It’s Time to Breathe New Energy into New Mexico with a Clean Fuel Standard

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Our more than 300 days of sunshine per year hide a silent danger: high ground-level ozone levels. Ground-level ozone is a harmful outdoor air pollutant that harms our lungs – especially on hot sunny days. According to the American Lung Association, 1 out of 7 New Mexicans suffer from a respiratory illness like asthma or COPD. And the annual cost of treating asthma is nearly 10% of the median per capita income for New Mexicans. New Mexicans cannot afford to keep relying on high-carbon fuels. 

A clean fuel standard simultaneously addresses one of New Mexico’s greatest health challenges while ensuring our state takes advantage of one of the greatest economic opportunities in generations – the clean energy boom and the economic diversification and workforce opportunities that come with it. 

The clean energy boom generated more than a third of a trillion dollars in private investment in the first six months of 2023. Clean energy is the biggest windfall available for New Mexico to take advantage of since oil was discovered here nearly a century ago. The clean fuel standard will bring this private investment here to our state while strengthening and diversifying our energy economy. 

Setting a carbon intensity standard for transportation fuels allows New Mexico to create a market that requires producers and vendors of high-carbon fuels to purchase credits from producers of low-carbon fuels. Over time, New Mexico can adjust the carbon intensity standard to allow for gradual adoption of cleaner fuels. A clean fuel standard is a sensible and measurable step to support innovations already underway by many in the oil and gas industry while encouraging investment in low-carbon fuels. 

HB 41 Fact Sheet - Authorizing a Clean Fuel Standard

Tribal Benefits from HB41, the Clean Fuel Standard

We've Heard You - Updates to Clean Fuel Standard Legislation in HB 41

How exactly does a clean fuel standard work? 

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The clean fuel standard is designed to reduce the carbon intensity of the state’s transportation fuel mix over time. This technology-neutral program allows the state to set a standard for the carbon intensity (i.e. amount of lifecycle greenhouse gas emission per unit of fuel energy) of transportation fuels such as gasoline and jet fuel. Producers or vendors of transportation fuels that produce low carbon fuels (i.e. fuels that are below the standard) generate credits to sell in the clean fuels marketplace. Producers or vendors of transportation fuels that produce high carbon fuels (i.e. fuels that are above the standard) obtain credits in the clean fuels marketplace.  

As an example, if an oil producer needs to purchase credits in the marketplace because its fuel falls above the carbon intensity standard, it can turn to a producer of a low carbon fuel such as renewable natural gas from a dairy to purchase clean fuel credits. The oil producer would then pay the dairy for the clean fuel credits and report the transaction to the state. 

Historically, these credit prices have ranged from $70-$200 per metric ton, and currently trade at about $170.

Any low-carbon energy company or fuel vendor, like renewable natural gas producers, utilities, and even school systems that operate fleets running on low-carbon fuels or using electric vehicles, can sell credits to benefit from the clean fuel market.  

A clean fuel standard program is not the same as a cap and invest program. 

How does this stimulate the economy? 

Clean energy in the 2020s is as much of an economic boom as we saw nearly a century ago when oil was first discovered in New Mexico. Scientific research shows that in the coming century the world must move away from high-carbon fuels. And reality and economics also show this won’t happen overnight.  

As an energy leader, New Mexico must weather this gradual transition by retaining its leadership position not just in oil and gas – but in all energy sectors during the coming decades. Implementing a clean fuel standard demonstrates that leadership by encouraging low-carbon fuel innovators to come to New Mexico while encouraging our existing high-carbon fuel producers to innovate cleaner production processes while giving them needed innovation time by operating within the status quo.  

Economic Impact of the Clean Fuel Standard Legislation in HB 41

Benefits to Rural NM of the Clean Fuel Standard

Won’t this raise gasoline prices? 

There is no statistically significant data that ties a clean fuel standard to price increases at the pump in states that have already enacted clean fuel standards. Many oil and gas producers are already innovating to decrease the carbon intensity of their fuels and improve extraction safety methods for environmental considerations.  

No Correlation Between Gas Prices and a Clean Fuel Standard

Whatever You Drive, We Have You Covered- Clean Fuel Standard Legislation

Why is this program needed now? 

With each year, investment in clean fuels development technologies and energy diversification and advancement only increases across the nation. At the same time, the ground-level ozone readings in many communities in New Mexico continue to be too high and neighborhoods along transportation corridors bear the brunt of high-carbon fuels. A clean fuel standard in New Mexico will help improve our state’s health, help diversify our economy and help bring our carbon output levels down. 

We worked with numerous stakeholders in advance of the 2024 Legislative Session to ensure New Mexico receives all the benefits of a Clean Fuel Standard. House Bill 41 (HB41), Authorizing a Clean Transportation Fuel Standard, has passed both houses of the New Mexico Legislature and has been sent to Governor Michelle Lujan Grisham for signature. You can track the bill's progress here. We appreciate the input NMED has received from the many stakeholders.

Health Impact of the Clean Fuel Standard Legislation in HB 41

Who supports a clean fuel standard for New Mexico?

The Speaker of the 25th Navajo Nation Council, Crystalyne Curley, has written a letter to James Kenney, Secretary of the Environment Department, to inform him that the New Mexico Council Delegates Caucus of the 25th Navajo Nation Council supports HB 41.

The following companies have written letters to New Mexico legislators supporting a clean transportation fuel standard in the state:

CompanyType of businessExcerpt from letter
3DegreesGreenhouse gas accounting, environmental markets"A CTFS will reduce greenhouse gas emissions to mitigate climate change and the resulting droughts, wildfires, and other catastrophic effects in New Mexico."
ChargePointOperator of large EV charging network across North America"In New Mexico, a state that sees a high amount of interstate freight transport, a CFS program would significantly help gas stations and rest stops invest in charging infrastructure to serve the medium and heavy-duty EV fleets of tomorrow that will create less air and noise pollution as they traverse the state."
Clean EnergyLarge provider of renewable natural gas in North America"The Clean Transportation Fuel Standard is a critical tool not only to effectively meet carbon emission reduction targets, but also as a mechanism that fosters technological innovation, supports a robust market for alternative fuels, provides long-term investment certainty and stimulates job creation and investment."
Green PlainsProducer of cleaner low-carbon biofuels and renewable feedstocks for advanced biofuels"Clean transportation fuels standards are proven to . . . reduce air pollution, decrease pollution-related health costs, narrow the persistent inequity in pollution exposures and health effects, create high-paying jobs, catalyze new investments and broad benefits to state economies, and even offer more affordable fueling options for drivers when crude oil price spikes drive up gasoline prices."
New Mexico Gas CompanyLargest natural gas utility in New Mexico"The legislation creates a market-based approach resulting in the use of cleaner transportation fuels, assisting New Mexico in achieving emissions-reduction objectives."
NGVAmericaRepresents more than 200 companies, environmental groups, and government organizations interested in the promotion and use of natural gas and biomethane as transportation fuels"New Mexico has an abundance of crop, dairy and other animal farms, some of which are already producing RNG and other bio and renewable fuels, providing economic opportunity for many rural areas of New Mexico."
OberonFocused on dimethyl ether (DME) transportation fuel made from renewable biomass including biomethane from agricultural operations"A New Mexico Clean Fuel Standard would positively impact the project opportunities in New Mexico and enable the regions where the feedstock is located to benefit from the emissions reductions of local DME consumption as well as the creation of local, family-wage, clean energy jobs."
RivianManufacturer of EVs and EV charging infrastructure"Passage of CTFS legislation would cement the state’s position as a national leader and round out a comprehensive approach to addressing emissions from the transportation sector"
Suburban PropaneNationwide marketer and distributor of propane, heating oil, electricity, etc. "In addition to the significant reduction in carbon emissions, clean transportation fuel standards incentivize fuel producers to innovate and develop ultra-low carbon, carbon-neutral, and even carbon-negative fuels in order to meet or exceed the annually-decreasing carbon intensity benchmark and maximize the reduction in the carbon intensity of the energy they produce. This leads to further economic development and good-paying job creation in the fast-growing clean energy industry."
Velocys, Inc.Developer of technology that enables the production of sustainable fuels to help decarbonise global aviation". . .one promising aspect about New Mexico is the significant opportunity to integrate future biorefinery operations with carbon capture facilities and thereby produce fuels which have a negative carbon footprint. A clean transportation fuel standard would certainly encourage our company to evaluate developing biorefinery and carbon capture projects in New Mexico. Such a facility would be a multi-$billion investment."

Updated 2/16/2024

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