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Lawmakers table bill to expand hydrogen power in NM amid environmental concerns

Adrian Hedden
Carlsbad Current-Argus

New Mexico’s anticipated legislation to help build a hydrogen power economy in the state was tabled during the 2022 Legislative Session this week despite support from Gov. Michelle Lujan Grisham and her cabinet.

House Bill 4, which would enact the Hydrogen Hub Development Act was sponsored by Rep. Patricia Lundstrom (D-9) and Rep. Nathan Small (D-36) and would offer tax incentives to energy companies and other industries developing projects using hydrogen to lower carbon emissions.

The effort was a signature priority of Lujan Grisham's during the 30-day session.

It was tabled on 6-4 on Thursday by the House Energy, Environment and Natural Resources Committee.

During the six-hour committee hearing that was exclusively focused on HB 4, oil and gas industry leaders and economic development officials voiced support while environmentalists argued against hydrogen development as perpetuating fossil fuel pollution. 

A draft of HB 4 was released publicly in November 2021 and drew immediate criticism from New Mexico’s environmental community, with groups arguing hydrogen power still represented a fossil fuel as most present hydrogen energy in the U.S. is generated through the burning of natural gas.

Camilla Feibelman, director of the Sierra Club’s Rio Grande Chapter who spoke against the bill during Thursday's meeting said it would only support further fossil fuel-related development of hydrogen which she said could lead to continued air pollution and environmental damage in New Mexico.

"This is still an incentive bill for fossil-fueled hydrogen. Fossil-fuel hydrogen is a source of climate and air pollution at every point of production -- from upstream methane emissions to unproven and incomplete carbon capture to combustion on the ground,” she said.

“If anything, we should be regulating hydrogen. We just do not have time left in this climate crisis to be paying companies to add climate pollution."

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New Mexico Environment Department (NMED) Cabinet Secretary James Kenney said the version of the bill introduced Tuesday in the legislature was altered to alleviate some of those concerns.

The carbon intensity (CI) limit imposed on projects in the previous bill for them to qualify for incentives as lowered from 9 to 4, Kenney said. After July 1, 2028, it would lower further to a CI maximum of 3, per a fact sheet released by NMED.

Carbon intensity would also be considered throughout the supply chain, Kenney said, meaning if a project used extracted natural gas, it’s production and transportation would be included in the CI rating.

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He said the highest tax incentives would be prioritized for “carbon-negative” hydrogen projects that could sequester carbon emissions or absorb it from the air.  

Hydrogen electric generating facilities would be required to meet a limit of 375 pounds of carbon dioxide per megawatt hour generated to qualify for incentives and must use only “clean hydrogen” to generate electricity.

"I understand the environmental community had concerns about the industry stepping up,” Kenney said, “We worked very hard to mitigate those concerns."

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The bill would help the extraction industry decarbonize but could also benefit agriculture, food production and manufacturing, he said.

It could help lower emissions from diesel vehicles and other equipment, Kenney said, that were unable to benefit from renewable energy sources like wind or solar power.

Hydrogen can also be generated using renewables like wind and solar, which many labeled “green hydrogen.”

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Kenney said “about a dozen” companies were already showing interest in New Mexico due to the State’s recent efforts in the hydrogen sector.

“It’s really targeting low carbon projects,” Kenney said. “It’s allowing us to decarbonize industries we would be able to for years.”

But even with the release of the updated bill, environmentalists continued to oppose efforts to incentivize hydrogen development.

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Lujan Grisham contended the bill would serve as a path to diversify New Mexico’s economy while also pursuing the state’s climate change and pollution reduction goals.

She said she hoped the initiative would encourage the federal government to view New Mexico as a “hydrogen hub” to lead national development, as the administration of President Joe Biden planned to invest up to $8 billion to develop four such “hubs” around the country.

“By incentivizing clean hydrogen development through this legislation, we are steering this emerging industry toward a lower-carbon future,” Lujan Grisham said in a statement. “This is New Mexico’s chance to reap the vast economic and environmental benefits of clean hydrogen, and I urge legislators to think boldly and support the Hydrogen Hub Development Act.”

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Lundstrom said the bill would improve the state’s economy, establishing and growing a new industry that could employ New Mexicans.

Patricia Lundstrom was chairman of the Appropriations Committee.

“This bill creates and protects good, family-supporting jobs for New Mexicans, while reducing emissions and addressing climate change, positioning our state as a leader in the just transition to a clean economy,” she said.

“We cannot turn back the clock on climate change, but we can use every tool at our disposal to slow it down and mitigate its impacts.”

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U.S. Sen. Martin Heinrich (D-NM) also supported the growth of hydrogen development in his home state, introducing legislation in Congress last year to provide funds for research and development and calling on the Biden administration to focus its efforts on New Mexico which Heinrich touted as a leader in energy development.  

Upon HB 4’s introduction, Heinrich said the bill was the next step toward establishing an “economic driver” in the hydrogen sector.

"As we make strides toward electrification and clean energy generation, there will still be difficult to decarbonize sectors like heavy trucking, aviation, and parts of the industrial sector. Clean hydrogen will be critical in solving these challenges,” he said.

“By taking this step, New Mexico can become the nation’s leader in clean hydrogen production, research, and workforce development.”

Adrian Hedden can be reached at 575-618-7631, achedden@currentargus.com or @AdrianHedden on Twitter.