Sierra Club files legal challenge to solar tax credit reduction

Published On: Dec 11 2012 11:21:20 AM HST
Solar panels
HONOLULU -

The Sierra Club, represented by Earthjustice, filed a legal challenge Tuesday in Circuit Court to the Hawaii Department of Taxation's recent decision to cut back on tax credits for residents and businesses that install solar energy systems.

The department's new interpretation of the solar credit, which was announced on Nov. 9 and goes into effect Jan. 1, will drastically reduce the availability of the Hawaii renewable energy tax credit for solar photovoltaic systems and threatens Hawaii's progress in promoting renewable energy and in weaning itself off fossil fuels, according to the lawsuit.

Sierra Club Hawaii Chapter Director Robert D. Harris said, "Since the Department announced it was cutting support for solar energy systems, we’ve heard from hundreds of our members across the state who say they will no longer be able to afford to install solar panels on their roofs. We’ve also heard of investors pulling out of several large-scale commercial projects because the reduced credit makes the projects unviable.  This goes completely against what the Legislature tried to accomplish in enacting and expanding the solar tax credit."

The legal challenge says the department's new rule conflicts with the law's aim of encouraging widespread adoption of residential and commercial solar energy systems, which are vital for Hawai'i to reach its goal of 40 percent of its energy coming from locally generated, renewable sources by 2030.

The Sierra Club says Hawaii has a strong reason to encourage a shift to renewable energy, especially rooftop solar energy systems.

Historically, Hawaii has relied on power from imported oil and coal for nearly all of its energy needs, at great expense to homeowners and businesses alike.  Bathed in sun year-round, Hawaii is well positioned to being the first state to shed its dependence on dirty, increasingly expensive fossil fuels, according to the Sierra Club.

"The Administration is wrongly slamming the brakes on one of the few success stories in achieving Hawai‘i’s clean energy goals," said Harris.

The department's new interpretation would slash the average tax credit to homeowners and businesses that install solar energy systems by about half.  It also threatens the future of thousands of solar energy workers in one of Hawaii's strongest growth sectors, according to environmentalists.

"By suddenly and dramatically clamping down on the solar tax credit, the Department is damaging a major engine of economic growth," said economist Thomas Loudat.  "The solar industry accounts for over 15 percent of all construction expenditures in the state.  When those companies start going belly up because folks can’t afford to install solar systems, we're going to have a lot of unemployed workers, which is going to impose huge costs on Hawaii's taxpayers."

The Sierra Club says the department changed its interpretation of the solar credit after asking the legislature to pass a similar reduction to the credit last session, which the legislature refused to do.

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