The New Mexico legislature passed The Clean Transportation Fuels Standard (HB 41). New Mexico Governor Michelle Lujan Grisham, who supported the legislation, is expected to sign it into law.

The bill provides the Environmental Improvement Board the authority to adopt rules setting a carbon intensity standard for transportation fuels and requires the New Mexico Environment Department (NMED) to maintain, develop, and enforce the carbon intensity of transportation fuels rules.

The rules shall:

1. establish a statewide technology-neutral clean transportation fuel standard;

2. apply the clean transportation fuel standard to reduce the carbon intensity of fuels in the state by at least 20% below 2018 levels by 2030 and at least 30% below 2018 levels by 2040;

3. establish technology-neutral mechanisms for generating obtaining, trading, selling and retiring credits among transportation fuel producers and market participants;

4. establish mechanisms for market operation, including mechanisms to stabilize and incentivize investment in the clean fuel market, verify compliance obligations and limit consumer costs amongst others;

5. require utilities to invest net credit revenue from clean fuel credit sales into projects that support transportation decarbonization, with at least 50% of such revenues supporting low-income and underserved communities and with investor-owned utilities receiving regulatory treatment consistent with Section 62-8-12 NMSA 1978;

6. consider and allow for coordination with program in other jurisdictions;

7. not discriminate against fuels solely on the basis of having originated in another state or jurisdiction;

8. establish a periodic review process that includes input from the advisory committee to review program performance and determine potential adjustments if deemed necessary after review;

9. allow for a deferral of the program based on emergency or forecasted conditions; and

10. establish permits and fees for regulated entities or credit generators to cover and pay for the costs of the department’s administration and enforcement of the program.

The states of California, Washington and Oregon have already adopted a Clean Fuel Standard. Numerous other states across the country, including Colorado, Illinois, Michigan, Minnesota, Nebraska, New York, and Ohio, are evaluating the adoption of such programs.