HI HB1986

Requires the Hawaii Department of Transportation to adopt rules by January 1, 2028, establishing a clean fuel standard for alternative fuels, with implementation for diesel and gasoline beginning January 1, 2029.

Sets carbon intensity reduction targets of at least 10% below 2019 levels by 2035 and at least 50% below 2019 levels by 2045.

Creates a credit and deficit system where fuels with carbon intensity below annual standards generate credits, while fuels above standards generate deficits, with credits being tradeable and bankable.

Exempts fuels used by aircraft, railroad locomotives, military vehicles, and interstate waterborne vessels, though these sectors may opt in to generate credits when using alternative fuels.

Requires biennial reporting to the legislature on implementation status, emissions reductions, and market impacts, plus public informational sessions in each county following adoption.