New Mexico Democrats' push to pass legislation that would turn the state into a hub for clean hydrogen production faltered this week.
House speaker Brian Egolf's (D) office confirmed that he had moved HB 228 to the "speaker's table," which means it would not come to a vote if no further action was taken. The 2022 legislative session ended today, effectively killing the bill.
HB 228 was just the latest iteration of a proposal to boost clean hydrogen production in the state, an effort laid out as a priority for this year's session by governor Michelle Lujan Grisham (D).
"Pure and simple, we cannot meet our decarbonization goals as a state without hydrogen," said representative Nathan Small (D), who co-sponsored the initial bill.
The plan's supporters had hoped to offer increasingly generous tax incentives to companies based on the carbon intensity of their hydrogen production, but environmental groups contended that the proposed incentives were too generous and would delay the state's transition away from fossil fuels.
"A conversation as complex as that around hydrogen just requires more time," said Camilla Feibelman, director of the Rio Grande chapter of the Sierra Club, who wants to see more federal guidance on low-carbon hydrogen before New Mexico lawmakers consider future policies to boost the fuel.
While the New Mexico Environment Department's initial proposal suggested awarding incentives for projects with a carbon intensity equal to or less than 6kg of CO2 equivalent (CO2e) per kilogram of hydrogen produced, the maximum threshold had been reduced to 4kg CO2e/kg H2 by the time the bill was first introduced.
That legislation was put on hold by the House Energy, Environment, and Natural Resources Committee when it came for a vote in January, after Republicans and some Democrats voiced their opposition.
It was further updated to lower the maximum carbon intensity for qualified projects to 2kg CO2/kg H2. But Egolf tabled that bill last week before it could come to a vote in a new committee.
Representative Patricia Lundstrom (D), another sponsor of the initial bill, introduced another version that removed all proposed income tax credits for companies pursuing hydrogen projects, kept smaller provisions setting guidelines for hydrogen-related public-private partnerships, and established a fund that could dole out grants and loans to some qualifying hydrogen projects.
But this week, Egolf tabled the revised bill too.
Hydrogen has been an especially contentious issue for legislators all session. Last week, a Senate bill to allow electricity produced using hydrogen to count toward the state's clean energy mandate failed in committee.
New Mexico lawmakers this week finalized a state budget, which leaves out funds that are explicitly dedicated to boosting hydrogen. An earlier provision that allocated $125mn for a hydrogen hub project fund, which environmental groups criticized as excessive, was replaced in recent days with $50mn for a "public-private partnership project fund" to finance transportation and broadband projects. It is unclear whether future hydrogen projects could qualify for such money.
