The United States has more than 2,000 electric utilities, many of them much larger than the Hawaiian Electric companies on O'ahu, Maui and Hawai'i Island.

But the HECO companies stand out unenviably as the industry's largest user of petroleum for power. More than 85 percent of their electricity sales come from burning petroleum. That is bad news for both environmental quality and energy security.

The Natural Resources Defense Council and HECO have worked since January on part of the solution: replacing as much as possible of these fossil fuels with biodiesel. We recognize that biodiesel can be good or bad for the environment, depending on where and how crops used to make the fuel are grown.

We issued a draft proposal in June and got extensive comments from both the public and a panel of university experts. We have now completed our initial work (available at www.nrdc.org/energy and www.hawaiisenergyfuture.com). We took full advantage of many good suggestions. We have set a high bar and challenge all biodiesel users to insist on nothing less.

The new biodiesel purchase policy should be viewed as a complement, not a substitute, for continued HECO acquisition of energy efficiency and renewable power generation from wind, sun, ocean, geothermal and other sources. This policy is part of a broad strategy to continue to transform Hawai'i's utilities into a model of diverse, sustainable supply and efficient use.

Hawaiian Electric is committed to transition as soon as possible to biofuels sustainably produced from Hawai'i sources, drawing on tens of thousands of acres left fallow by the demise of sugar and pineapple. HECO pledges to give preference in procurement to biodiesel from local feed stocks, and to support programs to nurture an agricultural energy industry in the Islands.

A new Biofuels Public Trust Fund will help, working with interested parties to invest the net profits from HECO's partnership in a biodiesel production facility planned for Maui. The HECO/NRDC policy does not, however, address the merits of any specific biodiesel production or power generation facilities in Hawai'i.

Since Hawai'i producers will need time to create local biofuels to meet Hawai'i's needs, HECO must start with out-of-state sources. NRDC and HECO are well aware that many imported biodiesel feed stocks are unacceptable for compelling reasons, including human rights violations, poor soil management, and widespread clearing of tropical forests (often involving catastrophic fires) to grow the crops.

The new procurement policy fully embraces (and goes beyond) the criteria of the Roundtable on Sustainable Palm Oil. This international organization of more than 200 diverse and widely representative groups has been working for five years on standards for palm oil production.

Any palm oil HECO imports must meet or exceed all RSPO criteria (published at www.rspo.org), which impose upon growers and processors demanding and detailed requirements across a wide range of social, economic, cultural and environmental concerns.

The HECO/NRDC policy includes additional requirements which will apply to palm oil and other potential feed stocks. These prohibit new conversion of natural ecosystems to cultivate biodiesel crops and a ban on fire to clear land for new plantings. Independent auditors will monitor compliance and insure the integrity of all biodiesel bound for HECO power plants.

NRDC and HECO recognize that voluntary standards are not a cure-all. We support binding international agreements that protect forests and other biologically rich natural ecosystems and their inhabitants, while reducing global warming from all sources. We believe this new HECO procurement policy sends a clear market signal that will strengthen the foundation for mandatory sustainability standards.

When NRDC and HECO released the initial draft of this policy, public meetings were convened across the state. We got many questions about whether we endorsed all RSPO requirements for palm oil and whether the first shipments would have to comply. Our response appears unambiguously in the revised policy: All RSPO requirements will apply to all shipments, starting with the first.

So what's next? The new Biofuels Public Trust will be up and running in early 2008. HECO will report publicly on plans to implement the new policy within nine months, and a public statement of progress and any issues encountered will appear within 18 months — and annually thereafter.

NRDC and HECO look forward to working with concerned parties to meet these demanding goals and address any unforeseen problems. And we thank all who helped launch an important shift away from fossil fuels toward a thriving, environmentally friendly agricultural energy economy in Hawai'i.

Ralph Cavanagh is energy program co-director for the Natural Resources Defense Council. He wrote this commentary for The Advertiser.