New Mexico Enacts Clean Fuel Standard

Husch Blackwell LLP
In a vote that stretched into the evening, New Mexico’s legislature passed House Bill 41 by a 26-15 vote on February 13. The bill, which establishes a statewide program known as the “Clean Transportation Fuel Standards,” makes New Mexico the fourth U.S. state to enact a clean fuel standard (i.e., a marked-based set of policies designed to curb carbon emissions while incentivizing investment into renewable fuel projects and green vehicles). Oregon, Washington, and California have similar standards on their books.

California’s program, known as the Low Carbon Fuel Standard, has been especially successful to date, having essentially created a statewide renewable fuels market worth $4 billion annually and significantly advanced carbon reduction goals by rewarding generators of renewable transportation fuels with credits. The value of those credits spurred massive investment in renewable natural gas projects designed to deliver product gas to offtake buyers in California for ultimate use as transportation fuel, leading to the capture and repurposing of millions of metric tons of methane that, were it not for projects created in response to the value of those credits, would have been vented into the atmosphere. 

New Mexico’s bill, which aims at achieving results comparable to California’s, is the result of years of ongoing collaboration between state legislators and renewable fuel industry groups, including the American Biogas Council (which praised New Mexico politicians Kristina Ortez and Mimi Stewart for their efforts guiding the law through the state’s notoriously compressed legislative session) and the Low Carbon Fuels Coalition.

“After four years of working on this legislation, New Mexico is ready for clean fuels,” said Sydney Lienemann, Deputy Cabinet Secretary of New Mexico’s Environment Department. “Clean fuels will bring good paying jobs to all corners of our state while reducing air pollution and incentivizing new technologies for transportation.” The bill, which is scheduled for implementation in July 2026, is anticipated to generate a 20% emissions reduction by 2030 and a 30% reduction by 2040.

New Mexico currently boasts 16 operational renewable natural gas projects, but industry observers believe the potential exists for at least an additional 140 – 150 new systems. If constructed, those new projects would be expected to generate over $400 million in new, local investment, 3,600 construction jobs, and 239 permanent jobs. Further, because renewable natural gas projects capture and redirect methane before it can be emitted into the atmosphere, they present a real, near-term opportunity to improve local air quality. In New Mexico, where the American Lung Association estimates 1 in 7 residents suffer from air-related health issues, House Bill 41 is expected to significantly reduce healthcare costs by improving air quality.

“Our air quality is hitting New Mexicans in the wallet,” said Michelle Miano, Division Director of New Mexico’s Environmental Protection Division. “A clean fuels standard means cleaner air and a healthier New Mexico.”

“Congratulations, New Mexico, on taking an enormous leap forward to combat climate change while making the state a magnet for new, local investments,” said Patrick Serfass, executive director of the American Biogas Council. “We’re looking at you next, Hawaii, Illinois, Michigan, Minnesota, New Jersey, and New York.”

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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