Economic development secretary: Fuel standards 'definitely' priority for N.M. in 2022

Jun. 14—An effort to create a statewide clean fuel standard as part of a larger plan to reduce New Mexico's carbon footprint and spur investment in a renewable energy economy ran out of gas during the 60-day legislative session earlier this year.

While the proposed law passed the state Senate on a party-line vote, it died in the House of Representatives as lawmakers shifted their focus to other pieces of legislation.

Expect the proposal to make a comeback in 2022.

Economic Development Secretary Alicia J. Keyes told lawmakers Monday a clean fuel standard is "definitely" going to be a legislative priority next year.

"We really want to get it over the finish line next session," she said during a meeting of the Economic Development and Policy Committee. "The governor has committed to putting it on the call."

The proposal, which would have required fuel producers and importers to gradually reduce the carbon intensity of transportation fuel, sparked concerns it would lead to higher gas prices for consumers — a concern that remains today.

"There's no such thing as a free lunch," said Paul Gessing, president of the Rio Grande Foundation, an Albuquerque-based free market think tank that opposed Senate Bill 11 during the legislative session. "There's going to be additional costs and inevitably those will be passed on to the consumer. It's kind of economics 101."

The bill aimed to reduce the carbon intensity of transportation fuels through a market-based credit program. It didn't apply to fuel retailers like gas stations.

"I just think there's going to be tremendous costs to motorists," Gessing said. "There's going to be tremendous challenges to just providing the fuel process the way that the state wants it to be processed. It's going to be a very problematic situation."

The state Economic Development Department, which teamed up with the Environment Department to pass the bill, has said the impact on the consumer at the pump was "negligible" in two other states that have adopted a clean fuel standard.

"Oregon and California reported no discernible impact on retail prices," according to a department PowerPoint presentation.

The department and supporters of the bill have said such a standard would go a long way toward combating climate change. In New Mexico, the transportation sector is the second-largest emitter of greenhouse gases, behind the oil and gas industry.

While a clean fuel standard is expected to have a positive impact on the environment and public health, it's also projected to stimulate growth in the state's economy.

"When you look at the data from the two other states that have passed a low carbon fuel standard, in California and Oregon, you see the employment and also the amount of infrastructure that has gone into those states really increased," Keyes said.

"I didn't understand the gravity of it until we introduced this and [Environment Secretary James Kenney] and I were receiving phone calls from so many big companies in the energy space that wanted to put infrastructure in New Mexico if this passed," she added. "So, this is something that can really help those communities that have traditionally been reliant on coal to help transition into something like hydrogen. This will be a huge priority for us coming up."

Keyes noted major auto companies, such as Toyota, Honda, BMW and Volvo, have committed to a clean fuel technology. She said GM announced plans to become carbon neutral by 2040, and Boeing Co. will begin delivering commercial airplanes capable of flying on 100 percent biofuel by the end of the decade.

"This is the future," Keyes said. "If we put the infrastructure [and legislation] in place right now, I think we're going to put ourselves in line for a lot of incentives that could potentially come down federally also."

Bruce Krasnow, a spokesman for the Economic Development Department, said a lot of companies have an eye out for clean fuel investments and are "trying to find places where this is a thriving industry."

"If we can offer a place where they can get these economic credits for doing the right thing, New Mexico can really benefit and be ahead of other states who also trying to attract these companies," he said. "In fact, if there's a national standard that eventually is implemented by the Biden administration, New Mexico would be a step ahead as far as having a place where companies can go and do this innovation, can try these technologies, can create jobs and hire people."

Follow Daniel J. Chacón on Twitter @danieljchacon.