The Aloha State has joined a growing list of states considering policies that could dramatically raise costs for local businesses and households. Lawmakers in Honolulu are advancing legislation that would make energy companies strictly liable for historical emissions, with a proposed price tag of $10 billion.
Similar to New Jersey legislation recently discussed in this blog, the text of the Hawai’i bill describes this multibillion-dollar charge as “remedial,” rather than regulatory or punitive. But in practice, it would operate as a massive, targeted financial penalty on energy companies that have done business in Hawaiʻi, imposed decades after the fact and with little regard for how those costs ultimately flow through an island economy that already struggles with some of the highest prices in the nation.
Below, we look at two ways this proposal could affect Hawaiʻi households. Additional details on the methodology appear at the end—but first, the numbers.
One Catastrophic Wave
If energy companies serving Hawaiʻi were required to pay the full $10 billion in a single year—and if those costs were passed through to consumers—the result would be a staggering burden on local families. In this scenario, the average Hawaiʻi household could see annual cost increases of roughly:
- $12,043 more in transportation costs, in a state where nearly everything arrives by ship or plane;
- $6,343 more in electricity bills, compounding already high energy prices; and
- $1,504 more in pass‑through costs from other affected businesses
That adds up to $19,890 per household—well over the cost of a year’s in-state tuition at the University of Hawaiʻi at Manoa.
Or a Long, Expensive Drip
The bill also allows companies to spread payments over 24 annual installments, rather than paying the full amount upfront, with companies paying 8% of the total cost in year one and 4% per year for the next 23 years. If all targeted companies chose that approach, and if those costs were passed on to Hawai’i consumers, the average cost per household in year one would be:
- $963 more in transportation costs
- $507 more in electricity bills
- $121 more in pass‑through costs from other goods and services
That works out to $1,591 per household in year one, dropping to $796 in each of the subsequent 23 years. Though this amount is far smaller than the bulk payment scenario described above, it would still be hard new burden for many families to bear.
No Matter the Path, Hawaiʻi Pays
Supporters of the bill may argue that reality would fall somewhere between these two scenarios. Some companies might pay upfront, while some might opt for installments. Others may suggest companies will simply absorb the costs, or spread them across multiple states to minimize local impacts.
But experience and common sense suggest otherwise. Large new costs rarely disappear into the ether. And because more than a dozen other states are considering similar policies, many of the same companies targeted by this bill could face overlapping liabilities elsewhere at the same time, limiting their ability to spread costs.
For an island state like Hawaiʻi—where energy, transportation, and imported goods already face severe upward cost pressure compared to mainland states—the risk of higher prices hitting local families is especially acute.
A Note on Methodology
The proposed legislation would make companies “with a sufficient connection with the State” that participated in the fossil fuel value chain between 2000 and 2018 strictly liable for a proportional share of the cost of climate adaptation projects, totaling $10 billion.
As described above, targeted companies could choose to pay their assessed share either all at once or in 24 annual installments. For clarity, we modeled two scenarios:
- Single‑year payment: All targeted companies pay immediately, creating a one‑year impact of $10 billion.
- Installment payments: All companies choose the 24‑year plan, resulting in a year‑one impact of $800 million, falling to $400 million in each of the subsequent 23 years.
To estimate household impacts, we allocated costs across major sectors—electric, transportation, commercial and industrial (these last two combined as pass-through costs from other goods and services)—based on each sector’s proportional contribution to carbon emissions, using the Energy Information Administration’s latest data. Sectoral costs were then divided by the number of households in Hawaiʻi, assuming full pass‑through to consumers.
Because there is no public list of companies that would be targeted, we do not attempt to model company‑specific liabilities. Instead, this approach offers a realistic snapshot of one way that costs could ripple through Hawaiʻi’s economy under the bill as written.
