The Hawaii Supreme Court has rejected a deal between Hawaii Electric Light Co. and an independent power producer that plans to burn trees to produce electricity on Hawaii island. That decision creates new problems and delays for a project that already has been stalled for years.

The agreement between HELCO and a company called Hu Honua Bioenergy LLC called for the utility to buy power that would be produced by burning eucalyptus trees growing along the Hamakua Coast as well as other wood.

That deal was challenged by the nonprofit environmental organization Life of the Land, which argued the state Public Utilities Commission violated state law when it approved the power purchase agreement (PPA) in 2017 between Hu Honua and HELCO.

The court agreed, finding in an order issued Friday morning that when the PUC approved the power purchase agreement, it failed to “explicitly consider” the state’s goal of reducing greenhouse gases (GHG) which is required under state law.

This is the second power purchase agreement Hu Honua has negotiated with HELCO. HELCO terminated the first agreement.

Hu Honua, which now does business as Honua Ola Bioenergy, says the plant would produce 21.5 megawatts of power. Hu Honua was formed in 2008 to convert the old Hilo Coast Processing Company plant in Pepeekeo into a biomass plant that would burn trees. The plant formerly burned sugar cane waste material and coal.

Hu Honua has argued the wood-burning plant will help the state reach its ambitious goals for transitioning entirely from power plants that burn oil and other fossil fuels to plants that use renewable fuels. The company claimed in its filings the plant will “avoid the emission of hundreds of thousands of tons of CO2.”

The company has asserted that its operations will be carbon neutral, with the replanting of trees offsetting the carbon emissions of the power production process.

That is a position supported by the European Union and the U.S. Environmental Protection Agency under the Trump Administration.

But there are scientific studies that not only contradict that conclusion but suggest they could actually worsen the consequences of climate change. They contend that generating electricity from burning trees is not carbon neutral when considering the emissions from combustion, plus emissions from soil and logging, and from processing the wood.

The state Supreme Court already had ruled that state law requires the PUC to consider greenhouse gases in the fulfillment of all of its duties. According to Friday’s ruling, the fact “that the facility involved in the Amended PPA is a biofuel facility does not absolve the PUC of this duty. Thus, in approving the Amended PPA, the PUC was required to expressly consider the reduction of GHG emissions.”

The court found the PUC did not show in its 2017 decision that it had done so and sent the case back to the PUC to explicitly consider the greenhouse gas issue. It also ordered the PUC to hold a hearing that would give Life of the Land an opportunity to present evidence and its argument on environmental concerns about the plant.

Hilo-based ProVision Solar President Marco Mangelsdorf applauded the court’s decision.

“The court’s remanding of the PPA approval back to the PUC is great news on multiple fronts,” Mangelsdorf said. “First, it’s a clear recognition that there’s a big difference between a renewable energy source that puts greenhouse gases into the atmosphere and those which don’t. Second, the contract terms were atrocious for Big Island ratepayers, locking in the utility company for 30 years at an outrageously high power price. Finally, we can and must do better than burning stuff when it comes to new power generation.”

Hu Honua was disappointed in the high court’s ruling.

“The Hu Honua project is intended to be a clean, renewable source of firm 24/7 baseload energy that can replace existing fossil fuel plants on Hawaii island,” according to a written statement issued by Hu Honua. “Unfortunately, this decision will delay bringing more renewable energy to Hawaii island and ultimately prolong the continued GHG emissions from fossil fuel plants. Hu Honua has already expended approximately $200 million, and construction on the plant is nearly complete. We will work with the Public Utilities Commission and Hawaiian Electric Company to fully address the issues identified by the Court on remand so that the Hu Honua project can provide clean, renewable energy as soon as possible.”

Star-Advertiser reporter Tim Hurley contributed to this story.