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Gov. Michelle Lujan Grisham’s Hydrogen Hub Development Act failed to make it out of the starting gate on Thursday, after the first House committee assigned to hear the bill voted to table the high-profile measure.
Members of the House Energy, Environment and Natural Resources Committee voted 6-4 against moving the bill forward, following six hours of debate that attracted a huge audience. Both Democrats and Republicans voted in opposition. Nearly 300 public participants listened in online, and dozens of supporters and opponents provided comments on the legislation.
Significant opposition became evident from the start, after Rep. Matthew McQueen, D-Galisteo, the committee’s chairman, conducted a 20-second online poll that showed 73% of respondents opposed the legislation.
About three dozen people – mostly industry leaders, local officials and economic development professionals from rural counties that could benefit from hydrogen development – did testify in favor of the bill. But another 40 environmentalists and concerned citizens from around the state spoke out against it, citing widespread fear that promoting and accelerating hydrogen development today with government incentives would hurt, rather than help, state efforts to combat climate change.
The governor has promoted the bill as “priority” legislation that could significantly boost efforts to lower carbon emissions in New Mexico, while simultaneously igniting an entirely new industry here that offers sustainable, high-paying jobs, especially in places like northwestern New Mexico, where the transition from fossil fuels to renewables is adversely impacting local communities.
Rep. Patricia Lundstrom – a Gallup Democrat who chairs the Legislative Finance Committee – and Rep. Nathan Small, D-Las Cruces, are sponsoring the legislation, House Bill 4, which would create a slate of new tax incentives to encourage hydrogen development around New Mexico.
After Thursday’s vote, Small said he was disappointed but still hopeful the bill could win approval during this year’s 30-day legislative session.
“I think we need to keep working this session to take in the input,” Small told the Journal. “I don’t think it’s acceptable to give up and say ‘next session’ or ‘next year.'”
In its current form, the bill would provide special incentives to establish “hydrogen hubs” in targeted areas where public-private partnerships could receive state-sponsored loans and grants to build needed infrastructure, potentially attracting a broad range of hydrogen-connected businesses to turn those zones into bustling industrial parks.
In McKinley and Cibola counties, for example, two private companies are pursuing a joint $600 million project to turn the Escalante Generating Station – a coal-fired power plant near Grants that closed in 2020 – into a hydrogen-based generating facility. About 150 people lost their jobs at Escalante, and at a nearby coal mine, when the power plant shut down.
A dozen local officials from those counties testified in support of the bill Thursday morning, including Gallup Mayor Louie Bonaguidi.
“It would have a direct affect on our community,” Bonaguidi told committee members. “It’s very important for the financial future of Gallup.”
Economic Development Secretary Alicia J. Keyes said hydrogen development represents a rare opportunity to diversify the economy, creating hundreds, if not thousands, of jobs while also combatting climate change.
“It’s pretty unusual for a single piece of legislation to have so much economic potential,” Keyes said. “It could actually usher in a new, innovative industry in the state.”
But opponents said those promises are based on a false premise that hydrogen is a “clean” resource that can help lower carbon emissions.
In fact, hydrogen is a relatively clean-burning fuel that doesn’t emit carbon dioxide when combusted. And, as a non-carbon resource, state officials say it could provide a critical tool to decarbonize many sectors of the economy, from electric generation and long-haul trucking to heavy industrial operations and the heating and cooling of homes and businesses.
But while the fuel itself doesn’t emit carbon, the process used today for creating hydrogen is carbon intensive, because it uses natural gas as a feedstock, pulling hydrogen molecules out of the methane contained in gas and emitting substantial carbon in the process.
As a result, environmentalists say burning hydrogen is worse than just burning natural gas, since it means a lot more gas will be mined in New Mexico. And that, in turn, could lead to more methane released when mining and transporting gas to hydrogen-production facilities, followed by substantial carbon emissions in the methane-to-hydrogen conversion process.
Environmentalists also question the reliability of carbon capture and sequestration technology, which industry would use to trap carbon in the hydrogen production process.
“We have an existential climate crisis that will be exacerbated by hydrogen development,” Mike Eisenfeld of the San Juan Citizens Alliance told legislators.
Erik Schlenker-Goodrich, executive director of the Western Environmental Law Center, said the bill is actually a giveaway to the fossil fuel industry.
“Let’s be clear, it provides fossil fuel companies with taxpayer subsidies,” Schlenker-Goodrich told committee members. “I don’t buy the fossil fuel hydrogen hype.”
Others questioned the state’s ability to police upstream methane emissions in the production and transport of natural gas, citing the bill’s vague explanations about how monitoring and certifying compliance with emissions regulations will be managed, plus the chronic shortage of money and staff at state regulatory agencies.
“There are loopholes you can drive trucks through that will allow upstream emissions of all sorts,” said Noah Long of the Natural Resources Defense Council.
Those arguments resonated with legislators, who pummeled the bill’s sponsors with similar questions during the committee hearing.
“Apart from the testimony we heard, I’ve received lots of emails and texts with grave concerns,” said Rep. Kristina Ortez, D-Taos. “… We need to listen to our communities when we make a decision like this.”
Rep. Debra M. Sariñana, D-Albuquerque, said she has “heartache” about giving fossil fuel producers state subsidies to clean up their own product.
“Constituents don’t like it,” said Sariñana.
Governor’s Office spokeswoman Nora Meyers Sackett said the administration will seek to revive the bill during this 30-day legislative session that ends Feb. 17.
“We fully expect to work with the Legislature to identify a successful path forward for this important legislation,” she told the Journal in an email.
Journal Capitol Bureau Chief Dan Boyd contributed to this report.
Editor’s note: An earlier version of this story incorrectly said that Rep. Kristina Ortez and Rep. Debra M. Sariñana voted to table the Hydrogen Hub Development Act. They did not. The story has been updated.