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By Ralph Cavanagh, Energy Program Co-Director, Natural Resources Defense Council

The United States has more than 2,000 electric utilities, many of them much larger than the Hawaiian Electric (HECO) companies on Oahu, Maui and Hawaii Island. But HECO and its subsidiaries stand out unenviably as the industry's largest user of petroleum to make power. More than 85 percent of the Hawaiian Electric companies' electricity sales now involve burning diesel and other petroleum byproducts. That is very bad news for both environmental quality and energy security.

NRDC and HECO have been working since January on part of the solution: replacing as much of that fossil fuel as possible, starting with the substitution of biodiesel for petroleum-based diesel fuel. We recognize that biodiesel can be good or bad for HECO's customers and the environment, depending on where and how the crops used to make the fuel are grown.

In June, we issued a draft biodiesel purchase policy, and got extensive comments from both the public and a panel of university experts. A revised version is now complete (see the policy in full), and we took full advantage of many good suggestions. We have set a high bar and we challenge all biodiesel users to insist on nothing less.

The new policy emphasizes that biodiesel should be viewed as a complement, not a substitute, for continued HECO acquisitions of energy efficiency and renewable power generation from wind, sun, the ocean, geothermal energy and other sources. The biodiesel purchase policy is part of a much broader strategy to continue to transform Hawaii's utilities into a model of diverse, sustainable supply and efficient use.

HECO is committing to a transition as soon as possible to sustainably produced biofuel from Hawaiian sources, drawing on tens of thousands of acres left fallow by the demise of sugar and pineapple production. HECO has pledged to give preference in its procurement to biodiesel from local feedstocks, and to support research and incentive programs to nurture an agricultural energy industry in the islands.

A new biofuels public trust fund will help, working with other interested parties and investing any net profits that HECO makes from its partnership in a biodiesel production facility planned for Maui. The HECO/NRDC policy does not, however, in any way address the merits of building any specific biodiesel production facilities or power generation facilities in Hawaii.

Since Hawaii producers will need time to create local biofuels capacity to meet Hawaii's needs, HECO will look initially for out-of-state sources. NRDC and HECO are well aware that many imported biodiesel feedstocks are unacceptable for compelling reasons, including human rights violations, poor soil management, and the widespread clearing of tropical forests to grow the crops (often involving catastrophic fires).

That is why the new procurement policy fully embraces, and indeed goes beyond, criteria developed by the international Roundtable on Sustainable Palm Oil (RSPO), an international organization of more than 200 diverse and widely representative groups that has been working for the past five years on standards for the production of palm oil, a widely available vegetable oil that can be used to make biodiesel and many other things.

For its imports, HECO will buy only palm oil that meets or exceeds all of the RSPO criteria, which impose upon growers and processors a demanding and detailed set of requirements across a wide range of social, economic, cultural and environmental concerns.

The HECO/NRDC policy also includes specific requirements not yet found on the RSPO list, which would apply to palm oil as well as other potential feedstocks. These include a prohibition on the conversion of any natural ecosystems to cultivate biodiesel crops and a ban on the use of fire to clear land for new plantings. Independent auditors will enforce compliance in the field and insure the integrity of all biodiesel that reaches HECO's power plants.

Voluntary standards like RSPO are not a cure-all, and we support binding international agreements that value and protect forests and other biologically rich natural ecosystems and their inhabitants, while reducing global warming pollution from all sources. This new HECO procurement policy sends a clear market signal that will strengthen the foundation for mandatory sustainability standards.

When NRDC and HECO released the initial draft of this policy and convened public hearings across the state, we got many questions about whether we were prepared to endorse all of the RSPO requirements for palm oil and whether the first shipments to HECO would have to comply. Our response appears unambiguously in the text of the revised proposal: all RSPO requirements will apply, starting with the first shipment.

The new Biofuels Public Trust Fund will be up and running in early 2008. HECO will report to the public on its plan for implementing the new procurement policy within 9 months, and a public statement summarizing progress and any issues encountered will appear within 18 months (and annually thereafter).

NRDC and HECO look forward to working with many concerned parties to meet the policy's demanding goals and address any unforeseen problems. And we thank all who have helped launch an important shift away from fossil fuels, and toward a thriving, environmentally friendly agricultural energy economy in Hawaii.

last revised 8/20/2007