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What is the Clean Transportation Fuel Program?
The main goal of New Mexico’s Clean Transportation Fuel Program is to reduce the overall climate pollution from transportation fuel used in New Mexico.
To accomplish this, the program:
- Establishes annual statewide carbon intensity standards for transportation fuel
- Allocates credits and calculates deficits for importers, producers or dispensers of fuel in New Mexico based on whether their fuel is above or below that carbon intensity standard.
- Creates a marketplace where fuel providers can meet the carbon intensity standard by generating or acquiring program credits.
Carbon intensity is a measure of how much climate pollution a fuel creates over its entire life — from production to end use. It is calculated based on the amount of greenhouse gases released per unit of energy consumed or produced, expressed in grams of carbon-dioxide equivalent per megajoule.
The program applies to most transportation fuel imported and produced in New Mexico for use in cars, trucks, and other vehicles.
Generally, companies that import or produce high-carbon-intensity fuel, like gasoline or diesel, must meet the carbon intensity standard by:
- Reducing their fuel’s carbon footprint,
- Generating credits from importing or producing low-carbon fuel,
- Using banked credits, or
- Buying credits.
Companies producing low-carbon fuel, like electricity or biofuel, may generate credits, which they may use to further expand low-carbon fuel production and transportation in New Mexico.
Fuel importers and producers are incentivized to reduce their carbon footprint to avoid having to purchase credits.
The program is not a cap-and-invest program; it only applies to one greenhouse gas-emitting sector, and the state does not collect and redistribute revenue from the program.
