• Hawaii will require transportation fuel carbon intensity to fall at least 10% below 2019 levels by 2035 and 50% by 2045.
• The state becomes the fifth in the U.S. to enact a clean fuel standard, following California, Oregon, Washington and New Mexico.
• Consumer protections include a $200 credit-price ceiling in 2026 dollars and a state review if compliance costs exceed 15 cents per gallon.

Governor Josh Green has signed legislation establishing a statewide Clean Fuel Standard aimed at sharply reducing emissions from Hawaii’s transportation sector.

Senate Bill 2999, enacted as Act 258, sets a minimum 50% reduction in transportation fuel carbon intensity from 2019 levels by 2045. It also creates a market-based credit system intended to attract investment into cleaner fuels, electric transportation and locally produced energy.

The measure makes Hawaii the fifth U.S. state to enact a clean fuel standard. California, Oregon, Washington and New Mexico have adopted similar policies.

Hawaii sets phased transport emissions targets

Under the law, the Hawaii Department of Transportation, or HDOT, must establish rules governing the program by January 1, 2028.

The standard for gasoline and diesel will then take effect beginning January 1, 2029.

HDOT must establish annual carbon-intensity targets under a phased reduction schedule. The targets must reach at least 10% below 2019 levels by 2035 and 50% below 2019 levels by 2045.

Transportation represents Hawaii’s largest source of lifecycle greenhouse gas emissions. The legislation therefore puts the sector at the center of the state’s wider decarbonization strategy.

“A resilient Hawaiʻi is defined by sustainable systems,” said Governor Green. “These investments reinforce a commitment to building co-beneficial models, allowing economic opportunities to give way to a cleaner, low-carbon future.”

The program will measure emissions across a fuel’s lifecycle, including feedstock production, fuel production and transportation. HDOT will use the Argonne National Laboratory GREET model for those calculations.

Credit market aims to drive cleaner investment

Rather than mandating a single technology, Hawaii will create a performance-based market.

Cleaner fuels that fall below the annual carbon-intensity benchmark can generate credits. Gasoline, diesel and other fuels above the benchmark generate deficits. Regulated companies can trade or bank credits for future compliance periods.

The framework could expand opportunities for renewable electricity, biofuels and fuels produced from waste materials. Electric utilities and charging providers will also be able to generate credits from electricity used for transportation.

At least 50% of the overall credit value generated by electric utilities and public agencies must support electrified transportation programs benefiting underserved or overburdened communities.

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“This is a huge opportunity to create new reinvestment in lower-cost, cleaner transportation options for local residents, using a model already proven in other states,” said Senator Chris Lee, introducer of SB 2999.

The legislation could also create new markets for Hawaii’s agriculture, waste management and renewable energy industries. State lawmakers identified materials such as used cooking oil, agricultural waste and renewable electricity as potential resources.

Consumer costs built into governance framework

Affordability has been built directly into the law’s compliance structure.

HDOT must establish a credit clearance market and cap the maximum credit price at $200 in 2026 dollars, adjusted annually for inflation.

The department must also calculate and publish the program’s per-gallon consumer cost for gasoline and diesel each year.

If the compliance cost exceeds 15 cents per gallon, HDOT must publicly assess within 60 days whether consumer protection measures are necessary. Possible responses include easing the carbon-intensity schedule, activating the credit clearance market or introducing other cost-containment measures.

“Governor Green’s signature on SB 2999 empowers HDOT to set a clear, actionable framework for clean fuels that considers all of our state goals including economy and affordability,” said HDOT Director Ed Sniffen.

Regular reporting, public information sessions and stakeholder consultation will form part of the implementation process.

For investors and fuel suppliers, the legislation creates a long-term regulatory pathway for cleaner transportation investment. For Hawaii, it also addresses a broader strategic vulnerability: an island economy heavily dependent on imported fossil fuels.

The 2045 target now puts transportation policy alongside energy security, affordability and local economic development as Hawaii works toward a lower-carbon economy.