AINA KOA PONO asked the state Legislature yesterday to support a 15 percent tax credit for building a refinery in Pahala

`AINA KOA PONO asked the state Legislature yesterday to support a 15 percent tax credit for building a refinery here in Pahala. Chris Eldridge, who also owns American Mattress stores around the state, is an `Aina Koa Pono partner. His testimony for yesterday’s hearing describes former sugar lands, now largely used by the cattle industry between Pahala and Na`alehu, as “fallow,” and says that using land for a biofuels farm and factory would help fend off a rise in fuel prices statewide. “Building agriculturally based biofuel refineries in Hawai`i has the potential to reinvigorate Hawai`i’s struggling agriculture industry while also helping to meet the renewable energy goals of Hawai`i’s Clean Energy Initiative,” said Eldridge.

THE NUMBER OF JOBS projected for the proposed biofuels refinery and farm here in Ka`u was increased in the testimony that asks for the 15 percent tax credit. Eldridge said that in addition to 300 construction jobs over two years to build the refinery in Pahala, `Aina Koa Pono now projects 150 to 200 jobs created for the 20 to 30 years that the biofuel refinery would be in operation.

HE ALSO SUGGESTED that the tax break bill be amended to provide tax credits within 60 days after the refinery becomes operational. “We cannot emphasize enough the need for these incentives to attract private capital to invest in these projects for Hawai`i. We have found that, because of the lack of commercial biofuel projects already constructed, private capital is reluctant to invest in these type plants. This legislation will assist greatly in attracting private capital to Hawai`i so we can become energy self-sufficient,” said Eldridge.

THE TAX FOUNDATION of HAWAI`I gave its analysis of giving biofuel refineries tax credits. It pointed out that each biofuel refinery could get up to $60 million in tax credits, a loss in tax revenues to the state should the refineries become successful. “While the idea of providing a tax credit to encourage such activities may have been acceptable a few years ago when the economy was on a roll and advocates could point to credits like those to encourage construction and renovation activities, what lawmakers and administrators have learned in the past few months is that unbridled tax incentives, where there is no accountability or limits on how much in credits can be claimed, are indeed irresponsible as the cost of these credits go far beyond what was ever contemplated.”
The Tax Foundation testified that the proposal “verifies what has been said about legislators latching onto the fad of the month without doing very serious research.” The Tax Foundation pointed to tax credits already set up for ethanol, saying that after the credits were enacted, it was learned that ethanol production demands more energy to produce than using traditional petroleum and that it directed the feedstock away from traditional uses – food.

PACIFIC BIODIESEL supported the legislation for tax incentives but requested that the tax break be given also to smaller locally sustainable businesses. The legislation would provide the tax breaks only for those businesses producing at least 10 million gallons of biofuel a year, cutting out small companies. Pacific Biodiesel also asked that any company getting the tax break be required to use only locally grown feedstock, rather than being allowed to import it. The legislation will be taken up again by the Senate committees on Economic Development & Technology, and Energy & Environment next Tuesday, Feb. 8 at the state capitol.

THE `AINA KOA PROJECT is the subject of a Frequently Asked Questions document being provided by the county Planning Department to help the community understand plans for a refinery in Pahala and a biofuels farm between Pahala and Na`alehu. Here are some of the questions that have been coming into the county Planning Department:
In what State land use districts and County zoning are biofuel production facilities permitted? State land use law permits biofuel production, biofuel processing facilities, and agricultural to energy facilities and associated operational infrastructure in the State agricultural district, the planning department says. The planners consider biofuel production activities “agricultural products processing, major” and permitted on parcels zoned agricultural and general industrial. The refinery would require plan approval.

`Aina Koa Pono has indicated that the facility can process solid waste into biofuel. Would that be permitted? Dumping, disposal, incineration, or reduction of refuse or waste matter is only permitted in the general industrial zone. To process waste to energy on Ag land would require either a change or a special permit. A General Plan amendment may also be required. A special permit would require approval of the Planning Commission. On parcels larger than 15 acres outside the State urban district, a change of zone or special permit would also require approval by the State Land Use Commission. The only general industrial zoned land in all of Ka`u is makai of Maile Street between Pahala Plantation House and KAHU radio at the old sugar mill site.

Is the biofuels project consistent with the Ka‘ū Community Development Plan? Though the Ka‘ū CDP is still being drafted, the planning department document says, the CDP Steering Committee has adopted values, priorities, and objectives. According to the planning department, based on the information available, the project seems consistent with the community’s desire to preserve agriculture and open space, develop renewable energy, and increase economic opportunity. “Questions remain, however, about other potential community benefits and impacts related to crop management, construction logistics, road improvements, pollution mitigation, safety, the biofuel production technology, job availability, workforce development, impacts on local businesses, and community benefits agreements.”

The Ka`u Calendar News Briefs, Hawai`i Island: Ka`u News Briefs Feb. 3, 2011