According to New Mexico Environment Department Secretary James Kenney, roughly a dozen firms have approached the state about placing new hydrogen operations since regulators issued a discussion draft of the Hydrogen Hub Development Act in November.
He stated, “I believe that speaks volumes in terms of how this may assist our state.”
Following the bill’s presentation in the state House of Representatives, Kenney talked with NM Political Report via phone on Tuesday. Rep. Patricia Lundstrom, D-Gallup, who has seen a huge hydrogen project in her district, and Rep. Nathan Small, D-Las Cruces, are the bill’s sponsors.
In a news statement, Lundstrom stated, “This bill creates and protects excellent, family-supporting employment for New Mexicans while decreasing emissions and tackling climate change, putting our state as a leader in the equitable transition to a clean economy.” “We can’t stop climate change from happening, but we can utilize every tool we have to slow it down and reduce its effects.”
The law would give fiscal incentives as well as the possibility of forming public-private partnerships to construct regional hydrogen centers. The tax incentives favor hydrogen with a negative carbon intensity. This might include hydrogen produced from methane that would otherwise be vented or flared, such as landfill methane and decaying agricultural waste, according to Kenney. The measure would also set a greenhouse gas emission limit for electric generating plants that utilize hydrogen to generate electricity and are seeking tax breaks.
Hydrogen has downsides, and detractors argue that if used incorrectly, it might increase pollution. Protests marred the start of the parliamentary session, with one group interrupting the governor’s State of the State address to voice their opposition to proposed hydrogen incentives. According to a peer-reviewed study published last year, hydrogen created from natural gas methane can have more emissions than natural gas burnt. Natural gas is used to create the great majority of hydrogen energy in the United States, owing to its lower cost.
Although some environmental organizations, such as the Sierra Club’s Rio Grande Chapter, are suspicious about hydrogen, they admit that hydrogen created using renewable energy from non-fossil fuel sources might have certain applications. Most of the projects planned in New Mexico, according to a fact sheet produced by the Sierra Club’s Rio Grande Chapter, would “cause considerable climate and health damage – not mitigate it.”
Companies or government groups might seek to have a region designated as a hydrogen hub under the law. Renewable energy or natural gas pipelines, natural gas generators, or methane generators must be available in these areas. If fossil fuels are utilized to make hydrogen, the carbon dioxide produced must be permanently stored. The New Mexico Finance Authority would be in charge of a new hydrogen hub project fund, which would offer grants and loans if the bill succeeds. Tax incentives will be more generous for projects situated in the hubs.
The Sierra Club’s fact sheet also puts doubt on the state’s ability to trap carbon. Types of injection wells are classified by the US Environmental Protection Agency. A class six-well is the best well for injecting carbon for storage. There are no class six wells in New Mexico at the moment, however, studies are underway to drill them. One such research, which has obtained federal support, is looking at the possibility of storing carbon underground near the San Juan Generating Station. Following a proposal to upgrade the coal-fired power station with carbon capture technology, the decision was made.
Some of the applications that the bill enables for hydrogen, such as power generation, are best done using renewable energy sources like solar and wind, according to critics of the initiatives to establish a hydrogen economy in the state.
One of the governor’s top goals heading into this legislative session is the Hydrogen Hub Development Act.
Kenney stated, “The governor is calling for revolutionary legislation.”
He mentioned that several of the bills she supports are related to crime and social security.
“Hydrogen is a revolutionary moment for our economy and climate,” he remarked.
Kenney sees hydrogen as a critical component in achieving decarbonization goals and claims that the economic benefits will be felt across the state. Companies, for example, have indicated an interest in eastern New Mexico, where there is a lot of dairy production, according to Kenney. Methane is produced when waste from dairy farms, such as manure, decomposes. One carbon atom and four hydrogen atoms make up methane. The methane from manure may be split into carbon and hydrogen using renewable energy sources such as wind and solar. The hydrogen would then be used in a variety of industries, including the packaging of dairy goods such as cheeses, while the carbon would be caught and either buried underground or put to good use.
Kenney stated that hydrogen is already present in New Mexico and that government incentives are available to help the hydrogen sector grow. According to him, the state incentives contained in the Hydrogen Hub Development Act are meant to complement the federal ones.
The Escalante Power Plant was transformed from a coal-fired generating station to a natural gas-fired hydrogen generating plant. This power plant is in Lundstrom’s neighborhood. Meanwhile, BayoTech and PESCO, both based in New Mexico, have teamed together to create compact hydrogen generators.
Although hydrogen may be utilized to decarbonize the transportation sector, Kenney stated that promoting hydrogen does not mean that NMED would abandon its plans to rapidly expand electric vehicle charging infrastructure. He claims that electrifying various modes of transportation, such as heavy machinery, railways, and tractor-trailers, is difficult. The bill specifies which cars are eligible for hydrogen subsidies in terms of transportation. Buses, commercial vehicles, off-highway vehicles, railroads, leisure vehicles, road tractors, school buses, special mobile equipment, tank vehicles, and trucks or truck tractors are all examples of this.
New Mexico’s national labs have a long history of exploring and developing hydrogen technology. They inked a research and development agreement of understanding with state entities earlier this month.
The hydrogen economy could help New Mexico diversify its revenue streams, particularly as decarbonization efforts reduce demand for oil and gas, which are the state’s economic backbone.
Kenney stated that the corporations interested in settling in New Mexico would each bring hundreds of high-paying jobs to the state and that if the law does not pass, those positions will be taken by other companies.
