HECO and NRDC Finalize Biodiesel Purchase Policy

Plan Could Jumpstart Sustainable Agricultural Energy Industry in Hawaii
HONOLULU – Hawaiian Electric Company (HECO) and the Natural Resources Defense Council (NRDC) today released a final policy to ensure that Hawaiian Electric, Maui Electric and Hawaii Electric Light companies purchase only biodiesel fuel produced from locally grown sustainable feedstocks and palm oil that complies with international standards established by the Roundtable on Sustainable Palm Oil. The utility and the national conservation organization both said the new policy represents a shift away from fossil fuels and toward creation of an environmentally-friendly biofuels sector in Hawaii.
The Hawaiian Electric companies’ diesel policy is significant because collectively they are the country’s largest utility user of petroleum diesel. When their transition is complete, they will become the largest user of biodiesel in the United States. Generating electricity from sustainable biofuels instead of petroleum is beneficial because the growing vegetation that is made into biofuel recycles carbon dioxide instead of adding to global warming pollution.
“Hawaiian Electric’s switch to biodiesel and adoption of this sustainable procurement policy could help lead the global transition to more sustainable fuels,” said Ralph Cavanagh, senior attorney and co-director of NRDC’s energy program. “It’s part of a strategy to continue to transform these companies into a model of diverse, sustainable supply and efficient electricity use.”
NRDC and HECO both agree that the utility system needs to continue its acquisitions of energy-efficiency and renewable generation resources, and view this policy as a complement, not a substitute, for them.
The HECO-NRDC biodiesel policy underwent vigorous review by a panel of academic experts in Hawaii and California to help ensure that it encourages development of an environmentally sustainable supply of local biofuels feedstocks and that it protects forests and other ecosystems at home and around the world. The policy also was discussed at a series of public meetings on Oahu, in Hilo, Kona and Maui in June and July.

“We heard spirited commentary at the public meetings and heard directly from a range of individuals and organizations representing a variety of views,” said Karl Stahlkopf, Hawaiian Electric senior vice president, energy solutions and chief technology officer. “We listened to everyone and made significant adjustments based on what we heard.”

As a result of this public process, the policy clarifies that in procuring imported palm oil for conversion to biodiesel, Hawaiian Electric will require that its suppliers and those in the supply chain be independently audited to ensure that they:
  • Comply fully with all Principles and Criteria of the Roundtable on Sustainable Palm Oil (www.rspo.org), an international organization of over 200 members representing all aspects of the palm industry from native peoples to processors that has worked for the past five years to create a sustainable model of palm oil production;
  •  Go beyond the RSPO requirements with additional baseline criteria, including a prohibition on the conversion of any natural ecosystem for the cultivation of biofuel feedstocks; and
  •  Meet or exceed RSPO Principles and Criteriaprior to the first shipment into Hawaii, not merely show good faith efforts to meet those standards as was envisioned in the first draft.   
The biodiesel policy also stipulated that the independent Biofuels Public Trust Fund planned by Hawaiian Electric be launched by early 2008 and include Native Hawaiian cultural practitioners among the constituencies represented on the fund’s board of directors. Hawaiian Electric will contribute all its share of profits from a proposed biodiesel processing facility on Maui to the fund to support research and development to enhance Hawaii’s agricultural energy industry.
“Hawaiian Electric also made the commitment at the public meetings and in the final policy document to provide seed funding for agricultural research on biodiesel feedstock production in Hawaii,” Stahlkopf said. “This research funding will not have to wait for the creation of the Biofuels Public Trust Fund by early next year or the receipt of profits from the BlueEarth Maui Biodiesel project, planned to be in operation by mid-2009.”
The policy does not endorse any specific biodiesel production facilities or power generation facilities in Hawaii. However, at present Hawaiian Electric has upcoming projects that will be subject to the new policy:
  • The company is committed to using 100 percent biofuel in its new 110-megawatt peaking unit planned to be completed by 2009 in Campbell Industrial Park; and 
  •  A Hawaiian Electric subsidiary will partner with Blue Earth Biofuels LLC to build a facility on Maui to supply biodiesel to Maui Electric Company, which uses diesel for about 85 percent of its electric production. 
In each case, the company will give preference to biofuels from locally grown feedstocks, using biodiesel from imported palm oil only until local biodiesel becomes available.

The final policy represents a major research, development, and deployment effort to jumpstart sustainable local production of agricultural feedstocks for biodiesel fuel. The eight components of the policy are: (1) local feedstock support mechanisms, (2) sourcing requirements for palm oil, (3), baseline criteria for all biodiesel feedstocks, (4) chain of custody tracking for feedstocks and oils, (5) global warming pollution accounting and reporting, (6) establishment of a Biofuels Public Trust Fund, (7) public review and notification, and (8) public progress reporting and contingencies.

The policy states, “NRDC and Hawaiian Electric recognize that voluntary certification is not a panacea. There are limits to the effectiveness of voluntary certification in addressing the problems of today’s commodity market for palm oil, in particular, and vegetable oils in general.
“Certification must be coupled with international agreements that value and protect forests and other biologically and carbon rich natural ecosystems and keep certification from simply displacing demand on to other land. NRDC and HECO are working to support the adoption of such agreements and U.S. government support and participation in them.
“However, by enacting this policy, we will be taking the first step towards creating a working model for sourcing sustainable palm oil. We hope that this model sends a powerful market signal and helps to create a foundation for the development and expansion of mandatory sustainability standards across the marketplace.”
The “Environmental Policy for the Hawaiian Electric Company’s Procurement of Biodiesel from Palm Oil and Locally-Grown Feedstocks, Prepared by HECO and NRDC” can be viewed at www.nrdc.org or www.hawaiisenergyfuture.com.
NRDC and HECO have previously collaborated on energy efficiency and renewable energy programs, as well as on the utility’s original Demand-Side Management programs which started in 1995.