March 4, 2023

Clean fuel standards heads to House floor

A bill that aims to reduce emissions related to transportation fuels is headed to the House floor following a 5-3 vote in the House Government, Elections and Indian Affairs Committee on Saturday.

Discussion of HB 426 began on Friday and the debate continued for nearly two hours on Saturday prior to the party-line vote to advance the bill.

The bill aims to reduce the carbon intensity of fuels such as gasoline that are used for transportation in New Mexico by at least 20 percent compared to 2018 levels by 2030 and 30 percent by 2040.

HB 426 would task the Environmental Improvement Board with drafting and enforcing clean fuel standards. It would allow for trading of credits, although the sponsor, Rep. Kristina Ortez, D-Taos, repeatedly emphasized that it does not create a cap and trade system.

The bill states that credits can be generated by “regulated entities and producers, suppliers and other entities that enable the use of low-carbon-intensity transportation fuels.”

One example given is that a refinery that produced high carbon intensity gas may need to purchase credits. However, because refineries often produce multiple types of fuels, it could generate credits that would offset the high carbon intensity gasoline.

Investor-owned electric utilities or other electric utilities that participate in the credits program would be required to invest at least 50 percent of the revenue from selling those credits into transportation electrification that benefits disproportionately-impacted communities and all of the net proceeds generated from the sales must be used for transportation electrification.

Ortez said that the bill “creates an environment for us to decrease air pollution, which is so important especially around transportation corridors.”

She said it also creates an incentives program for low carbon transportation fuels and decreases greenhouse gas emissions.

“It attracts new and existing clean fuels businesses,” Ortez said. “That’s so important for our jobs, for our economic development, for our (gross receipts tax).”

She said it does not “turn New Mexico into California.”

Republicans expressed concerns that enacting clean fuel standards will lead to increased costs of gasoline at the pump, which would disproportionately impact low-income and rural communities.

The bill was amended to require consumer impacts to be considered. Ortez introduced the amendment at the start of the discussion on Friday.

“We ensure that consumer protections are reserved, that we are going into this process keeping in mind the prices, keeping in mind that we want to help consumers,” she said.

But Republicans continued to express concerns about the costs, referencing high costs of gasoline in states like California, Oregon and Washington that have adopted fuel standards.

“If we could promise…that we will not raise the cost of gas, I’d love that. But we weren’t able to promise that today…so I cannot support this bill,” Rep. John Block, R-Alamogordo, said prior to the vote.