Carbon credit swap proposal moves forward in committee

Party line vote advances bill; supporters include energy lobbyists while skeptics range from Ag to climate activists

By: - January 21, 2024 10:16 am

Democrats, climate nonprofit representatives and some utility companies like the Public Service Company of New Mexico and Exxon Mobile praised the bill as a step in the right direction. (Photo by Anna Padilla for Source NM)

A bill that could limit the carbon intensity of transportation fuels such as gasoline and diesel faced eclectic support and opposition in the House Energy, Environment and Natural Resources Committee on Saturday as people from both political wings took varying sides on the issue.

House Bill 41 seeks to lower carbon intensity by rewarding fuel companies for investing in cleaner options by allowing them to purchase carbon tax credits that it can then sell to companies that are producing high-carbon fuels like traditional gasoline and diesel. 

Producers that make high-carbon products will have to purchase carbon credits to be allowed to continue manufacturing such items.

The bill passed the committee on a party-line vote of 7-4.

Bill sponsor Rep. Kristina Ortez (D-Taos) said it was time for New Mexico to capitalize on growing investments in clean energy. She estimated that the passage of the bill would lead to up to $240 million in new investments in clean energy, creating 1,600 or more new jobs.

Last week, the United States Department of Agriculture announced $19 million in grants for U.S. business owners in 22 states to expand the production of biofuels, which blend ethanol into gasoline. This includes $4.9 million for Love’s Travel Stops & Country Stores to retrofit 704 new ethanol pumps at stations across 18 states, including those in Albuquerque. 

“Without this bill, the new energy boom that we’re experiencing all around the country will leave New Mexico behind,” Ortez said at Saturday’s committee hearing.

Reactions across the board

In the nearly five-hour hearing, Republicans and lobbyists for agriculture and small petrol producers criticized the bill for having too many unknowns and argued it would pass costs on to consumers. Supporters said that the bill would not affect gasoline prices, drawing skepticism from Republicans in the committee.

“That would be the first business cost I knew or ever heard of that didn’t get passed on to the consumer,” said Rep. James Townsend (R-Artesia). “Somebody pays. And that’s what I think most people have not fully grasped.”

Others who spoke in public comment claimed the bill didn’t take all stakeholders in account and some groups were excluded.

Climate activists also criticized the bill for not going far enough to compel industries to meaningfully reduce emissions, calling carbon credits “gimmicks” to allow industries to continue polluting at the same rate.

“This not only allows producers to make more money without achieving any environmental benefits, but also raises doubts about the credibility of these offset programs,” said Destiny Ray, an activist with the climate nonprofit Earth Care. “We need laws that result in effective, new and permanent emissions-reducing activities.”

Democrats, climate nonprofit representatives and some utility companies like the Public Service Company of New Mexico and Exxon Mobile praised the bill as a step in the right direction. 

“For too long, this state, the fossil fuel industry has considered the health effects collateral damage,” said Jim MacKenzie, co-coordinator of the climate nonprofit 350 New Mexico. “It’s time we take the health effects of this industry as real people. They are not only costs, they are people who hurt.”

In contrast to smaller energy producers, Exxon Mobile representatives said the bill would be a cost-effective and efficient way to reduce emissions faster.

The bill aims to reduce emissions by 20% by 2030, resulting in a decrease of 16 million metric tons of carbon emissions over six years – less than 10 million metric tons short of emissions released in a year in New Mexico, according to the Environment Protection Agency.

According to the American Lung Association, one in seven New Mexicans has a respiratory condition like asthma or chronic obstructive pulmonary disease. The annual cost of treating asthma is about 10% of New Mexico’s median income of, which is about $3,100 in health care costs per person, per year the study shows.

Republicans argued the decrease in emissions would be insignificant and would require a high cost for little reward.

“I think we’re really trying to do something here, but we can’t quantify it,” said Rep. Rod Montoya (R-Farmington). “We’re hoping that it will help with asthma and other breathing issues, and we don’t know how or how much. And with the numbers presented earlier, I don’t think it’ll make a difference at all.

Future revenue source for the state?

The proposed legislation is a reflection of similar plans enacted in Oregon, Washington and California. In Washington, the state’s first auction of carbon credits netted $300 million.

New Mexico’s bill would require companies that sell credits to invest the revenue in infrastructure projects. An amendment to the bill that did not come in on time to be heard in the committee changed the language to stipulate that 50% of the investments must go toward low-income and underserved communities.

The credit swap program would be run by the New Mexico Environment Department that can collect fees on transactions.

While Rep. Angelica Rubio (D-Las Cruces) ultimately voted yes on the bill, she reiterated concerns that the bill did not go far enough to protect communities of color that are disproportionately affected by climate change and environmental racism. 

Much of the frontline communities in oil and gas production in the state are immigrants and people of color.

“Organizing is slow and governing is that much slower,” Rubio said. “I hope that in my tenure serving in this committee and in this institution that we’ll one day truly prioritize the needs and challenges of tribes, frontline communities and youth through real action in the way, if not more than, that we do for extractive industries and car culture.”

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Megan Taros
Megan Taros

Megan Taros is a freelance reporter for Source NM. She is born and raised in the harbor area of Los Angeles where she began her career covering higher education and local government. She previously launched the South Phoenix beat at the Arizona Republic where she covered race and equity in one of the largest communities of color in the state. She also launched the Latino affairs beat at the Times-News in Twin Falls, Idaho. She is a graduate of the Columbia University Graduate School of Journalism where she covered racial and economic inequality in Queens, New York.