New Mexico Gov. Michelle Lujan Grisham on March 5 signed legislation to establish a technology-neutral clean transportation fuel standard (CTFS) that aims to reduce the carbon intensity (CI) of transportation fuels by at least 30% by 2024. New Mexico is the fourth U.S. state to enact a low carbon fuel standard (LCFS), joining California, Oregon and Washington. 

“Clean fuel standards not only decrease emissions and move us toward our climate goals, but also diversify our economy and attract new businesses to our state,” Lujan Grisham said. “Thank you to the bill’s sponsors for their hard work in getting this important legislation across the finish line.”

The bill, HB 41, was passed by the New Mexico House of Representatives on Feb. 3 by a vote of 36 to 33. The New Mexico Senate voted 26 to 15 in favor of the bill on Feb. 13. By signing the bill, Lujan Grisham has concluded a multi-year effort by state lawmakers to establish a CTFS. Similar legislation was introduced in both 2021 and 2022.  In 2021, the New Mexico Senate voted in favor a bill to create a clean fuel standard (CFS), but the House failed to action on that bill. The following year, the New Mexico Senate again passed a CFS bill. The New Mexico House did vote on that bill but failed to pass it. 

New Mexico’s newly established CTFS will phase in, requiring the CI of transportation fuels used within the state to achieve a 20% reduction below a baseline 2018 CI level by 2030, ramping up to 30% by 2040. The legislation defines transportation fuel to mean electricity or a 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 legislation directs the New Mexico Environmental Improvement Board to promulgate rules to implement a CTFS program no later than July 1, 2026. Those rules would, in part, establish technology-neutral mechanisms for generating, obtaining, trading, selling and retiring credits among transportation fuel producers, fuel distributors and other individuals or entities in the transportation fuel market, including additional credit opportunities from activities and projects that support the reduction of greenhouse gas (GHG) emissions associated with transportation in the state. 

Clean Fuels Alliance America is welcoming New Mexico’s creation of a CTFS, noting the new law will help drive demand and open a new market for biodiesel and renewable diesel while spurring economic opportunity and creating cleaner air for New Mexicans. 

“New Mexico's passage of the Clean Transportation Fuel Standard marks a pivotal moment in the state’s commitment to a sustainable future,” said Cory-Ann Wind, Clean Fuels director of state regulatory affairs. “Cleaner fuels like biodiesel and renewable diesel will play a significant role in helping New Mexico reach its climate and air pollution goals.”

Jeff Earl, Clean Fuels director of state governmental affairs, highlights that endorsing clean fuels not only supports environmental goals but also contributes to reducing fuel costs.

“A study by the World Agricultural Economic and Environmental Services revealed that the availability of biodiesel increases the fuel supply, resulting in an average annual reduction of 4% in diesel prices at the pump,” Earl said. “We congratulate New Mexico on passing this landmark legislation and express gratitude to Gov. Lujan Grisham for championing its advancement.”

The Low Carbon Fuels Coalition is also applauding the new CFTS.  “This is a major win for an all-of-the-above approach in the second-largest oil and gas state in the nation,” said Robin Vercruse, executive director of the Low Carbon Fuels Coalition. “We and our many allies brought together an incredibly broad coalition to get the bill across the finish line this year.” 

“I am thrilled to see this bill signed into law,” said Lindsay Fitzgerald, vice president of government relations of Gevo Inc. and board chair of the LCFC. “The Low Carbon Fuels Coalition team and membership have been relentless in their dedication to getting the CTFS passed in New Mexico. This is great progress for clean fuels standards everywhere.”