
But whether you’re optimistic or pessimistic about the outcome, the action sends a clear signal to both consumers and businesses: Hawaii is serious about decarbonizing, and in a way that doesn’t penalize the local economy. Central to that will be an as-yet-undefined carbon offset program that will explore the most effective ways the Aloha State can sequester emissions — the current conversation centers on planting trees and engaging the agricultural sector. But a working group that includes representatives from a broad cross-section of industries is working on more specific ideas.
“I think everyone we’ve talked to believes we can do this as a state, and in doing it we will open the doors to progress in other states and hopefully, the rest of the world,” said Representative Chris Lee, chairman of the state legislature’s committee on energy and environmental protection, during a plenary session Tuesday at VERGE Hawaii.
Rep. Lee, who was deeply involved with crafting policies to set Hawaii on the path to transitioning to 100 percent renewables, said creating some sort of carbon marketplace will be crucial for tying together the great work being done in both the private sector and public sector across Hawaii to push toward clean energy and transportation.
You can expect Hawaii to look to other states — particularly neighboring California and Washington states (2,500 miles and 2,733 to the east, respectively, across the Pacific)— to figure out the structure. And it wouldn’t be at all surprising if the state were to tie its own initiatives into existing (or forthcoming) cap-and-trade systems. “How do you create a mechanism that doesn’t penalize those who can least afford it but that transfers the climate impacts from a small few to make sure that we all do our part,” Rep. Lee said.
Hawaii’s example stands as a reminder that pioneering models at the state level —no matter how small the state — are what is driving forward clean energy policy, said Commissioner David Hochschild, with the California Energy Commission.
“We have a surplus of carbon, and a shortage of courage,” he said, also noting that Hawaii’s policies have “materially impacted what California is taking about right now.”
The policy of setting jurisdiction-by-jurisdiction policies won’t fly for certain industries, such as commercial aviation, observed Hawaiian Airlines CEO Peter Ingram. That’s why the air travel sector has developed a carbon offset scheme, starting in 2018 with reporting requirements. The goal is to achieve carbon-neutral growth by 2050, to be met at first through offset transactions. The industry also aims to cut overall emissions by 50 percent.
“We’d prefer to do it through technology, through renewable fuels,” Ingram said during the discussion about carbon policy, adding: "This is effectively the industry’s commitment that we are going to reduce the carbon that it takes to operate, until such a time when it takes much less carbon to do what we’re doing.”
To those who fret that creating some sort of carbon tax could harm Hawaii’s fragile economy, Hochschild offers this observation: Prior to its cap-and-trade program, which took effect in 2012, California boasted the world’s ninth largest economy. Now, its gross domestic product ranks it at No. 5 on a global basis, larger than the United Kingdom. What’s more, unemployment there has declined, Hochschild noted.
“When you set up stable, long-term policies that really set up that investment signal, it attracts new capital and driving new innovation,” he said. That’s one reason California’s current commitments have a pretty long lead time, focused on outcomes around 2030.
You could argue that Hawaii has been actually charging something akin to a carbon tax since the mid-1990s — in the form of the “barrel tax” it levies on fossil fuels shipped into the state. The fate and evolution of that tax is likely to factor in whatever approach the design of Hawaii’s future carbon marketplace takes. Earlier this year, the state voted down a proposal that would have set carbon tax starting at $10 per ton, beginning in 2019.