The Senate Conservation Committee passed a bill Thursday that is intended to lower the carbon intensity of transportation fuels through the use of a carbon credit market.
The bill, HB 41, passed on a party-line 6-3 vote, with Democrats supporting its passage.
Bill sponsor Rep. Kristina Ortez, D-Taos, started the discussion by discussing potential benefits such as cleaner air and reduced respiratory illness. She also said the bill would spur economic development.
One of the main reasons people have cited for opposing the clean transportation fuels standards is the potential impact to prices at the pump since the states that have enacted clean transportation fuel standards tend to have higher gas prices.
“There’s been lots of fear-mongering around the gas prices,” Ortez said.
She argued that the states that have the program also have other factors affecting gas prices.
Robin Vercruse, the executive director of the Low Carbon Fuels Coalition, also addressed those concerns during her public comment.
“This claim is based on two false or flawed assumptions. The first is contrary to basic economic theory in supposing that market competition will actually raise prices,” she said. “The second is that the compliance cost, in this case the cost of credits in the program, will be passed directly to consumers. Theoretical studies reflect that assumption when they assign a cost per gallon. But here’s the thing: Real world data shows that is not the case. If the cost is passed directly to consumers, gas prices would rise and fall based on credit prices. However, there has been no correlation between credit prices in these programs and gasoline prices. That means these programs do not work in the real world as speculative studies would suppose.”
Environmental advocacy groups are split in their thoughts on HB 41. Conservation Voters New Mexico has made it one of the group’s priority bills this session. But New Mexico No False Solutions opposes it.
Alejandría Lyons with New Mexico No False Solutions said that in states like California where the low carbon fuel standards have been implemented, this program “has been used as a loophole for a lucrative pollution tax credit scheme.”
Additionally, she argued that biogas from factory farms should not be seen as a clean energy source.
Much of the debate in the committee focused on the potential cost to consumers. Sen. Steve Neville, R-Farmington, argued that it could lead to higher refinery costs and noted that alcohol-based fuels are not necessarily lower carbon intensity than gasoline.
Ortez said that some of the oil and gas operations may start investing in cleaner technologies like renewable diesel or green hydrogen rather than paying the increased costs of refining to meet the lower carbon intensity standards.
Sen. Steven McCutcheon II, R-Carlsbad, said that if the fuel costs increase it will have ripple effects in the economy.
But Ortez said the transactions on the clean fuel market occur “so high up in the supply chain that the consumer never sees them.”
She further said that the oil companies that support the bill have their own carbon emissions goals and are already investing in technology to lower the carbon intensity.
“They’re already looking at hydrogen plants, they’re looking at renewable diesel plants,” she said. “We want all that investment to come here to New Mexico for New Mexico families and to ensure that we have economic growth in all areas.”
HB 41 has already passed the House of Representatives on a 36-33 vote. It now heads to the Senate Finance Committee.