New Mexico is home to an abundance of natural resources. For decades, our state has relied on the revenue from oil and natural gas production in our northwest and southeastern corners to fund needed programs and services.
While recent years have witnessed the emergence of other industries, such as film and aerospace, as a state, we are still far too dependent on one single industry – an industry that, despite its immense financial value to our state, is wildly unpredictable and, due to the emergence of new, cleaner and cheaper fuel sources, will eventually not be able to support our state’s budget the way it has in the past.
Thankfully, New Mexico is also home to an abundance of wind and sunshine, and we are only beginning to reap the benefits of those nearly limitless resources, while making substantial advancements toward saving our planet. Our wind and sun can also help New Mexico make substantial advancements toward saving our budget – but only if state lawmakers act responsibly and wisely.
Late last year, Xcel Energy completed construction on the Sagamore Wind Project, the largest wind farm ever constructed in New Mexico, and earlier this year, Pattern Energy announced the start of construction on one of the largest wind projects ever built in North America, along with plans for an investment of more than $9 billion in our state.
These two projects alone represent billions in economic impact and thousands of jobs for rural New Mexicans at a time when we need them most. Dozens of other renewable energy projects are already in the queue.
We have a massive opportunity to reap the economic, job and climate benefits of renewable energy, but only if our state’s leaders help rather than hinder this progress.
There are several climate-related bills currently in front of the Legislature, and policymakers are moving – and should continue to move – swiftly on those measures. There are also numerous measures that seek to fill the state’s budget gap that has resulted from the nearly yearlong pandemic that has crippled our economy.
As tax revenue from conventional energy sources has declined, it’s tempting to increase taxes on renewable energy sources as a way to fill the gap. That temptation would be shortsighted and have devastating unintended consequences.
Contrary to the belief of some, a tax on our air and sun simply can never replace the tax revenue generated from our oil and natural gas. The sheer value from the volume of oil and gas produced (more than $10.5 billion in 2017) is and will remain much greater than the value of wind and solar energy produced ($41 million in 2017).
Additionally, comparing tax revenue from oil and gas to that of wind and solar is an apples-to-oranges comparison as the margins and pricing structures for the energy produced are entirely different. Finally, the wind and solar industries already pay a gross state tax rate that is almost identical to the state tax rate on oil and gas.
Not only will creating an onerous tax on our air and sun do little to fix our state’s budget shortfall, but also it will almost certainly drive renewable energy investment out of New Mexico to states that are much more favorable to renewable energy development – along with the rural jobs and much-needed local tax revenues that come with it.
New Mexico’s challenges in a post-Covid world are very real, but let’s not drive away new investment in wind and solar energy at a time when we are just beginning to reap the benefits. It’s time to prioritize our rural communities and jobs, and save our planet at the same time.
Glenn Schiffbauer is executive director of the Santa Fe Green Chamber of Commerce.