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How does it work?
Clean Transportation Fuel Program credit market basics
A broad range of companies, utilities, and organizations who import or produce fuel used for transportation must register in the program through the Application, Reporting, and Compliance System (ARCS) and generate credits or deficits.
Companies and organizations earn credits or deficits depending on if their specific fuel or fuels are above or below the corresponding annual carbon intensity standard.
- Fuel with a lower carbon intensity than the standard generates credits.
- Fuel with a higher carbon intensity than the standard incurs deficits.
Registered participants pay fees, report fuel use, transfer credits to offset deficits, if needed, and submit periodic compliance reports to NMED.
After each compliance period, credits are accounted for or “retired.” If a participant has fewer credits than deficits, the balance is recorded as a deficit. Participants with a deficit balance must acquire and retire credits.
Those with a credit balance may “bank” credits or sell them to generate revenue.
Enforcement of the program
The New Mexico Environment Department (NMED) prioritizes a collaborative approach to ensure compliance with the Clean Transportation Fuel Program. The department focuses on providing technical assistance to help participants meet program requirements. When NMED identifies potential non-compliance through data reviews or site inspections, it may issue a notice of non-compliance to inform the participant and encourage a swift resolution.
NMED generally reserves formal enforcement — such as taking corrective actions or pursuing civil actions — for instances where a participant fails to cooperate or refuses to take the necessary steps to return to compliance. Nonetheless, NMED reserves its ability to take any enforcement action that may be necessary to protect public and environmental health. See the rule section to learn more.
Funding the program
The program issues and collects fees from program participants to fund its implementation. NMED announces an annual budget, allows for public input, and then distributes the fees according to deficit and credit generated in the previous reporting periods.
