Clean Transportation Fuel Standard

With the passage of House Bill 41 in March 2024, the State of New Mexico became the fourth state in the U.S. to authorize a Clean Transportation Fuel Standard (CTFS).

New Mexico’s CTFS program (1) establishes a statewide carbon intensity standard for transportation fuels and (2) creates a marketplace to buy, trade, and sell credits based on whether fuels are above or below that standard.

Companies producing or importing fuels above the carbon intensity standard — an objective way of measuring carbon throughout the lifecycle of a fuel — would have to buy credits in order to sell those higher carbon fuels in New Mexico. Companies producing or importing fuels with carbon intensities below the standard would generate credits for their lower carbon fuels to sell.

The ultimate goal of the marketplace is to reduce the overall pollution from transportation fuels used in New Mexico and incentivizing fuel producers and importers to decline their carbon footprint in order to avoid having to purchase costly credits. Importantly, the CTFS is not the same as a cap-and-invest program.

New Mexico’s CTFS authorizing law establishes the framework for the CTFS program, and NMED is currently developing a regulatory proposal to present to the Environmental Improvement Board that will govern how the CTFS program operates. The law requires the Environmental Improvement Board to enact regulations to initiate the CTFS program no later than July 1, 2026.

In furtherance of creating the most beneficial CTFS program for New Mexico, NMSA 1978, Section 74-1-18(B) directed the Environment Secretary to convene a CTFS Advisory Committee to provide technical input to inform development of CTFS rules. The Environment Secretary convened the CTFS Advisory Committee from June 21 to July 26, 2024. Announcements, agendas, and minutes were posted and published as required by the Open Meetings Act. Announcements, notices, agendas, minutes, recordings, copies of presentations, written public comments, and procedures from the CTFS Advisory Committee meetings are below, as are the CTFS Advisory Committee’s Technical Report and public comments on that report.

• New Mexico CTFS Advisory Committee: Technical Report (final; adopted and issued on July 26, 2024): https://service.web.env.nm.gov/urls/jeDOxDem
  
  • Notice of Correction: https://service.web.env.nm.gov/urls/YuAIEqEG
    
• Public Comments: https://service.web.env.nm.gov/urls/nSXXMtpl
  
  • The public had an opportunity to provide written comments to NMED on the CTFS Advisory Committee: Technical Report from 5:00 PM MT Friday, July 26, 2024, through 5:00 PM MT Friday, August 2, 2024.

June 21, 2024, CTFS Advisory Committee Meeting Information:

Meeting Announcement:

• English: https://service.web.env.nm.gov/urls/SSBcMegW
• Español: https://service.web.env.nm.gov/urls/FQwtNJPo

Meeting Agenda:

• English: https://service.web.env.nm.gov/urls/GYxRsoZO
• Español: https://service.web.env.nm.gov/urls/bvRqpBNr

Meeting Minutes, Recording, and Copies of Presentations:

• Minutes: https://service.web.env.nm.gov/urls/YhAfnpCE
• Recording: https://youtu.be/hb-wlHnyxQc
• Presentations: https://service.web.env.nm.gov/urls/dtQjbPmN

June 28, 2024, CTFS Advisory Committee Meeting Information:

Meeting Announcement:

• English: https://service.web.env.nm.gov/urls/KUJzJzFX
• Español: https://service.web.env.nm.gov/urls/IvQUByRA

Meeting Agenda:

• English: https://service.web.env.nm.gov/urls/zDhPPoeM
• Español: https://service.web.env.nm.gov/urls/vHFfujZu

Meeting Minutes, Recording, and Copies of Presentations:

• Minutes: https://service.web.env.nm.gov/urls/OZfBIAEE
  • Notice of Correction: https://service.web.env.nm.gov/urls/YuAIEqEG
• Recording: https://www.youtube.com/watch?v=IYyobTA2-OU
• Presentations: https://service.web.env.nm.gov/urls/WTVWDuFM

July 12, 2024, CTFS Advisory Committee Meeting Information:

Meeting Announcement:

• English: https://service.web.env.nm.gov/urls/eEtNsnPD
• Español: https://service.web.env.nm.gov/urls/iECcCoDB

Meeting Agenda:

• English: https://service.web.env.nm.gov/urls/HOyhaNYt
• Español: https://service.web.env.nm.gov/urls/MTMxmIHn

Meeting Minutes, Recording, and Copies of Presentations:

• Minutes: https://service.web.env.nm.gov/urls/JxnBjlFG
  • Notice of Correction: https://service.web.env.nm.gov/urls/YuAIEqEG
• Recording: https://www.youtube.com/watch?v=PhyFe2C6JcE
• Presentations: https://service.web.env.nm.gov/urls/vnfinMCR

July 26, 2024, CTFS Advisory Committee Meeting Information:

Meeting Announcement:

• English: https://service.web.env.nm.gov/urls/jVfnzakX
• Español: https://service.web.env.nm.gov/urls/PtWQbEgb

Meeting Agenda:

• English: https://service.web.env.nm.gov/urls/xopWHZBu
• Español: https://service.web.env.nm.gov/urls/nqEkDznQ

Meeting Minutes, Recording, Copies of Presentations:

• Minutes (draft): https://service.web.env.nm.gov/urls/WKtEPUjZ
• Recording: https://www.youtube.com/watch?v=P35w6n88ifw
• Presentations: Not applicable.

The CTFS Advisory Committee adopted its 2024 Open Meeting Compliance Procedures (final; adopted and issued on June 28, 2024), available here: https://service.web.env.nm.gov/urls/hxZbZnmp.

With the issuance of the CTFS Advisory Committee Technical Report, the CTFS Advisory Committee has now been dissolved. However, NMED anticipates convening additional advisory committees in the future for periodic review of CTFS rules per Section 74-1-18.

CTFS Advisory Committee Members:

Name:	Affiliation:
Alaric Babej	Public Service Company of New Mexico (PNM)
Amy Brown	Adelante Consulting, Inc.
Anthony Willingham	Electrify America, LLC
Brian Bartlett	Valero Energy
Cara Lynch	Coalition for Clean Affordable Energy
Cory-Ann Wind	Clean Fuels Alliance America
Dalva Moellenberg	New Mexico Mining Association
Daniel Klein	Twenty-First Strategies an Libertad Power
Eduardo Barrientos	ExxonMobil
Ethan Epstein	New Mexico Tax Credit Alliance
Evan Rosenberg	SRECTrade
Gabriel Pacyniak	UNM School of Law Clinic
Graham Noyes	Sustainable Aviation Fuel Producer Group
Jane Sadler	RMI
Jed Smith	Rio Valley Biofuels, LLC
Jessica Gregg	Carbon America
Joseph (Joe) Sorena	Chevron Products Company
Kari Buttenhoff	Christianson PLLP
Karl Feldman	Individual
Lloyd Funk	Phillips 66
Luis Reyes	Kit Carson Electric Cooperative
Matthew Weyer	Taos Ski Valley
Michael Teague	ONEOK
Robert Hagevoort	NMSU Dairy Extension
Sam Wade	Coalition for Renewable Natural Gas
Teresa Sosa	El Paso Electric Company
Tiffany Wallace Polak	Occidental Petroleum
Todd Trauman	Energy Mission Control, Inc. dba FuSE
Tom Dollmeyer	Individual
Travis Madsen	Southwest Energy Efficiency Project
Viswanath Krishnamoorthy	Qynergy Corporation

Anyone or any entity interested in participating in development of the CTFS rules may do so in multiple ways:

• Request a meeting with the NMED rulemaking team by submitting a meeting request form.
  • If you use this option and don’t hear back within three business days, please reach out to the NMED rulemaking team at cleanfuel.standard@env.nm.gov.
• Once NMED has petitioned the Environmental Improvement Board (EIB) with the proposed rules, and the EIB has agreed to consider the rules:
  • Provide comments to the EIB through a comment portal after NMED informs the public when it opens.
  • Participate in the public engagement meetings that NMED will be hosting on the CTFS rules and program, which are anticipated to take place virtually and in-person at various locations across the state.
  • Appear at the rulemaking hearing to address the EIB directly in-person on the proposed rule as part of that proceeding.

The best way to stay informed of updates is to subscribe to NMED’s Climate Change Bureau’s listserv.

NMED’s Climate Change Bureau (CCB) plans to propose CTFS rules to the EIB by the end of 2024. 

The process starts by NMED submitting proposed rules to the EIB and requesting the EIB hold a rulemaking hearing to determine if the rules should be finalized. At the time EIB grants NMED’s hearing request, CCB will issue notices, including identifying the time and place of the hearing, hold public meetings and facilitate public participation opportunities, engage with Pueblos, Tribes and Nations on the draft rules, and continue to meet with interested persons and entities on rule language. To meet its notice requirements, CCB will publish all notices in English and Spanish on this website, in the New Mexico Register, and in at least one newspaper of general circulation — in this case, at least the Albuquerque Journal.

At the rulemaking hearing, NMED and potentially other interested parties will present testimony on the proposed rules to the EIB. All those interested in participating will have a reasonable opportunity to provide comments to EIB at the hearing. The EIB will then deliberate and decide whether to adopt the rules. If the EIB adopts the rules, NMED will file the rules with the New Mexico State Records Center and Archives (SRCA) and the SRCA will publish the rules in the New Mexico Register. The rules become effective thirty days after filing with the SRCA, unless a later date is provided in the rules. CCB anticipates the current rulemaking to be one of many rulemakings on the CTFS given the complexity of the CTFS program.

Experience in other areas with a CTFS program has shown that a CTFS not only decreases harmful emissions but also provides economic growth, jobs, and more fueling options for consumers. Adelante Consulting estimates that in New Mexico the CTFS program could generate 1,600 permanent jobs, such as process engineers and delivery drivers, and 2,300 yearly construction jobs by 2030 – providing an estimated value of $470 million in workforce benefits. Furthermore, a CTFS program provides drivers in New Mexico with greater fuel choices for their vehicles, which will reduce sole source reliance on traditional fossil fuels and has the potential to reduce all fuel market prices due to increased fuel competition.  

First, investment in clean fuel technologies and energy diversification is increasing across the nation – and business decisions are being made now that will affect clean job opportunities in the state. This program is needed now to ensure those clean jobs and industries select New Mexico for their investments.

Second, the state of New Mexico is on a carbon reduction timeline per Executive Order 2019-03, Addressing Climate Change and Energy Waste Prevention, which directs the state to reduce its greenhouse gas emissions by 45% by 2030 from 2005 levels. The Leap Ahead Analysis Assessment, authored by New Mexico Bureau of Geology & Mineral Resources, the state’s geological survey, points to severe impacts from climate change for our state, including an average temperature increase of 5 to 7 degrees Fahrenheit, decreased water supply, and increased frequency and intensity of wildfires. Meeting this goal is imperative for New Mexico, as it continues to do its part to address the climate crisis.

The CTFS is not a silver bullet for the climate crisis for New Mexico, but as a “comprehensive market-based program that sets emission limits to reduce carbon dioxide, and other greenhouse gas pollution, across New Mexico,” it is one key policy and regulatory strategy identified in the Executive Order to assist in helping us achieve our state goals.

Third, according to New Mexico’s authorizing CTFS law, the initial CTFS program must be adopted by the Environmental Improvement Board promulgate rules to implement a CTFS program no later than July 1, 2026. Thus, NMED is currently working to ensure this timeline is met by drafting rules to present them to the Board for adoption. See “What is the timeline for the rulemaking?” above for more information.

Under New Mexico’s CTFS laws, the CTFS requires a participating utility’s net revenue from the CTFS program to support transportation decarbonization projects — with at least fifty percent of such revenues supporting people living in low-income and underserved communities.  Combined with other transportation policies, the CTFS program can lower air pollution, which often disproportionately impacts people who live in low-income communities.  

Gasoline and diesel prices change due to several factors, including underlying demand, crude oil prices, distribution and marketing costs, refining costs, and state excise taxes. Research with data from states that have had CTFS-like policies in effect show that the cost of clean fuel credits are not correlated with and have not led to a demonstrable increase in prices at the pump. Many oil and gas producers are already innovating to decrease the carbon intensity of their fuels. The CTFS program gives these producers and clean fuel innovators incentives to make the change to cleaner fuels happen faster.