New Mexico Introduces Clean Fuel Standard Limiting Emissions Of Transportation Fuels

New Mexico Introduces Clean Fuel Standard Limiting Emissions Of Transportation Fuels - Carbon Herald
Credit: Jennifer Latuperisa-Andresen | Unsplash

Similar to California, Oregon, and Washington, New Mexico is moving forward in establishing a limit on transportation fuels emissions. Last week, the Governor of New Mexico signed House Bill 41 (“HB 41”) into law – a new bill establishing a Clean Fuel Standard (CFS) aiming to reduce the carbon intensity of transportation fuels. 

According to the new standard, there will be annually decreasing carbon intensity targets for certain covered transportation fuels against a set baseline coupled with a credit market. Fuels generated within the state with a lower carbon intensity than the limit are able to generate carbon credits, while those with higher carbon intensity than the applicable target will generate a deficit. New Mexico is required to finalize the rules for the implementation of the program by July 1, 2026.

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Some of the guidelines of the bill include:

  • The transportation fuels used in New Mexico will have to achieve a 20% reduction in lifecycle greenhouse gas emissions against a 2018 baseline carbon intensity by 2030 and a 30% reduction by 2040.
  • The fuels covered are: “electricity or any liquid, gaseous or blended fuel, including gasoline, diesel, liquefied petroleum gas, natural gas, hydrogen and electricity sold, supplied, used or offered for sale to power vehicles or equipment for the purposes of transportation.”

The text also includes further details on the eligibility of fuels produced out of state to generate credits, the banking of credits, subject to yet-to-be determined holding limits and a direction of “participating utilities” to use revenues from credit sale to invest in electrification infrastructure development.

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Next, the regulation requires the New Mexico Environmental Improvement Board to establish an advisory committee to advise on the development of rules related to the CFS and periodically review them. The advisory committee must consist of transportation fuel producers and distributors, utilities, tribal groups, environmental groups, local governments and others.

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