SANTA FE – While climate change activists rallied outside, Gov. Michelle Lujan Grisham on Monday began her push to drum up support for a proposed legal framework for hydrogen energy development by urging New Mexico oil and natural gas executives to back the legislation during the 30-day legislative session that starts in January.
The Democratic governor opened her remarks at the annual meeting of the New Mexico Oil and Gas Association by asking the roughly 300 attendees to wear face masks to comply with a state public health order that requires face coverings in indoor public settings. Most people appeared to comply.
She then devoted much of her 25-minute speech to the proposed hydrogen initiative, which was recently unveiled by the governor and which she vowed will be on the agenda for the coming legislative session.
“We believe that being the first state to have a statutory framework (that) … puts us in the driver’s seat when it comes to hydrogen,” said Lujan Grisham, who described hydrogen as the “transitional fuel of the future.”
The governor’s remarks, which drew somewhat tepid applause, marked the latest stanza in her delicate two-step with the extractive energy industry, which Lujan Grisham has both pushed to adhere to stricter environmental rules and defended as a key producer of revenue.
Although details have not been released, the proposed Hydrogen Hub Act would create a statutory framework to regulate the new industry and incentivize public-private sector partnerships that can accelerate development.
But some environmental groups have expressed misgivings about the proposal, saying a focus on hydrogen energy could slow the state’s push to expand wind, solar and other types of renewable energy projects.
Meanwhile, the governor’s appearance at the oil and natural gas conference also drew a group of youthful climate change activists, who protested outside the downtown Santa Fe hotel where the governor was delivering her remarks, at one point chanting: “Which side are you on?”
Seneca Johnson of Santa Fe, a member of Youth United for Climate Change Action, said Lujan Grisham has not done enough to address climate change since taking office in 2019.
“We’ve been calling on her for meaningful climate reform for several years,” Johnson told the Journal. “We can see where her priorities lie.”
The Lujan Grisham administration has pushed in recent months for proposed regulations to address New Mexico oil and natural gas pollution that contributes to high ozone levels.
However, the governor has also touted the extractive industry’s economic heft, pointing out during her Monday speech that more than one-third of the state’s $7.4 billion budget is funded by the oil and gas industries.
“It’s important we protect New Mexicans and our environment while driving our economy,” the governor said.
New Mexico recently overtook North Dakota to become the nation’s second-biggest oil producer – behind Texas – and natural gas prices have soared in recent months.
That’s led to an increase in taxes and royalties collected from the extractive industries, prompting legislative and executive branch economists to project New Mexico will take in roughly $8.8 billion in revenue during the coming budget year – a record.
Lujan Grisham has said in the past that oil and gas companies could play a key role in the state’s transition toward a renewable energy economy, and she suggested Monday that could happen with the emerging hydrogen industry.
“All of us are responsible for advancing clean energy,” Lujan Grisham said. “It is here right now, and everyone is scrambling to be identified as that innovative leader.”
The governor also said hydrogen energy development could generate “hundreds of billions” in possible revenue over the coming decade. She said she discussed the initiative with U.S. Energy Secretary Jennifer Granholm during Granholm’s visit to New Mexico over the summer.
Hydrogen development could be at the forefront of a federal plan to help decarbonize everything from electric generation and long-haul shipping to heavy industrial processes such as steel and concrete production.
The concept has bipartisan support in Congress, including a proposal for $8 billion in federal grants to build four initial hydrogen hubs around the country. The proposal is part of President Joe Biden’s $1.2 trillion infrastructure bill, which is awaiting a final vote in the U.S. House.
Lujan Grisham said Oklahoma, Texas, Wyoming and Montana could be among the other states in the running, but said New Mexico is uniquely positioned to be a player in the national – and international – hydrogen market, due partly to its abundant natural gas reserves that can be used, at least at first, to derive the methane needed to produce hydrogen.
Robert McEntyre, the New Mexico Oil and Gas Association’s communications director, said some members of the industry group have already been looking into hydrogen energy development.
“We’re always happy to collaborate with the governor and find inventive ways to maximize our resources,” McEntyre told the Journal. “It’s an area that could hold a lot of promise in the future.”