February 3, 2022

Clean Fuel Standard Act heads to Senate floor

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A bill aimed at reducing emissions from motor vehicles received a do pass recommendation on Wednesday from the Senate Finance Committee on a 6-4, party-line vote.

The Clean Fuel Standard Act, Senate Bill 14, now heads to the Senate floor. Mimi Stewart, D-Albuquerque, sponsored the bill. Stewart also brought the bill last year and it passed the Senate but the session ended before it could clear the House of Representatives.

The committee discussed the bill on Tuesday before returning Wednesday morning to vote. An amendment reverting the appropriation for a carbon credit program to the general fund passed prior to the vote. 

This amendment came following concerns expressed by the Legislative Finance Committee about including appropriations language in the bill. In the fiscal impact report, the LFC stated that earmarking money for the newly-created fund would reduce the Legislature’s ability to establish spending priorities.

“When we started doing this last year, we heard from 20 companies who wanted to move to New Mexico or expand their operations here,” Stewart said. “We’re now up to 28 businesses that are supporting this. So we’re conservatively estimating that we’re going to get at least 1,600 permanent jobs, 2,300 construction jobs. This is just good for our economy. We think we’ll have an additional benefit of $240 million in investment in facilities and infrastructure if we move forward with this bill.”

The Clean Fuel Standard Act is one of the pieces of legislation backed by Gov. Michelle Lujan Grisham as part of an effort to address climate change. One of the main concerns expressed about the bill was the impacts that it will have on the cost of gasoline. 

Sen. Crystal Diamond, R-Elephant Butte, expressed concerns about the bill’s potential impacts on agricultural producers.

“Not only do we stand to have an increase to consumers in fuel prices, but then also at the grocery store they’re going to feel the impacts of legislation like this,” she said.

If passed, the Environment Improvement Board would draft rules creating a clean fuel standard. This includes a reduction of the carbon intensity by at least 20 percent from the 2018 levels by 2030. By 2040, that reduction in carbon intensity would be at least 30 percent less in 2040 than it was in 2018.

Businesses that make, import or refine fuels for motor vehicles would be required to meet those standards. Those businesses would be able to use carbon credits to meet those goals.

Stewart said the bill does not apply to fuel retailers like gas stations.

Credits can be earned by reducing greenhouse gas emissions and the businesses can sell those credits to other businesses that need them to meet the requirements for reducing emissions. Any business, regardless of economic sector, is able to generate those credits by reducing emissions. While the credits cannot be traded with California, Washington and Oregon, who have similar clean fuel standards, New Mexico companies will be able to sell fuel produced in the state in other markets where clean fuel standards exist.

“A clean fuel standard will clean up the air along our interstates and highways,” Stewart said.

The bill also addresses electric utilities, requiring them to invest the money that they earn from credits into the electrification of transportation.

House Bill 2, the budget bill, includes $650,000 in funding for the New Mexico Environment Department’s proposed Climate Change Bureau. That bureau would be tasked with implementing the clean fuel standard. This is significantly less than NMED says it needs to support the bureau.

NMED Environmental Protection Division Director Sandra Ely said the clean fuel standards would be “a giant leap forward in our climate change strategy.”