After being placed on the speaker’s table and struggling to make it through committees, hydrogen legislation attempts failed last year during New Mexico’s legislative session. But the formation of the Western Interstate Hydrogen Hub (WISHH) and the U.S. Department of Energy’s encouraged recommendation on a concept paper the coalition of western states submitted may have changed attitudes toward developing the fuel.

State Rep. Patricia Lundstrom, D-Gallup, is optimistic as she drafts a new piece of legislation focused on hydrogen.

Lundstrom sponsored several of the unsuccessful bills last session. This year, she told NM Political Report, the bill will have a more narrow, targeted focus.

“We’ve often talked about diversification of our economy. This is the perfect way to do it. It’s got a lot of federal support,” Lundstrom said.

New Mexico Environment Department Cabinet Secretary James Kenney said that the encouraged recommendation may garner more support from state lawmakers for legislation to support building a hydrogen economy in New Mexico. That legislation, he said, could help WISHH’s efforts to receive federal grant money.

The WISHH proposal includes eight anchor tenants, or businesses that the states have partnered with. These businesses, Kenney said, have committed to spending their own resources and capital to build upon federal funding should WISHH be awarded the hydrogen hub funding. Five of those anchor tenants are located in New Mexico, including the Tallgrass Energy proposal to retrofit the closed coal-fired Escalante Generating Station in New Mexico so that it can use hydrogen to create electricity.

Kenney said the next steps for WISHH involve developing a more detailed application about how the four states would spend the federal money if awarded it.

Hydrogen debate

Proponents say that hydrogen can create a clean fuel that will cut emissions from hard to decarbonize sectors like transportation while also providing baseload power to ensure a reliable electrical grid.

While hydrogen is among the most abundant elements, it is not readily available. To get it, the hydrogen atoms must be broken off of other molecules such as water or methane.

That is where the different classifications of hydrogen energy come in.

Most of the proposed projects focus on what is known as blue hydrogen. Blue hydrogen is derived from methane. That methane comes from natural gas.

That is why opponents say hydrogen power will lead to continued reliance on fossil fuels and emissions related to the extraction and transportation of natural gas. 

Additionally, once hydrogen is broken off of the carbon atoms in the methane molecule, the carbon must be captured and sequestered underground in deep reservoirs. Opponents point to limited successes with carbon capture.

They further say that the market for hydrogen is moving toward green hydrogen—or hydrogen that is created from water.

Mona Blaber, communications director with Sierra Club’s Rio Grande Chapter, said green hydrogen is preferable to blue hydrogen, especially in light of the amount of emissions leaking from natural gas production in areas like the Permian Basin in New Mexico.

She said the Sierra Club chapter is more likely to support legislation that would restrict which types of hydrogen are allowed in New Mexico than it is to support legislation that would include incentives for hydrogen production. 

However, in an arid environment that has struggled with water scarcity, some have concerns about using a vital resource for hydrogen production.

Kenney said that New Mexico views hydrogen as a way to meet emission reductions needed to mitigate climate change. He said using “dirty” hydrogen would be counterproductive to those efforts.

Many of the proposals he’s seen for hydrogen in New Mexico involve what he calls “clean” hydrogen. He said that means using something like waste from dairy cattle or brackish water to create the hydrogen.

Blaber said only a small percentage of hydrogen can actually be considered a clean source of energy and she said that should be focused on the hard to decarbonize sectors.

“I don’t think the state of New Mexico needs to subsidize that,” she said.

She said incentivizing renewable energy is a much quicker and more direct solution toward cutting emissions than retrofitting a coal-fired power plant like New Mexico’s Escalante Generating Station to run using hydrogen.

The Escalante project involves using natural gas to create that hydrogen and Blaber said that means methane leakage.

“A solar and storage plant could provide the same amount of power a lot cheaper,” she said.

Blaber said there are better uses of state money than incentivizing hydrogen. For example, she said, the money could be used to fund more positions for inspectors at the environment department so it would be better able to enforce regulations.

Federal legislation

The federal Infrastructure Investment and Jobs Act, which the president signed in 2021, included funding for four hydrogen hubs in an effort to develop the technology needed to make hydrogen a reality.

Those would include both blue and green hydrogen hubs as well as what is known as hydrogen produced using nuclear energy, including “pink” hydrogen that uses nuclear power to split the hydrogen atoms in water from the oxygen atoms. While blue and green hydrogen has dominated the discussions in New Mexico, there has been little conversation about nuclear energy and hydrogen. 

After the hydrogen legislation failed to pass last year, the governor brought New Mexico into a partnership with Utah, Wyoming and Colorado, forming WISHH. 

Together, the four states submitted a proposal to the U.S. Department of Energy to have one of the hydrogen hubs be a regional effort that they would share. The infrastructure law allows for regional hubs, which would be a network of producers, consumers and related infrastructure.

Encouraged recommendation

On Dec. 27, WISHH learned that the Department of Energy’s Regional Clean Hydrogen Hubs program gave its proposal—contained in a concept paper—an “encouraged” recommendation. It was one of 33 of the 79 proposals to receive that endorsement.

The Department of Energy program either gave proposals the encouraged notification or the discouraged notification.

The submitters of the 46 concept papers that received “discouraged” were essentially told not to expend more resources on the effort as their proposals were unlikely to meet the requirements for the hydrogen hubs program.

WISHH’s concept paper receiving the “encouraged” notice does not mean that the proposal will receive the federal funding. Even if only applicants that received the “encouraged” notification were to apply, the Department of Energy is anticipating a competitive process. The total request for funds of the 33 proposals that received “encouraged” notifications was about $33.5 billion, far exceeding the $6 billion to $7 billion allocated for the hydrogen hubs.

WISHH asked for $1.25 billion, of which approximately $355 million could come to New Mexico.

The full application deadline is April 7.

Potential legislation

Lundstrom said last year the legislation she sponsored was broad because she did not know what the federal government’s hydrogen hub efforts would look like. 

Kenney said last year’s legislation included two parts: tax credits and public-private partnerships. The tax credits that New Mexico was considering implementing to encourage development of hydrogen-related industries are similar to those that were incorporated into the federal Inflation Reduction Act. 

He said a public-private partnership bill could help with WISHH’s April 7 deadline by showing that New Mexico is not just after the federal grant money.

“It’s still important that we think about how we encourage the hydrogen economy in New Mexico,” Kenney said. “How do we continue to separate ourselves from the other applicants?”

He said attitudes in New Mexico may have changed in the last year in regards to hydrogen.

“Last year I think the public was not as educated and willing to go down that path with us,” he said.

President Joe Biden’s support of hydrogen and the federal funding opportunities and tax credits have helped shape the conversation and educate people about the possible fuel, he said.

“Even some of the environmental community has recognized that we don’t get to net zero or climate goals without hydrogen,” Kenney said.