Earthjustice, representing the Sierra Club, is challenging in state circuit court the Hawaiʻi Department of Taxation’s 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 November 9, 2012 and goes into effect January 1, 2013—will drastically reduce the availability of the Hawaiʻi renewable energy tax credit for solar photovoltaic systems and threatens Hawaiʻi's progress in promoting renewable energy and in weaning itself off fossil fuels.
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 Hawaiʻ to reach its goal of 40% of its energy coming from locally generated, renewable sources by 2030.
Hawaiʻi has a strong reason to encourage a shift to renewable energy, especially rooftop solar energy systems. Historically, Hawaiʻi has relied on power from imported oil burned in diesel generators for nearly all of its energy needs, at great expense to homeowners and businesses alike. Bathed in sun year round, Hawaiʻi is well positioned to being the first state to shed its dependence on dirty, increasingly expensive fossil fuels.
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 Hawaiʻi's strongest growth sectors.
Among the hardest hit from the rule change are lower-income groups, including many local households that cannot afford to install solar systems without an adequate credit.
The Department changed its interpretation of the solar credit after asking the State Legislature to pass a similar reduction to the credit last session, which the Legislature refused to do.