FACT SHEET: New Mexico HB6 (2022) Clean Future Act

HB6: The Clean Future Act (On the Governor’s Call)

Sponsors: Rep. Nathan Small, Spkr. Egolf, Rep. Roybal Caballero, Sen. Siah Correa Hemphill

As New Mexicans experience prolonged drought, devastating forest fires, unprecedented heat waves, and pollution from industries right here at home, we must prioritize just climate solutions that protect our people and preserve our air, water, and climate.

The clean-energy transition is a once-in-a-generation opportunity to diversify our economy, raise new revenue, and create good jobs in growing industries along the way, in addition to tackling the climate and health impacts we already see across New Mexico. For our climate, our health, and our economy it’s time to open new doors to a clean future for every New Mexico community.

The Clean Future Act sets ambitious requirements of a 50% reduction of climate pollution in New Mexico by 2030 and at least 90% by 2050. Because New Mexico’s carbon emissions have increased since the 2005 baseline, this would represent a 64% reduction of current levels of climate pollution by 2030. The bill doesn’t allow offsets to meet the 2030 target and limits emissions that can be offset by 2050 to 10% of 2005 levels, making this one of the most stringent limits anywhere.

The Clean Future Act would require emissions reductions, rules, and accountability:

• Emissions 50% below 2005 levels by 2030. Because emissions have increased since 2005, this would represent a 64% reduction from current levels by 2030. The bill does not allow offsets to meet the 2030 target.
• Net-zero emissions in 2050 and beyond, including minimum 90% direct emission reductions. Any remaining emissions between the 90% reduction and zero emissions must be offset by reductions elsewhere that would not have been achieved otherwise. Offsets cannot exceed 10% of 2005 levels and would not be allowed before 2030.
• Consultation with overburdened communities and prioritization of reducing impacts in those communities when establishing regulations. Consultation will be used in development of climate policies that address disproportionate impacts and improve our understanding of how climate change affects those communities. When developing regulations, the state must consider prioritization of reductions in overburdened communities.
• Annual reports from state agencies on total emissions, emissions reductions, impacts of climate change on disproportionately impacted communities, and whether additional policies to reduce emissions are necessary.
• A statutory deadline for proposed regulations requiring that the state Environment Department petition the Environmental Improvement Board to create rules to reduce emissions from sources covered by the state Air Quality Control Act.

The draft bill has improved in some key areas, but needs some improvements:

• How greenhouse-gas emissions are defined will be critical to facilitate effective regulation and achieve emission reductions consistent with a stable climate future. The definition in the current draft should be expanded and clarified and needs to ensure that regulators have all necessary authority to enforce targets covering all major sectors.
• Legislation should require NMED to initiate a rulemaking earlier than 2025 to support meeting 2030 targets. This remains an issue – we can’t afford to wait 3 more years for rulemaking.

To achieve these new requirements, New Mexico will have to begin a thoughtful transformation to clean energy and away from fossil fuels. A recent Gridlab report shows the immense possibility of the Clean Future Act. By 2030, our modeling shows we’d need reductions amounting to:

• 95% climate pollution reduction in the power sector
• More than 90% reduction in upstream oil and gas methane emissions
• At least 55% electric vehicles as a percentage of new passenger vehicle sales
• 20-30% emissions reductions from commercial and residential buildings
• 70% electric furnaces and water heaters as a percentage of new sales
• Full compliance with reductions in all emitting sectors

From Gridlab/Evolved Energy analysis

Frequently Asked Questions

• What’s the best part of this bill? This bill creates firm greenhouse gas pollution limits and requires the Environmental Improvement Board to adopt rules to meet those limits. It ensures emissions reductions and accountability. Over 50% of greenhouse gas emissions currently come from oil and gas. So even if every sector reduced all of their emissions we wouldn’t meet the statewide 50% reduction without oil and gas making major reductions.
• Why does the bill mention fees? The bill allows the collection of fees from polluters to cover administrative costs of regulation.
• Why does the bill include mention of carbon capture and sequestration? The bill mentions CCS as a means of direct emission reduction or reductions associated with excess emissions reduction credits, which would involve capturing and sequestering carbon at polluting facilities. The bill does not require or in any way incentivize this technology and without economic incentives, CCUS is still too expensive to build. Over a dozen states require similar limits to power sector emissions and allow for this technology in their GHG reductions bills but none has been built. The proven direct reductions will likely dominate. The US EPA, rather than the state, currently has authority to regulate and permit any potential CCUS projects in New Mexico.
• What are excess emissions reductions? This is a new part of the bill that ensures the state counts and credits reductions above and beyond the required level by regulated sources. The ‘excess’ reductions must be quantifiable, verifiable and permanent reductions in greenhouse gas emissions. Use and any trading of these credits is subject to protocol and rule development by NMED.
• Does the bill allow offsets? Offsets represent reduced emissions that would not have been achieved otherwise. To be clear, offsets can be misused. But the bill requires development of a thorough and transparent process to verify that any offsets represent new emission reductions. The bill also requires clear protocols for any use or trade of offsets, including consultation with overburdened communities, to help minimize the risk of  harm to those communities.
• How much of total emissions reductions can be achieved through offsets? Offsets play a limited role in the bill. They cannot be used to comply with the 50% target by 2030. Instead, the 2030 target must be achieved through direct emissions reductions. The extent of offset use to achieve the 100% target by 2050 will be determined in subsequent rules, but the maximum emissions they could displace in 2050 is 7.5 million to 7.8 million metric tons, representing 10% of 2005-level emissions. In other words, the 2050 target must be reached with at least a 90% reduction of direct emissions.
• What were 2005 emissions levels? Inventory sets the 2005 baseline at 75.6 million metric tons. Emissions have increased by about 50% between 2005 and today.
• Why might we need offsets for the last 10% of emissions? Some emissions sources are difficult to decarbonize directly, such as aviation and cement manufacturing. While we hope to find ways to decarbonize these emissions sources directly, some offsets may be necessary as we pursue those solutions. Well designed offsets also create an opportunity for investment in improved forest management, grazing and other projects that can benefit New Mexico lands and communities. According to the gridlab graphic, the bulk of remaining emissions in 2050 is from “natural and working lands” – these have also been cited as potential carbon sinks through healthy soils, reforestation and other measures.
• Could offsets justify continued pollution in low-income communities and communities of color past 2050? Offsets should be about allowing time to figure out difficult-to-decarbonize sectors — and never about justifying emissions in communities that are already disproportionately burdened by pollution. The bill does contain language providing that offset rules consider “disproportionately impacted” and “environmental justice” committees, and, climate advocates are committed to strengthening equity provisions and ensuring the greatest possible direct pollution reductions in low-income communities and communities of color, both in the near and long term.
• How does this bill address oil and gas in people’s backyards now? The bill includes emissions from the extractive industry. Modeling by GridLab/Evolved Energy suggests that to meet the 2030 target, methane emissions will need to be reduced by on the order of 95%. This will likely result in substantial public health benefits and also provide communities with a powerful tool to protect themselves from oil and gas development.
• How important are the rulemakings described in this bill?  The rulemaking will be essential and controversial. We will need all hands on deck to ensure the best outcomes for communities and the climate.

Sierra Club-Rio Grande Chapter * Environmental Defense Fund * 350NewMexico * NM Café * Southwest Energy Efficiency Project (SWEEP) * Western Environmental Law Center * Climate Advocates Voces Unidas * Conservation Voters New Mexico * OLÉ * New Mexico Wild * Western Resource Advocates * Power4NM * NRDC * NM Native Vote * La Semilla Project * Dreams In Action NM * NM Interfaith Power and Light