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The Honolulu Advertiser
Posted on: Tuesday, April 6, 2010

Barrel tax crucial for cleaner Hawaii

By Jeff Mikulina

Thirty-five days. That according to the 2009 Hawaiian Electric Industries annual report is the length of time before Hawai'i's electricity shuts off should something disrupt the flow of oil to our Islands. It's the length of time between comfort and chaos.

If Hawai'i hopes to free itself from this dangerous addiction to imported fuel, we'll need to commit to changing how we produce and use energy. It makes sense to tap the source of our problem, imported oil, to fund our solutions: clean energy and energy efficiency.

Lawmakers are currently considering House Bill 2421, a policy that would tack a $1.50 tax per barrel on most imported oil products. This could generate roughly $40 million annually for clean energy programs at a monthly cost to residents that's equivalent to a Starbucks grande coffee. It's less than four cents additional on each gallon of gas. But those pennies would make a down payment on our clean energy future, something that will pay dividends to every resident and business.

This idea of a "carbon tax" to support clean energy has support among experts and residents alike. In a Washington Post interview last month, U.S. Energy Secretary Steven Chu, a Nobel Prize-winning physicist, said, "I absolutely believe a price on carbon is essential." According to two statewide surveys conducted for our organization, 70 percent of residents would be willing to pay a $3 barrel tax if the money was used to wean Hawai'i from oil.

The success of the policy, however, rests on lawmakers' ability to resist the urge to reroute the revenue to the general fund. The funds from the carbon tax must be used to wean Hawai'i from oil. While other programs are certainly worthwhile, reducing oil's burden on our economy simply makes everything else more affordable. So where should we put the oil tax revenue to work?

The first place is energy efficiency. It's the quickest and most effective way to lower residents' and businesses' energy bills. Fortunately, we have established programs, such as the solar rebate program, that can be vastly expanded with new revenue.

Here's the magic: Efficiency allows us to leverage a massive return on investment. Consider Blue Planet Foundation's Moloka'i project to replace every incandescent bulb on the island with energy efficient alternatives. Over the life of the program, every dollar invested in new bulbs will prevent about $200 from being spent on electricity. One dollar down, $200 back those are returns that would make Bernie Madoff green. We can keep more money in our economy if we spend less on purchasing oil from overseas.

Second, we need to fund the essential planning and development of Hawai'i's clean energy future. The 40 positions in the state energy office, however, are almost solely funded by limited federal funding source, sources soon to expire. Gov. Linda Lingle has made clean energy a hallmark of her administration, but this legacy won't last without a dedicated source of funding for navigating this multibillion-dollar transition.

Not all taxes are created equal. The oil tax is smart tax-shifting policy that puts a price on things we don't want (like pollution) and pays for things we do want (like local jobs in the clean energy industry). Unlike most other taxes, residents can easily offset the barrel tax: a few compact fluorescent bulbs and keeping the car's tires properly inflated will offset any additional cost.

Our energy strategy for the past half century rolling the dice on the availability of cheap oil is a gamble that just doesn't work in an era of changing economies, changing world order, and a changing climate. While passing a carbon tax takes political courage, doing nothing leaves us with only 35 days of comfort.