No matter how often the legislature says no, hydrogen advocates find ways to circumvent that process and continue their work. Today we learned that HB 12 has been pulled and is effectively dead. Nonetheless, bill sponsors Reps. Nathan Small and Margaret Dixon are also chair and co-chair of the House Appropriations and Finance Committee (HAFC), and when you hold those positions, you can make legislation on your own — no need for votes of other committees. Read On!

For the last two sessions, I’ve been struck by how often appearances deceive and solid ground is nowhere to be found. Last year, we saw Speaker Egolf use all his Speaker powers to carve a path to pass HB132 to lower small loan rates to 36%. Egolf used all his wiles to first introduce the bill with a funding request, making the bill “germane,” then stripping the bill of funding so it needn’t have to go to House Appropriations where Rep. Lundstrom would have killed it. Finally, he appointed a new House member to House Judiciary, ensuring that it had the votes to pass through the committee where it had been hijacked the prior year. Effectively, it was a one-man show of legislative manipulation, in this instance, in service of poor people, not industry. Recall that Egolf had almost single-handedly killed predatory lending reform in 2021. But in 2022, he flipped and the bill got through. But manipulation of the legislative process can take many forms, and the 2023 session has already packed a full session’s worth of manipulation and twists and turns, and we are barely past the halfway mark.

When I heard HB12 was pulled my initial reaction was euphoria, almost tear-evoking. Then the other shoe dropped. I was tipped off that buried on page 196 of HB 2, the overall House budget, there was an allocation of $50M “for public-private partnerships to seek matching federal funds for advanced energy-related projects.” This is precisely the language and the allocation amount that had been contained in HB 12 to support public private partnerships work on carbon sequestration. The House budget bill, HB2, has passed through the House and is now in the Senate. Hence, despite not receiving a single vote in either chamber, the funds to advance HB 12’s purpose are practically on the Governor’s desk with HB 2, only needing to pass through Senate Finance and then the Senate floor.

So, despite multiple legislative defeats in 2022 and now in 2023, NM hydrogen work has been moving along undeterred on multiple fronts. Aside from sneakily inserting $50M in the state budget for carbon sequestration, NM has been moving on multiple hydrogen fronts.

• Federal Hydrogen Hub proposal. NM has entered into a multistate partnership to develop a Western Inter-State Hydrogen Hub (WISHH) with supporting facilities in each state in response to the U.S. Department of Energy RFP. The initial proposal has been approved with a full proposal due late this spring. All of the hydrogen maneuvering of the past two sessions should be seen as posturing and positioning for NM to succeed in this grant competition.
• Implementation, testing and evaluation of Underground Injection Wells. With Federal funds, NM Environment Dept. has been implementing an Underground Injection Wells program in NM and 12 other western states, with HB 174 being introduced to sustain that work and provide additional funding. In fact, New Mexico is already a leader in national and regional efforts to identify optimal geological formations where CO2 captured from industrial operations could be stored deep underground for at least 1,000 years. The New Mexico Institute for Mining and Technology in Socorro is heading that effort here and 12 other western states with financing from the U.S. Department of Energy, not only to pinpoint storage zones, but to help investors test the sites and develop monitoring, reporting, and verification plans needed for federal permits to begin commercial operations.
• Hydrogen Research & Development. In Jan. 2022, the Governor signed an MOU directing the NM Environment Dept and Economic Development Dept. to work with both Sandia and Los Alamos national labs on hydrogen development. The MOU allows these organizations to partner on the science, technologies, and policy impacts of “zero-carbon hydrogen” as it relates to climate, economy, energy, environment, equity, research, water, and New Mexico’s workforce.
• NM Carbon capture projects. And again, even without legislative authorization, multiple carbon-capture projects are under way in NM
  • Piñon Midstream LLC opened a new gas-processing facility with CCS technology in Lea County last fall, and it’s now preparing to open a second one.
  • Lucid Energy, which already operates gas-processing facilities in both Lea and Eddy counties, is also working to retrofit its Red Hills complex with CCS.
  • And in northwestern New Mexico — where Enchant Energy plans to convert the San Juan coal plant to carbon capture — Newpoint Gas LLC and Tallgrass Energy are pursuing a joint project to turn the coal-fired Escalante Generating Station near Grants into a hydrogen production facility.

So, industry efforts to equip carbon-emitting facilities in both the Northwest and Southeast corners of the state with carbon capture and sequestration, or CCS, systems are steadily advancing, spurred on by federal tax incentives to promote such projects. And, despite repeated rejection by the legislature in 2022, Gov. Michelle Lujan Grisham’s administration is aggressively supporting those plans, proposing new rules, regulations, and state incentives that could position New Mexico to win a goodly share of billions of dollars in forthcoming federal funding to accelerate the deployment of CCS technology.

As described in its Financial Impact Report (FIR), HB 174 is intended to establish NM as the tip of the carbon capture spear nationally, by enabling NM to achieve “primacy enforcement authority designation from the EPA.” This is but another strategy for demonstrating to the feds that NM is all in and ready to move on hydrogen. From the HB 174 FIR:

EMNRD has begun the process of applying for primacy enforcement authority. According to the agency’s analysis, “The development of an underground injection control (UIC) Class VI program and the process of obtaining approval from the U.S. Environmental Protection Agency (EPA) is a significant undertaking. In addition, while federal grants have been obtained for the existing UIC program, these grants have not proved sufficient to handle the large increase in UIC applications in recent years. As a result, OCD has a backlog of applications, inspections and enforcement, and the EPA has raised questions about OCD’s ability to
administer the UIC programs it has already been delegated.”

HB 174 Financial Impact Report

While securing EPA approval of Class VI primacy could take 5-6 years, merely applying will afford the state an opportunity to present their best case for readiness to implement their federal WISHH Hydrogen hub proposal. Part of that “best case” would have been to show the EPA that the legislature is fully supportive of the state’s Underground Injection wells (HB 174) and hydrogen hub programs (HB 12). This would have been achieved by showing bipartisan passage of bills like HB 12 and HB 174. Failing that, with Small and Dixon slipping $50M into the budget to support “advanced energy technology projects,” the state can say in its WWHISH proposal that, “in 2023, both chambers of the legislature passed $50M in matching funds for advanced energy technology projects.”

Capital & Main produced an excellent primer on state efforts to advance hydrogen with or without legislative support in “New Mexico’s Budget Battles Continue While a Hydrogen Development Bill (Likely) Appears: The Advanced Energy Technology Act clearly echoes last year’s quartet of failed hydrogen bills that promoted public-private partnerships.” And HB 12 met the same fate as last year’s quartet of bills, not even achieving a floor vote. Yet somehow the hydrogen work advances. Capital & Main noted what is at stake for NM’s hydrogen development plans in this legislative session. And this brings us to the budget again. From Capital & Main:

Maddy Hayden, director of communications for Gov. Michelle Lujan Grisham, is upbeat about funding for OCD, but says that NMED’s budget in the General Appropriation Act has “insufficient legislative appropriations to support oil and gas permitting, compliance and enforcement activities.”

Matthew Maez, spokesperson at NMED, noted two consequences for oil and gas enforcement in New Mexico if the funding isn’t ultimately increased either in the Senate or in the final reconciliation between House and Senate versions. One: The Environmental Protection Agency is expected to designate the Permian Basin an ozone nonattainment zone later this year, and “NMED will not be ready” to enforce the federal standards. And two: Underfunding both programs puts federal matching funds for hydrogen energy development in New Mexico in jeopardy.

So, according to NM Environment Dept. spokesperson Maez, without the $50M for the Environment Dept in HB 2, federal matching funds for hydrogen development are at risk. And with that, the entire WISHH grant proposal collapses. Hence the importance of slipping these funds through this session — hundreds of millions of federal and private dollars for NM hydrogen development are at stake.

This is why legislators promoting hydrogen are going to any and all lengths to advance any bill that offers evidence of broad bi-partisan support for hydrogen production — so NM is successful in securing its share of federal funding resulting from approval of its WISHH federal grant proposal. And it’s why they pull bills that they feel will be voted down.

What Have We Accomplished?

Given how swiftly state plans for hydrogen production and carbon capture are advancing, have we accomplished anything in blocking HB 12? Fair question, which I’ll answer by acknowledging that if HB 2 passes with its $50M earmark for advanced energy technology projects, bill sponsors will have achieved an important objective: $50M and the appearance of bipartisan support for its hydrogen program. But there are important elements in HB 12 that died with it. Specifically:

HB 12 would have given industry partners assurance that if their carbon sequestration technology failed, the state would reimburse private sector lost investments. That provision is gone, a very good thing, as without it industry must invest and risk their own resources to secure state and federal grant monies from which to profit.

The thought of risking hundreds of millions of investor dollars may cause some CEOs heartburn, now that that risk comes without state guarantees of reimbursement of its losses.

And as Retake’s two-page research brief on hydrogen production points out, everywhere an industrial scale carbon capture project has been attempted it has failed, and failed miserably, with billions in stranded assets and tons of escaped methane as the result of pursuit of this false solution.

Secondly, the elimination of procurement regulations called for in HB12 will not occur, ensuring a more equitable bidding process for hydrogen production public-private partnership contracts. A small win, but a win.

Are you confused, uncertain how a bunch of lowly constituents can influence a coal-fired hydrogen train that seems to barrel on, no matter what we do? Join us on Weds. night to compare notes. See below.

Huddle Up Among Friends & Allies!

Join us on Weds., March 1, 6-7 pm, for our weekly Zoom Huddle where we will discuss what legislative advocacy strategies could work in a political environment where industry and Democratic party leadership consort to advance short-sighted, environmentally unsound policy despite fierce constituent opposition. This session, we are winning on many fronts — e.g., women’s reproductive rights, tax reform, gun violence prevention — but when it comes to climate, we’ve had tepid progress at best. Tepid won’t do in the age of global warming. Join us and let’s talk about it.

Retake Legislative Huddle, Weds., March 1. Click here to register. You must register to attend. This will be an especially important meeting, as we enter the stretch run to pass good bills and kill bad ones, and we need to apply lessons we’ve each learned in this session to hone our strategies. Join us.

In solidarity & hope,

Paul & Roxanne

Categories: Local-State Government & Legislation

Tags: climate justice, economic justice, Featured, hydrogen, New Mexico, NM State Legislature, read more